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Tag: USPIS

  • BULLETIN: National Investment-Fraud Sweep Dubbed ‘Operation Broken Trust’ Nets 532 Defendants; AG Holder Says Capers Caused More Than $10 Billion In Losses; ‘Undercover Operations’ Part of Task Force Arsenal

    U.S. Attorney General Eric Holder and members of President Obama’s Financial Fraud Enforcement Task Force said this morning that a nationwide sweep known as “Operation Broken Trust” has netted 343 criminal defendants and 189 civil defendants.

    Among the targets of the sweep were purveyors of Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business-opportunity fraud and other similar schemes, investigators said.

    Some of the defendants “filed for bankruptcy in an attempt to avoid claims by victim-investors,” investigators said.

    The combined losses in the schemes, which affected 120,000 investors, were estimated at $10.4 billion, Holder said. He was joined in the announcement by FBI Executive Assistant Director Shawn Henry; U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami; U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell;  Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI); Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC); and other members of the Financial Fraud Enforcement Task Force.

    “With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Holder.  “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan — we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”

    The calling card of the schemes was greed, Henry said, adding that undercover probes are part of the Task Force’s arsenal.

    “This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said Henry.  “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”

    Khuzami, meanwhile, said the law-enforcement community was pursuing multiple forms of fraud.

    “Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Khuzami. “Victims want justice and don’t much care who the fraudster is or how unique the fraud. Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”

    Read Holder’s announcement, made this morning in Washington.

    President Obama authorized the Financial Fraud Enforcement Task Force in November 2009. In January 2010, Holder ventured to Florida to speak about the aims of the Task Force and to warn scammers that the government was serious about putting them in jail.

  • Atlanta Journal Constitution: 3 Floridians Charged In Alleged $425 Million ‘Yellow Pages’ Directory Scam; Separate Research Shows Brother Of 1 Of The Defendants Is International Fugitive

    WANTED BY U.S. POSTAL INSPECTION SERVICE: Charles Robert Smith

    The Atlanta Journal Constitution and the Florida Times Union are reporting that three Jacksonville-area residents have been charged in an alleged $425 million fraud scheme involving mass solicitations for the renewal of dubious “Yellow Pages” listings.

    Separately, the brother of one of the defendants is listed as an international fugitive by the U.S. Postal Inspection Service in his own alleged Yellow Pages scheme.

    Charged in federal court in Atlanta were Mark Stuart Smith, Christopher Jon Gregory and Marian Phelan. The defendants were associated with a company known as United Directories, the newspapers reported.

    Smith’s brother, Charles Smith, was indicted last year in Atlanta on similar charges, the Times Union reported. The U.S. Postal Inspection Service (USPIS) has published a “Wanted” poster on Charles Smith, whose full name is Charles Robert Smith. Charles Smith also uses the alias of  Joseph Austin Smith, according to the USPIS.

    Charles Smith, according to the USPIS, is believed to have passports and Florida driver’s licenses in both names. He is described as an international fugitive possibly living in Tanzania, and is believed to travel extensively in Europe and Africa.

    Postal inspectors and state attorneys general have battled several variants of Yellow Pages scams over the years. Charles Smith, according to records, has been implicated in such scams for at least two decades.

    The Federal Trade Commission, among other agencies, has issued warnings about Yellow Pages scams. So has the state of North Dakota.

    Selling “Yellow Pages” listings on the Internet to create the impression that customers have purchased an ad in well-known, local print publications is one variant of the scam.

    Another variant is to send businesses a bogus bill for “Yellow Pages” listings. Because firms frequently purchase such listings and associate the “walking fingers” logo with legitimate print and online publishers, they often pay the bill without looking.

    Yet another variant of the scam is to send what appears to be a small “refund” check to businesses for overpayment of a “Yellow Pages” bill. When recipients endorse the checks, they actually are entering into a contract and agreeing to be automatically billed for advertising purchases.

    On May 26, 2009, the PP Blog reported that the AdViewGlobal (AVG) autosurf, which had close ties to the alleged AdSurfDaily Ponzi scheme operated from Florida, appeared to be in the process of launching a purported Yellow Pages directory service. Whether AVG planned to offer the purported service independently or through a partnership with a vendor was unclear.

    With great fanfare in May 2009, AVG announced that it was launching a new website and offering a new suite of purported services. The launch ultimately failed — but not before AVG had published a “walking fingers” logo to which the acronym “AVGA” had been added.

    Read the early story on the charges against Mark Stuart Smith, Christopher Jon Gregory and Marian Phelan in the Atlanta Journal Constitution.

    Read the story in the Florida Times Union.

    Visit the USPIS website to view the “Wanted” poster of Charles Robert Smith.

    Search for “Smith” in this USPIS document to get additional background.

    In the alleged Charles Smith scheme, “More than 10,000 victims lost an estimated $10 million,” USPIS said. Some of the money allegedly ended up in a Swiss bank account.

    During the course of the Charles Smith probe, “[i]nspectors and agents also found documents indicating that Charles Robert Smith was trying to liquidate funds in a brokerage account and several other bank accounts by purchasing one-ounce gold coins from dealers across the United States,” USPIS said.

    “Charles Smith had also recently placed a $42,000 deposit on a $1.2 million jet from Epic Air in Las Vegas, Nevada. Inspectors used information from the documents to obtain seizure warrants for the following items: – $323,793 from a brokerage account at Investscape. – 690 one-ounce American Eagle gold coins valued at $293,940. – 545 one-ounce Austrian Philharmonic gold coins valued at $228,900. – $42,000 down payment for the purchase of the jet, which had been converted into $30,000 worth of airplane parts and $12,000 in cash.”