Tag: U.S. Postal Inspection Service

EDITOR’S NOTE: Recidivism, the tendency to continue committing crimes or breaking laws even after getting caught and perhaps even going to prison, is a common theme in the scam universe. It has been an element in many recent cases we’ve written about, including the AdSurfDaily Ponzi scheme case (principals Andy Bowdoin and Clarence Busby had previous run-ins with securities regulators); the Frank Constantino securities-fraud case (Constantino had previous run-ins with securities regulators in Georgia and Missouri); the Edmundo Rubi foreclosure-rescue case (Rubi had a previous conviction in a Ponzi/pyramid case and spent time in federal prison).

Meanwhile, it has been an element in the Philip R. Lochmiller Ponzi scheme case (Lochmiller previously was sentenced to three years in a California state prison for a fraud scheme); the Kenneth W. Lee Ponzi scheme case (Lee spent five years in a Texas prison in a previous fraud scheme and also had a $3 million judgment against him); the Thomas L. Labry securities-fraud case (Labry had been ordered by five states to cease and desist from selling unregistered securities); the Brian David Anderson Ponzi scheme case (Anderson was linked to multiple fraud schemes and clashed with law enforcement in the United States and Canada); the Bruce Namenson mortgage-fraud case (Namenson, formerly an attorney, already was in jail for an insurance scam when charged in the mortgage case); the Troy A. Titus Ponzi scheme case (Titus, a former attorney, was disbarred for writing bad checks for huge amounts before his Ponzi scheme conviction).

At the same time, recidivism has been an element in the Trevor Cook Ponzi and financial-fraud case (Cook had a run-in with the National Futures Association before his spectacular run-in with the SEC and the CFTC);  and the Arthur Nadel Ponzi scheme case (Nadel, a former attorney, was disbarred decades ago amid allegations he raided client funds to pay off loan sharks).

There are other recent examples, of course.

Here is a new one . . .

A New Jersey man implicated in fraud schemes dating back to the early 1990s has been arrested in a new, work-at-home fraud scheme, federal prosecutors said.

Part of the scheme centered on telling participants that the companies involved had good reputations and weren’t shady, “get-rich-quick” schemes, prosecutors said.

Philip Pestrichello, 38, of Bayville, N.J., is a recidivist offender who served three years in federal prison after being convicted in 2003 of mail fraud in a work-at-home scheme known as “IMXT & Co.”

Pestrichello was on supervised probation when he hatched his new scheme — for which his wife, Rosalie Florie, 38, also was arrested. Prosecutors said the husband-and-wife team collected more than $1 million, operating the scheme through entities known as “Preferred Platinum Services Network LLC” ;”PPSN LLC”; “Home Based Associate Program;” and “Postcard Processing Program.”

“Work-at-home scams prey on some of the most vulnerable in our society — the economically disadvantaged, the unemployed, the disabled, and the elderly — who are trying to supplement their income by working from home,” said U.S. Attorney Preet Bharara.

Bharara assigned the Complex Frauds Unit to the case. The FTC and the U.S. Postal Inspection Service also are playing pivotal roles.

Pestrichello’s post-prison scheme began in June 2007, prosecutors said.

Consumers were duped into sending money to Pestrichello and Florie “under the pretense that the consumers were enrolling in a program that would allow them to earn income at home,” prosecutors said. “In fact, the consumers typically got nothing in return for their payment.”

The scheme operated though the U.S. mail, the Internet and classified ads. Participants
were charged what they believed to be “one-time” enrollment fees of up to $90 and promised “the opportunity to earn a ‘weekly paycheck’ by labeling postcards that advertised a product called the ‘Mortgage Accelerator Program,’” prosecutors said.

Consumers were told they could earn $1 for each postcard they labeled, but the story changed after they sent their money.

“[A]fter consumers paid their enrollment fee, they were asked for more money to remain in the program,” prosecutors said. “Typically, consumers learned for the first time after paying the enrollment fee that they had to pay an additional fee, usually $40, for a new batch of 100 postcards for processing.”

To keep the scheme churning, prosecutors said, the scammers pressured participants “to return their first set of labeled postcards ‘within 5 days’ or risk delays with their paychecks.

“This caused many consumers to send in money for second and third batches of postcards before they received payment for the first batch,” prosecutors said. “By the time they realized they were not receiving any paychecks at all from PPSN, many consumers had already sent PPSN between $150 and $350.”

Among the advertising claims were (italics added):

“Would you like an opportunity to earn a $475 check from home processing Mortgage Products Postcards for our company?”

“EARN $1.00 PER POSTCARD”

“Rest assured, this is NOT a gimmick or some shady ‘get rich quick scheme.’ Our company has a rock-solid reputation . . . As one of our Home Based Associates you could earn $1.00 (one-dollar) for each Postcard you process and we conveniently offer you weekly
compensation directly by Company Check each Friday.”

“The vast majority of consumers ultimately received no money at all, after paying the up-front fee and labeling and returning the postcards as instructed,” prosecutors said. “Even those few individuals who were paid did not receive anything near the promised payments of $1.00 per postcard.”

And, prosecutors asserted, the rules continued to change, thus putting consumers in the impossible position of clinging to the program in an effort to get back the money they paid in.

“After consumers complained to PPSN that they did not receive the weekly paycheck, they either received no response from the company or were then told, contrary to PPSN’s earlier representations regarding the operation of the program, that the program was a ‘commission’ program, and that they would receive a commission only if and when the postcards they sent out generated a sale on the ‘Mortgage Accelerator’ product advertised in the postcards,” prosecutors said.

“In fact, the Mortgage Accelerator Program itself appears to have been a sham, non-existent product,” prosecutors continued. “Although the work-at-home program was marketed as offering a ‘100% Satisfaction Policy’ guaranteeing consumers a refund in the event they are not fully satisfied with the program, refunds were rarely, if ever given. If a refund was in fact given, it was typically only after a consumer had complained to law enforcement authorities.”

Pestrichello was in repeated trouble even prior to his 2003 criminal conviction, prosecutors said.

“Between 1992 and 2002, Pestrichello was the subject of numerous enforcement actions by the New Jersey Division of Consumer Affairs, the Office of the Attorney General in the State of Florida, and the FTC, in connection with his operation of other consumer fraud schemes. Those actions resulted in permanent injunctions barring Pestrichello from engaging in the type of conduct and business alleged in the Complaint.”