Scheme Used Remotely Created Checks to Debit Money from Seniors’ Bank Accounts
Two defendants who participated in an alleged multi-million dollar telemarketing fraud that targeted U.S. seniors and withdrew money from their accounts without authorization have agreed to settle Federal Trade Commission charges. The settlement orders bar them from using remotely created checks drawn on consumers’ bank accounts, require them to obtain consumers’ consent before debiting their accounts, and prohibit them from misrepresenting any goods or services.
The individuals Marc Ferry and Robert Barczai, also will turn over the proceeds of the scheme from their personal and corporate accounts. The FTC has filed for default judgments against the corporate defendants, and summary judgment against the leading individual defendant in the scheme, which took in nearly $11 million between 2010 and March 2014.
“Scammers thought they could cover their tracks by operating across borders, but law enforcement caught up with them,” said Jessica Rich, Director of the Bureau of Consumer Protection. “We’ve shut down their scheme of lying to older people and stealing their money.”
According to the FTC’s March 2014 complaint, defendant Ari Tietolman and his associates established a network of U.S. and Canadian entities to carry out their scam. The defendants used a telemarketing boiler room in Canada, where Tietolman lives, to cold-call seniors claiming to sell fraud protection, legal protection, and pharmaceutical benefit services for $187 to $397.
In some instances, the telemarketers convinced consumers they were affiliated with banks or government entities, leading consumers to disclose their bank account information. The defendants then used that information to create checks drawn on the consumers’ bank accounts. They deposited these “remotely created checks” into corporate accounts set up by defendants Ferry and Barczai in the United States. The U.S.-based defendants then transferred the money to accounts in Canada, the FTC alleged.
The FTC charged the corporate and individual defendants with violating the FTC Act and the agency’s Telemarketing Sales Rule. A U.S. district court temporarily shut down the operation in late March 2014, pending the resolution of the FTC’s action.
Two defendants in the case, Ferry and Barczai, have now agreed to stipulated orders settling the FTC’s charges against them. The order against Ferry bans him from using remotely creating checks and payment orders, requires him to get consumers’ authorization before charging their financial accounts, and prohibits him from making misrepresentations regarding any goods or services. It imposes a judgment of $325,449 against him, which will be partially suspended after he pays the FTC $68,412.
The order against Barczai contains the same conduct provisions as the order against Ferry, and imposes a judgment of $9,655,638, which will be partially suspended after he pays the FTC $21,367.
The Commission vote approving the two proposed stipulated final orders was 5-0. They were filed in the U.S. District Court for the Eastern District of Pennsylvania.
The FTC subsequently filed a memorandum seeking default judgments against the following corporate defendants on January 13: First Consumers LLC; PowerPlay Industries LLC; Standard American Marketing, Inc.; 1166519075 Quebec Inc., doing business as (d/b/a) Landshark Holdings Inc; and 1164047236 Quebec, Inc. d/b/a Madicom, Inc.
Finally, on January 13, the FTC filed a memorandum seeking summary judgment against Tietolman, who ran the operation and collected money funneled into Canada. The FTC alleges that Tietolman controlled the deceptive scheme, and therefore is seeking to permanently bar him from the conduct alleged in the complaint and hold him liable for the $10.7 million in harm he caused defrauded consumers.
The FTC received valuable help throughout this case from the U.S. Postal Inspection Service and the Royal Canadian Mounted Police.
NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
Mitchell J. Katz
Office of Public Affairs
Bureau of Consumer Protection