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David N. Kirkman
Task Force Alert
Chair
Asst Attorney General
Consumer Protection
NC Department of
Justice
P.O. Box 629
Raleigh, NC 27602
919-716-6000

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TO NC SENIOR CONSUMER FRAUD TASK FORCE MEMBERS

******Alert #316******

Feds Go After U.S. Sweepstakes Mailings Firm, Dominican Republic Sweepstakes Fraud Ring

Two important court actions involving alleged sweepstakes scammers have just been announced.

Case #1. The Federal Trade Commission announced yesterday that a federal court granted it an order shutting down and freezing the assets of a Nevada company, Applied Marketing Sciences, LLC, that allegedly mailed millions of deceptive notices to people in the U.S. and around the world informing them that they had won a sweepstakes or other contest. The Commission’s announcement of the court filing reads, in pertinent part:

According to the FTC’s complaint, Liam O. Moran, a resident of Ventura, California, and his companies, mass mail personalized letters to millions of consumers telling them that they have won a large cash prize, typically more than $2 million with bold, large-type statements such as “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you.” Consumers are told that they can collect the prize by sending in a small fee of approximately $20 to $30. The letters often indicate that recipients are “guaranteed” to receive the prize money if they pay the fee, and they create a sense of urgency by stating that it is a limited-time offer.

In “dense, confusing language,” often on the back of the letters, there are statements in direct conflict with the bold claims of major winnings. A very careful reader might learn that they in fact have not won, and that the defendants do not sponsor sweepstakes but instead claim only to provide consumers with a list of available sweepstakes. Consumers frequently fail to see or understand this language and send money to the defendants. The FTC alleges that this language does not appear designed to correct deceptive statements, but exists mainly as an attempt to provide a defense to law enforcement action. Consumers get nothing of value in exchange for their payment.

The defendants have sent more than 3.7 million letters during the past two years, including nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009. The vast majority of the victims of this scam appear to be over 65.

As has been mentioned in previous Alerts, the names and contact information of people who respond to such mailings often go on lists that are sold to sweepstakes scammers based overseas. Those scammers extract large sums from their victims. (See Case #2, below)

Case #2. Also yesterday, the U.S. Attorney in New York City and the Assistant Director in Charge of that city’s FBI office announced that a telemarketer from the Dominican Republic, Warren Stelman, a/k/a David Ford, had been sentenced to a prison term of 6.25 years by a federal judge for defrauding U.S. seniors with claims that they had won a sweepstakes contest and needed to wire substantial sums of money to the Dominican Republic in order to collect their prize. Whenever a senior wired thousands of dollars to the Dominican Republic in response to those representations, Stelman and his colleagues would call again and inform him or her that additional fees and payments needed to be sent before the prize could be released. They told the victims to go back to the Western Union or MoneyGram counter at their local store and send thousands more. The court also sentenced Stelman to three years of probation and ordered him to make restitution to 78 victims in an amount just under one million dollars. Several other defendants have been charged in the case, have pled guilty and are awaiting sentencing. The U.S. Attorney’s announcement of Mr. Stelman’s sentence can be found at http://www.fbi.gov/newyork/press-releases/2013/telemarketer-sentenced-in-manhattan-federal-court-to-75-months-in-prison-for-sweepstakes-fraud-that-targeted-elderly-victims?utm_campaign=email-Daily&utm_medium=email&utm_source=fbi-in-the-news&utm_content=261986

******End of Alert******

Date: September 25, 2013

David N. Kirkman
Task Force Alerts Chair
Assistant Attorney General
Consumer Protection Division
Office of Attorney General Roy Cooper
114 West Edenton Street
9001 Mail Processing Center
Raleigh, NC 27699-9001
Tel. 919-716-6000

 

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