Anatomy of a Scam Investigation, Chapter Thirteen
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.
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