Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC action leads to halt of mass telemarketing scam, (Mar 31, 2014)

By Linda O’Brien, J.D., LL.M.

An action brought by the FTC has led to the halt of a multi-million dollar telemarketing fraud that targeted U.S. seniors across the nation, scamming tens of thousands of consumers, the Commission announced today.

On March 18, a federal district court issued a temporary restraining order to close down the scam. After a hearing on March 27, three defendants, Robert Borczai, Charles Borie, and Marc Ferry, agreed to preliminary injunctions. The court imposed a preliminary injunction against the remaining defendants, Ari Tietolman and his companies. In stopping the scheme, pending trial, the court found that the FTC was likely to prevail and that funds should be preserved so they can potentially be returned to the victims of the telemarketing fraud scheme.

In March 2014, the FTC filed a complaint (FTC v. First Consumers, LLC, File no. 132-3291) in the U.S. District Court for the Eastern District of Pennsylvania, alleging that the defendants conduct violated the FTC Act and Telemarketing Sales Rule. The FTC claimed that the telemarketing scheme drew in over $20 million between May 2011 and December 2013.

Tietolman, the alleged leader of the telemarketing scheme, and his associates established a network of U.S. and Canadian entities to carry out their scam, according to the FTC complaint. The defendants used a telemarketing location in Canada, where Tietolman lives, to cold-call seniors claiming to sell fraud protection, legal protection, and pharmaceutical benefit services. The cost for the defendants’ alleged services ranged from $187 and $397.

In some instances, the telemarketers who carried out the fraud impersonated government and bank officials, and enticed consumers to disclose their confidential bank account information to facilitate the fraud. The defendants used that account information to create checks drawn on the consumers’ bank accounts. They then deposited these “remotely created checks” into corporate accounts they established in the United States. The U.S.-based defendants then transferred the money to accounts controlled by the Canadian defendants, according to an analysis of bank records.

The defendants’ businesses include First Consumers, LLC, Standard American Marketing, Inc., and PowerPlay Industries LLC. First Consumers, LLC is a Pennsylvania company formed in 2010.

“The defendants’ conduct in this case was simply outrageous. They targeted and called senior citizens and lied to them to get their bank account information. Then they used this information to withdraw money from their bank accounts,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers can count on the FTC to be aggressive in the fight against this type of fraud”

The Commission vote approving the complaint was 4-0.

Companies: First Consumers, LLC; Standard American Marketing Inc.; PowerPlay Industries, LLC

News: ConsumerProtection FederalTradeCommissionNews