FTC Dragnet Catches Seven Alleged Spammers

The Federal Trade Commission said yesterday that a sting operation ensnared seven alleged spammers accused of sending deceptive chain letters to consumers through e-mail. The defendants agreed to settle the charges brought against them.

The FTC said the defendants were sending chain letters that promised recipients who sent $5 in cash to each of the four or five names at the top of the list a return of “46,000 or more in the next 90 days.” Recipients were instructed to place their names at the top of the list and send the message to others. In exchange for their $5, recipients were promised a report that provided instructions on how they could start their own chain letter schemes.

“The chain letter deceptively claims the program is legal and urges recruits who question its legitimacy to contact the FTC's associate director for marketing practices,” said Eileen Harrington, the FTC's associate director for marketing practices. “Well, I am the associate director for marketing practices, and these chain letters are illegal.”

The defendants agreed to stipulated final judgments and orders for permanent injunction that bar them from “promoting, advertising, offering for sale, selling or assisting others in a Ponzi scheme, chain marketing scheme, or other prohibited marketing schemes.”

Stipulated final judgments and orders are for settlement purposes and do not constitute an admission of breaking the law, the FTC said.

The seven defendants named by the FTC include Paul Boivin of Clearwater, FL, doing business as Destiny 1999, Destiny 2000 and Destiny 2001; Chad and Megan Estenson of Warwick, ND, doing business as CMJ Enterprises and Rockin' E Marketing; and Fernando Pacheco of North Providence, RI, doing business as E-Solutions and E-Solutions 101. Also named were Arnold Larsen of Sarasota, FL; John Lutheran of San Diego; and Dario Va of Weston, FL.

The defendants also must return any money they receive in the future from this scheme.

The FTC also said that in September 2000 it sent e-mails to 1,000 spammers notifying them that their chain letters were illegal spam and instructing them to stop promoting their schemes. In October of that year, the FTC searched online newsgroups and its own junk e-mail database for examples of the chain letters and found more than 2,000 participants from more than 60 countries.

The commission plans to send 2,000 more warning e-mails to alleged spammers who still run chain letter schemes.

In addition, the FTC is working with Internet service provider associations to launch a consumer education effort. The associations will publicize and disseminate consumer education materials developed by the FTC to warn consumers about illegal chain mail schemes. The commission has developed two brochures, “What You Need to Know About Chain E-Mails and Letters” and “The Lowdown on Chain Letters.” The brochures can be accessed at the FTC's Web site at www.ftc.gov/chainmail.

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