Anatomy of a Scam Investigation, Chapter Thirteen

Fun

This series is about my independent investigation of a local mail fraud ring, its methods, the history of its practitioners, and the methods I've used to investigate it. This happened because the fraud ring tried to scam my firm on an already trying day, thus mildly annoying me. Contemplate that, and conduct yourself accordingly hereabouts. You can find the chapter index here.

It's been four months since I wrote about U.S. Telecom aka UST and its principals, including David Bell. Slowly but surely, various states are waking up to their mail fraud scheme. And the feds? No comment.

Yesterday wasn't a good day for the UST team. The Connecticut Department of Consumer Protection announced that UST/U.S. Telecom consented to an order against it prohibiting it from doing any business in Connecticut and requiring it to refund money obtained from victims in Connecticut, including several government entities. (You may remember from earlier chapters that UST started to target government entities, probably to take advantage of lax controls on accounts payable.) The Connecticut media has picked it up. I've obtained a copy of the complaint and consent order here. Note that the attached sample invoice is typical of the past ones we've discussed. UST did not admit wrongdoing, but consented to the order. Connecticut now joins North Dakota and New York in ordering the UST team to cease and desist their scheme.

Even though they were represented by an attorney in the Connecticut proceeding, and even though they've now been ordered to cease and desist in three states, UST has not stopped doing that thing it does. It's just changed the pitch a little bit. Tipsters continue to send me sample solicitations received from UST. Here are two recent examples. As you can see, UST has altered the fake invoice minimally but has kept the general format and the "please remit" and the "net 30 days" language which, as the Connecticut complaint points out, are calculated to deceive. UST now attaches a sheet of badly drafted boilerplate terms and conditions to the solicitations; you can see it in both examples. It doesn't detract from the overall deceptive nature of the solicitation. As I said in the first chapter of this series, solicitations designed to look like bills are prohibited by federal law, which requires multiple specific elements that UST has been ignoring for more than a year now:

(d) Matter otherwise legally acceptable in the mails which—
(1) is in the form of, and reasonably could be interpreted or construed as, a bill, invoice, or statement of account due; but
(2) constitutes, in fact, a solicitation for the order by the addressee of goods or services, or both;
is nonmailable matter, shall not be carried or delivered by mail, and shall be disposed of as the Postal Service directs, unless such matter bears on its face, in conspicuous and legible type in contrast by typography, layout, or color with other printing on its face, in accordance with regulations which the Postal Service shall prescribe—
(A) the following notice: “This is a solicitation for the order of goods or services, or both, and not a bill, invoice, or statement of account due. You are under no obligation to make any payments on account of this offer unless you accept this offer.”; or
(B) in lieu thereof, a notice to the same effect in words which the Postal Service may prescribe.

UST's team knows that's the law, because they've been following this series, and because the Better Business Bureau wrote them and told them. The fact that they've failed to comply for more than a year is overwhelming evidence of fraudulent intent. UST's planned defense is, apparently, "we aren't sending fake bills, we're asking people to buy preventative maintenance warranties." Logical problems with that, and with the solicitation, aside (what kind of solicitation has no information about the company or their services to convince you to buy?), let me say this: I've gotten dozens of tips over the last year about UST, and I've never heard from a single person who received services from them.

Meanwhile, David Bell has a pretrial hearing in his criminal case on September 21, 2012. I'll keep you up to date.

Last 5 posts by Ken White

15 Comments

15 Comments

  1. Brian  •  Sep 19, 2012 @4:33 am

    "conduct yourself accordingly hereabouts"

    Don't you mean, "govern yourselves accordingly?"

    Also, since I'm a (well, a few months anyway) long-time reader and first-time poster, I also want to say that I have found this blog to be thought-provoking, educational, and hilarious. My thanks to those who provide it.

  2. piperTom  •  Sep 19, 2012 @5:32 am

    Not quite on topic, but Ken asked, "what kind of solicitation has no information about the [thing offered] or their [abilities] to convince you …?" That would be most political ads.

    Oh, by the way: Vote for Gary Johnson!

    /works?

  3. Joe Pullen  •  Sep 19, 2012 @5:52 am

    Good work. Glad to see this guy is finally starting to get cornered. I suspect Steven Hamilton from Pacific Telecom and Fred Accuardi from Telephone Management Corp. (the guys responsible for all the annoying "Card Services" illegal telemarketing calls) are about to go down as well.

    http://telemarketerspam.wordpress.com/

  4. tsrblke  •  Sep 19, 2012 @7:13 am

    Heh, I Just bought a house, got a thing in the mail that said "Deed Transfer Notice" on it, and looked a lot like a bill (It said "Due: $88 By 9/13" or some such.)
    At first I assumed that my city (hard up for cash that it is) decided to institute new record keeping fees, luckily I read the whole thing through, and noticed that it's some company that wants to charge $88 to mail me a copy of the deed to my house.
    In the boilerplate mouseprint on the back it even noted: "Deeds can be obtained from your city records often for as litte as $5"
    At first I was really really angry. Middle of a freaken economic turmoil period, housing is just picking up and along comes this california company trying to bilk new homebuyers out of $88. I had intended to mail it to my State AG, but got busy and it sat on the counter, until my wife picked it up and said "Do we need to pay this bill, is it past due?"
    Sadly, I don't have the time Ken has and just had to pitch it all.

  5. Gavin  •  Sep 19, 2012 @7:24 am

    Taking advantage of the ignorant, old, naive, and sometime just plain dumb has never been easier.

  6. Josh M.  •  Sep 19, 2012 @7:34 am

    @tsrblke Next time just scan it and send it to Ken. I'm sure he'll be looking for some new scheme to break once the UST thing wraps up.

    And Ken? Keep up the damn good work. I've been wondering recently what had become of these chuckleheads, and you've satisfied my curiosity. Now to make up some popcorn and watch the shenanigans that will undoubtedly ensue next week after Mr. Bell's next court appearance.

  7. perlhaqr  •  Sep 19, 2012 @8:09 am

    As I said in the first chapter of this series, solicitations designed to look like bills are prohibited by federal law, which requires multiple specific elements that UST has been ignoring for more than a year now:

    Hunh. I'm sure I read that in the first chapter, but didn't click until just now that this probably applies to those domain registrars that send out those: "Your domain is expiring, send us $whatever to renew now!*"

    "*And transfer from your current registrar to us."

    The next time I get one of those, perhaps I will report it to the appropriate authority.

  8. Dan Weber  •  Sep 19, 2012 @8:36 am

    I don't know if this is new or I'm just massively out of the loop, but their website at us-telecom.com has a section for how to handle warranties and "be removed from their mailing list."

    They use vague nouns for whatever it is they send out. "Received a Maintenance Warranty?"

  9. EH  •  Sep 19, 2012 @10:04 am

    perlhaqr: That is likely the Domain Registry of America, who has already been busted and is still in business.

    http://www.the-name-i-wanted-was-already-taken-so-i-used-a-lot-of-dashes.com/the-domain-registry-of-america-scam/

  10. Dan Weber  •  Sep 19, 2012 @10:42 am

    Wow, I would have thought the Domain Registry offer was clearly not a bill. Maybe I've just been primed by the UST stuff to have really low standards.

    But if that is bad enough to warrant a slap from the FTC, there is no way that UST isn't way way way over the line.

  11. perlhaqr  •  Sep 20, 2012 @10:31 am

    Dan: That's one of the new and improved "offers". The old ones were really quite deceptive. IIRC (it's been a long while since I looked at one, since I can tell what they are from just the outside of the envelope now) they didn't even have the name of the company on the front. It just looked, well, like a bill, with your name and address and domain name on it, with a set of ticky boxes to select how long you wanted to renew for, and an address to send the check to.

  12. Andrew K  •  Sep 21, 2012 @4:28 pm

    Wow…

    So I caught up on this series today and I have to say I have been completly floored by it. By the scope of this scam, by how long they have been able to get away with it and by the sheer gall these people seem to posess.

    I know you mentioned in your first article about how it's never the scammer's first rodeo. I do have to ask though, did you believe that it was this extensive when you started looking into it? Or am I that nieve and that this is nothing compared to most other scams?

    Growing up with the internet has made me left me a cynical shell of a real man. Even so this has opened my eyes to just how brazen these scam artists can be. I just can't understand how these people can just push on with their scam. I mean they have to know that the walls are closing in on them by now?

    Anyway, thanks for this.

  13. bandersnatch  •  Sep 21, 2012 @6:08 pm

    When this showed up in my Google Reader feed, I went back and started reading the whole series from the beginning – so impressed by your diligence and what you've accomplished so far here, and I wanted to say thank you for doing it, and for demonstrating how ordinary random people on the internet can also chip away at the problems these scum cause.

    But you've heard all that from lots of people, mostly I wanted to comment to remind you to add Chapter 13 to the index. ;)

  14. Gavin  •  Sep 24, 2012 @6:25 am

    I wonder what you'd recommend we do if we stumble across organizations like this or other scams? I ran across a scam when I was in college. It was one of those scam jobs where they send you a check for you to deposit (because they're on the road so very much selling products and they don't have time to go to the bank) and allow you to keep a percentage while you send them a check/cash of your own. The check then bounces in a few days but you've already forwarded the money to the other guys. I'd heard of these so my ears perked up when I saw it listed in my college's job website (where jobs have to be approved to be added, so other students would have thought it was legitimate).

    I reported it immediately to my college and also applied for the job out of curiosity. Once I got the check I mailed it and all correspondence to the office of the attorney general as I was instructed to do by my school (they subsequently removed the job from our website).

    Are there additional steps, something more we can do to ding these people and help them actually get caught?

  15. Denise Scherer  •  Sep 25, 2012 @2:23 pm

    Ken, as you probably already know, David Bell's next pre-trial has been rescheduled to 11/30/12.
    Also, just to let you know an FBI agent and a USPS Inspector/Investigator showed up at my home – guess what they wanted? – Information on David Bell! They are hot on his heels now!