FTC Cracks Down on Envelope-Stuffing Scams
Involved in the sweep were two federal civil complaints by the FTC, five criminal cases and 22 civil complaints by the U.S. Postal Inspection Service, plus two state complaints by the Illinois attorney general's office. Using direct mail and direct response ads, the accused individuals and companies promised consumers that they could earn hundreds or thousands of dollars weekly mailing brochures from home.
The sweep, dubbed "Operation Pushing the Envelope," involves cases dating to the start of 2003.
The FTC's complaints targeted Financial Resources Unlimited Inc. and Castle Publishing Inc. The two companies, charged separately, claimed consumers could earn $10 per envelope, or $500 to $5,000 weekly, but had to pay sign-up fees of $55 to $150, the FTC said.
Financial Resources used classified ads for promotion, and Castle Publishing used mailers, the FTC said. Few consumers who participated received paychecks, and those who tried to contact the companies found them impossible to reach, according to the FTC.
In the Illinois cases, the state attorney general charged KNB Marketing of Wood Dale, IL, and River Road Production of Galveston, TX, but which used an Illinois private mailbox, of violating state consumer protection laws.
KNB Marketing advertised in New York, Michigan and Minnesota through newspaper ads and in the Chicago area through a weekly employment publication, the attorney general said. KNB offered consumers the chance to earn $4 per envelope in exchange for a fee and further operated a pyramid scheme by promising more money if the consumers placed their own ads to bring more people into the operation, according to the attorney general.
River Road Production advertised payments of $2 per envelope and charged a $49.95 fee, the attorney general said.
The five criminal cases announced by the Postal Inspection Service are:
· Nelson Barrero Jr., sentenced Nov. 14 in U.S. District Court in Southern Illinois to 46 months in prison and ordered to pay back $1.6 million to consumers for operating a multi-state envelope-stuffing scheme.
· Darrell E. Richmond, sentenced in U.S. District Court in Columbia, SC, to 27 months in prison for his role in an envelope-stuffing pyramid scheme that defrauded 23,000 consumers.
· Clifford Kidd, arrested March 14 on charges of violating a previous agreement he signed to cease selling work-at-home envelope-stuffing programs.
· Elizabeth McGuire, sentenced April 28 in U.S. District Court in Phoenix to four months in prison for her role in an envelope-stuffing scheme that defrauded consumers of at least $1 million.
· Robert Hancock, arrested Dec. 13 in San Antonio, was charged with operating an envelope-stuffing scheme over the past year and a half that defrauded consumers of $2.5 million via several business entities.