BULLETIN: Oh, Utah! FTC Says Yet-Another Scam Used Shell Companies To Bilk Consumers And Dupe Payment Processors
UPDATED 1:17 PM ET (FEB. 27. U.S.A.): The FTC has sued six Nevada-based companies with ties to a call center in St. George, Utah, amid allegations that the firms and corporate officers scammed consumers and payment processors in a $25 million fraud scheme.
Nevada and St. George were ground zero for the alleged $275 million Jeremy Johnson/IWorks fraud scheme involving shell companies in 2010. The region now has served up another doozy of a case, with the FTC alleging once again that shell companies were used to pull off a major swindle.
Named corporate defendants in the latest alleged caper were Ideal Financial Solutions Inc., Ascot Crossing LLC, Bracknell Shore Ltd., Chandon Group LLC, Avanix LLC and Fiscal Fitness LLC. Individual defendants include Steven Sunyich, Michael Sunyich, Christopher Sunyich, Shawn Sunyich, Melissa Sunyich Gardner, and Kent Brown.
U.S. District Judge Miranda M. Du, the same judge presiding over the Johnson/IWorks civil case brought by the FTC in December 2010, has ordered an asset freeze and appointed a receiver in the agency’s most recent case that alleges spectacular financial fraud occurring in Nevada and Utah.
Du’s order lists the following as receivership entities, amid FTC allegations they were part of a common enterprise: Debt Elimination Systems LLC; US Debt Relief LLC; Money Mastery LLC; US Debt Assistance Corp.; IWB Services (St. Kitts); Financial Fitness LLC; Debt to Wealth LLC (St. Kitts); Debt to Wealth LLC (Nevada); Ideal Goodness LLC; Dollars West LLC; Fluidity LLC; Newport Sails LLC; Shaw Shank LLC; Bunker Hillside LLC; Funding Guarantee LLC; Newline Cash LLC; Wealth Fitness LLC; and Zeal Funding Services LLC.
The judge appointed Thomas McNamara of Ballard & Spahr receiver.
At least 230 Internet domains were used in the scam, the FTC alleged. From the agency (italics added):
According to the FTC’s complaint, the Ideal Financial Solutions defendants targeted financially vulnerable consumers who had never come in contact with them, and without authorization debited their bank accounts and charged their credit cards, usually for about $30. Those who disputed the charges were told they had purchased something, such as financial counseling or loan matching services, or assistance in completing a payday loan application. How the defendants got the consumers’ financial information is not known, but some consumers had recently applied for payday loans via the Internet, and entities that receive payday loan applications often sell the information to other parties.
The complaint alleged that, to avoid detection, the defendants created dozens of shell companies to open merchant accounts with payment processors that enable merchants to get customers’ money via electronic banking; the processors receive a fee for each transaction they handle. The defendants also allegedly registered more than 230 Internet domain names, often using identity-hiding services and auto-forward features.
Read the FTC complaint.