Prosecutors Clamp Down|on Fraudulent Mailers

LOS ANGELES (CN) — The Federal Trade Commission says scammers on both coasts not only targeted the elderly in a phony "prize" scam, they sold lists of their victims to other scammers who could try it again.

The scammers sent "hundreds of thousands of personalized cash prize notifications to be mailed to mostly elderly consumers," the FTC says in federal lawsuit. The suckers were told they had $1 million or more, but to collect, they had to pay "a 'document processing fee,' 'folio release fee,' or other 'fee' of approximately $25," according to the Sept. 21 complaint.

It goes without saying that (c)onsumers who sent in the fees to collect their cash prizes did not receive the promised cash prize money." Instead, they got more phony solicitations and "cash prize notifications from defendants and other companies who purchased lists containing the consumers' personal information."

The lead defendant is Terry Somenzi of Tarzana, and his businesses, International Advisory Services, Paulson Independent Distributors, International Procurement Center, Phelps Ingram Distributors, and Keller Sloan & Associates.

Also sued are David Raff and his company, Millennium Direct Inc. aka MDI Lists, of Weston, Fla.; and Ian Gamberg of Weston, Fla., and his company, Printmail Corporate Solutions, of Hollywood, Fla.

Phone numbers for Raff's Millennium Direct and for Gamberg's office were disconnected Thursday afternoon. Contact information for Somenzi could not be located.

The FTC lawsuit came as part of a large, coordinated series of criminal and civil actions against fraudulent mass mailers.

Even as reports about hackers, data breaches and email vulnerabilities fill the headlines, schemes using regular mail "target millions of Americans with false promises of wealth and riches, swindling hundreds of thousands of our fellow citizens," Attorney General Loretta Lynch said in a statement Wednesday announcing the concerted moves.

The Departments of Justice and the Treasury, the U.S. Postal Service and the Iowa Attorney General's Office also filed several civil actions or settlements, two criminal prosecutions and related enforcement actions against people and here and abroad.

The actions were "part of a broader effort by the department and its international law enforcement partners to attack fraud schemes targeting older Americans and other vulnerable populations that involve individuals and entities across the globe, including Canada, France, India, the Netherlands, Singapore, Switzerland, Turkey and the United States," the Department of Justice said.

A key target was a Canadian payment processing company called PacNet Group, according to Nadine Samter of the FTC's Seattle office, who is handling the case against Somenzi, et al.

PacNet processed payments for all the defendants in all the matters announced Wednesday.

In a rare move, the Treasury Department designated the company as a "significant transnational criminal organization" and blocked all U.S. assets of "12 individuals and 24 entities across 18 countries" connected to it. The Postal Service obtained a warrant to seize funds in the U.S. bank account the company uses to process payments.

"In 2016 alone, PacNet has processed payments for the perpetrators of more than 100 different mail fraud campaigns, collectively involving tens of millions of dollars" in order to give "fraudsters in other countries ... unfettered access to U.S. banks," the Justice Department said.

All the schemes targeted in Wednesday's actions promised consumers valuable prizes for a small processing fee.

Somenzi and Raft crafted official-looking letters and envelopes announcing the prizes, issued their heartfelt congratulations, and urged their suckers to respond quickly, before a deadline, the FTC says.

The letters were personalized with phrases such as, "This letter constitutes actual designation of [Jane Doe] as a cash prize winner!" and "[John], rest assured that there is no mistake, misprint or error. This is the notice you have been waiting for all your life!"

Somenzi and Raft created or found the mailing lists, while Gamberg and his company printed the letters and envelopes and put them in the mail, according to the FTC.

"Since at least 2013, defendants have sent hundreds of thousands of the deceptive cash prize notifications to consumers. Consumers who responded to the cash prize notifications paid substantial sums to defendants to collect their purported cash prize winnings," the FTC says.

"Prize winners" were instructed to send their fees to post office boxes in the Netherlands. Samter said that made it difficult for law enforcement to detect consumer injury and it means the fee money can't be seized.

The FTC seeks restitution, refunds, disgorgement and an injunction.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit