Federal, State Law Enforcers Announce 18 Cases From Joint Crackdown,Close Dozens Of Scam Operations
Dozens of apparent con artists who targeted small businesses and not-for-profits ranging from churches to charities have been closed down in “Operation CopyCat,” a federal, state and local government crackdown on allegedly bogus office and cleaning supply telemarketing sales schemes that was coordinated by the Federal Trade Commission. The cases were announced today by the FTC, the U.S. Postal Inspection Service, state Attorneys General, and local law enforcers, following issuance of court orders and other actions resulting in the closing down of these allegedly fraudulent operations.
“These scam artists preyed on the most vulnerable small businesses and not-for- profit organizations, including churches, monasteries, private schools and a YMCA,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “They conned their victims about who they were; they sent merchandise that wasn’t ordered; they misrepresented their products and charged outrageously inflated prices; they lied in their billing calls; and they threatened and harassed people who complained. These hustlers are the worst kind of predators. Well, today we’re the terminators. We’re closing their bogus businesses down. We’ve frozen their assets and we’re going to seek consumer redress.”
The FTC has cracked down on fraudulent business supply companies in the past. But there is now a new important tool. The deceptive and misleading tactics of these boiler room bilkers are covered under the FTC’s new Telemarketing Sales Rule. The Telemarketing Sales Rule requires that telephone sellers disclose that they’re calling to sell something, prohibits collecting payments for “awards” or “prizes,” bars misrepresentations about goods offered for sale by phone, prohibits false and misleading claims to induce payment, and prohibits calls between 9 p.m.until 8 a.m. Seven of the cases filed today charge violations of the FTC Telemarketing Sales Rule.
In the FTC cases announced today, the defendants allegedly peddled products including copy paper, copy machine toner, cleaning supplies, light bulbs, and trash bags. According to the FTC, the bogus business supply companies typically operated out of telephone boiler rooms, placing calls to businesses, and non-profits. The scam artists use a variety of deceptive techniques to get the name and address of the right person to list on the invoice. Some scammers say they are calling to inquire about the type of supplies the business uses; others offer free gifts or catalogues. Some imply that the defendants have done business with the company before, and that they’re calling to offer a special sale or to resupply stock . In one case, a telephone huckster allegedly told a Catholic priest that the company wanted to send him a clock radio as a free gift. The clock radio apparently was sent, followed by a box of light bulbs with an invoice for nearly $400 and a claim that the priest had ordered them.
As in the case of the priest, the other FTC cases involve the sending of unordered merchandise followed by invoices that charge dramatically inflated prices for the products. In one case, bills for copy machine toner cartridges totaled $169. The same cartridges purchased from the regular supplier cost just $55.
When victims of the scam complain that they have not ordered the merchandise or complain about the cost of the merchandise, harassing calls and credit threats were made, the FTC charged.
Typically, when victims tried to return unordered goods, they were told they would have to pay substantial “restocking” fees and shipping costs.
“These scam artists cost small businesses and others millions of dollars a year, and those costs get passed on to consumers and organizations’ members. The bottom line is legitimate companies don’t ship unordered merchandise,” said Bernstein. “Companies that receive goods they haven’t ordered should tell the shipper to take them back. No one has to pay to return goods they haven’t ordered. And if they are threatened or harassed, they should call the Better Business Bureau, the National Fraud Information Center at 1-800-876-7060, and their state and local law enforcers.”
The complaints in the FTC cases have been filed in California, Florida, Maryland and New Jersey courts against 14 defendants. The states of New Jersey and Michigan joined with the FTC in alleging violations of the federal telemarketing rule in one of the New Jersey actions which also contains an allegation that the defendants violated a New Jersey statute barring the alleged fraudulent conduct. Complaints, consent agreements and criminal charges have been filed against 13 other operations, involving dozens of defendants, by local, state and federal law enforcers including the U.S. Postal Inspection Service, the Attorneys General of Illinois, Indiana and Iowa; the Commonwealth of Pennsylvania; the Ventura County, California, District Attorney; and the Aurora County, Colorado, police department.
All of the FTC cases charge that the defendants violated the Telemarketing Sales Rule and laws that prohibit deceptive and misleading practices.
The defendants in the FTC cases announced today are:
- Sparta Chem, Inc., and Dennis Saccurato of Elmwood, New Jersey;
- American Business Supplies, Inc., Interstate Office Systems, Inc., Nationwide Office Products, Inc., and Michael Chierico of Miami, Florida;
- Commercial Electrical Supply, Inc., and Michael C. Spence d/b/a Commercial Distributors, Kemtech Industries, Crown Electrical Supply and American Industrial Supplies of Baltimore, Maryland;
- National Business Distributors Company, Inc., Ralph Azari and Deborah L. Azari, of Van Nuys;California
- Michael McGowan, Amna Medical Products Corp., and Industrial Chemical, Inc., d/b/a National Safety & Supply and Med-Anna Products and First Aide Care based in Union City, New Jersey.
The Commission vote to file the complaints was 5-0.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaints and FTC publication, “Avoiding Office Supply Scams” is available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov
(FTC File Nos. 962-3206, 962 3207, 962 3216, 962 3219, 962 3225)
Office of Public Affairs,
Bureau of Consumer Protection,
202-326-3042 or 202-326-2989