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Crackdown targets work-at-home scams
« on: Feb 22nd, 2005, 9:02pm » |
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Crackdown targets work-at-home scams
Action taken against 200 operations, including 'cashless ATMs'
From Paul Courson
CNN
Tuesday, February 22, 2005 Posted: 8:02 PM EST (0102 GMT)
WASHINGTON (CNN) -- Authorities have cracked down on scores of "scam artists" across the United States who cheated thousands of consumers out of millions of dollars with illegal business ventures, officials said Tuesday.
A combination of criminal and civil actions have been leveled in state and federal courts against more than 200 questionable operations in 14 states, they said.
Federal Trade Commission Chairman Deborah Platt Majoras said the coordinated push was called Project Biz Opp Flop, and noted that "business opportunity fraud is big business."
"In the FTC's 16 cases alone, tens of thousands of consumers collectively lost over $100 million," Majoras said during a news conference at agency headquarters.
The operations included vending machine businesses and work-at-home schemes involving refrigerator magnets, medical billing, Web design and envelope-stuffing, the FTC said.
One scam peddled an expensive apparatus called a cashless automated teller machine, a seeming oxymoron that drew laughter from reporters.
But telephone solicitors working a "boiler-room" style of operation teamed up to persuade victims to pay money for the machines, according to U.S. Attorney Marcos Jimenez.
"They make it make sense to these folks," Jimenez told reporters. "Then they turn them over to distributors, or closers, who are these other professional scam artists who are trained and expert at closing deals and getting people to send them the $10,000, the $5,000 or whatever it is to start up their own cashless ATM business."
Assistant Attorney General Peter Keisler said that in some cases people buy into a questionable business plan because there is no benchmark as to how much money can be made.
"It's much easier than you think," Keisler said. "We've talked to these people, these are not unintelligent people. I think we all tend to be more easily persuaded by things we want to believe, and the people on the other side of these phone calls have really reduced this to a fine art."
Many of the people taken in by the scams are reached at home, and they include the elderly and immigrant populations, especially those in need of fast, easy cash.
Officials said that even when scam artists are caught, there is little hope to recover the money invested, because the criminals behind the activity often spend victims' cash on expanding the illicit business, and for illegal drugs and prostitutes.
One case announced Tuesday involved a civil lawsuit against American Entertainment Distributors. The firm's leaders are accused of committing fraud by trying to sell machines that would reputedly be located in hotel lobbies to sell DVDs that a guest could play in the room.
Authorities gave CNN audio recordings and transcripts of an undercover investigator's exchange with one of the accused company's principals. In it, the man is heard advising the agent to set up "a really big room," suggesting many telephone solicitors making the pitch to potential victims.
To measure risk versus revenue in the proposed scam, the man said that "before anything happens, like about 30 complaints coming in, there's already $20 million in the [expletive] door."
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