- Five Convicted in Telemarketing Scams
- May 19, 2006
- Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
Two separate cases of telemarketing fraud involving credit cards ended on April 28, 2006, with the conviction of four men in Iowa, and a guilty plea by another in Kentucky.
An Iowa jury convicted the four managers of a telemarketing firm, Gecko Communications, of conspiring to commit telemarketing wire fraud by scamming more than $10 million from almost 50,000 individuals with credit problems. According to the District Attorney, the scam promised a pre-approved credit card for a $220 fee. Some telemarketing scripts used by Gecko said customers would be "eligible" for a card, while others said they would get the card if they paid the fee. In fact, all that victims received was a credit card application.
All four defendants could face prison time. Defendant Zachery Whitehill was also found subject to forfeiture of more than $10 million. Gecko founder Christopher Ekeland pleaded guilty to telemarketing fraud in 2004.
In a separate case in Kentucky, Matthew Hunt pleaded guilty to four felony telemarketing counts in connection with a scam in which victims' bank account numbers were obtained with fraudulent promises of pre-approved credit cards or government grants in exchange for a fee of $199 to $299. Telemarketing firms in Canada and India were involved in obtaining the bank account numbers. In some cases, victims' bank accounts were debited without their authorization or under false pretenses. Authorities charged that from November 2003 to August 2005, about $3 million from those victims was processed through a bank account Hunt set up in Kentucky and then sent on to the telemarketers. Hunt was arrested and indicted last December. Each charge carries a possible jail sentence of up to five years, with a maximum sentence of 20 years.
Significance: In addition to civil enforcement efforts by the FTC and state attorneys general, in certain instances in which a scam is particularly egregious or happens to catch the attention of federal or state prosecutors, telemarketing scammers can also face criminal charges, as these cases demonstrate.