Principals of Bay Area Internet Services Company Charged with Mail Fraud, Conspiracy, and Money Laundering
SAN FRANCISCO - A federal grand jury in San Francisco indicted Roy Lin and John Lin, of San Francisco, on March 27, 2012, with six counts of mail fraud, one count of conspiracy to commit mail fraud, and three counts of engaging in monetary transactions using criminally derived property, United States Attorney MELINDA HAAG announced.
The charges relate to the Lins’ operation of a business in San Francisco known as INC21.com Corporation. INC21 and its related companies were in the business of providing Internet services to consumers, including on-line directory-based information services, web hosting, search engine optimization, and Internet faxing. INC21 and its related companies commonly charged consumers for these services through the use of local exchange carrier (“LEC”) billing. LEC billing enables third-party vendors to charge customers for products and services by placing charges onto the customers’ local telephone bills. In order to obtain approval for LEC billing, the third-party vendors provided information to the phone companies (i.e., the LECs) through various billing aggregation companies.
According to the indictment, Roy Lin, 43, and John Lin, 41, both of San Francisco, are alleged to have made numerous false representations on application forms submitted to billing aggregation companies for the purpose of gaining access to LEC billing after complaints had arisen regarding one or more of the INC21 companies. For example, the Lins are alleged to have misled the billing aggregation companies and the LECs regarding the company-applicant’s relationship to other INC21 companies and to the defendants. The Lins are also alleged to have provided false information about whether any state or federal agencies previously had taken regulatory action against an INC21 company, its affiliates, or its principals. After these misrepresentations were made, several of the defendants’ companies were approved for LEC billing.
In 2010, the Federal Trade Commission filed a complaint for injunctive and other equitable relief against Roy Lin, John Lin, INC21, and several of its related companies. The FTC complaint alleged that the defendants in that case had engaged in cramming of unwanted and unauthorized charges on consumers’ telephone bills. In 2009, the United States also filed a separate civil asset forfeiture action. In September 2010, Judge William H. Alsup granted summary judgment in the FTC case against the defendants in that case, ordered restitution in the amount of $37,970,929.57, and permanently enjoined the defendants from billing customers, either directly or through an intermediary, by placing any charges onto any telephone bill. On March 30, 2012, the Ninth Circuit Court of Appeals affirmed Judge Alsup’s decision.
Both defendants were arrested on April 4, 2012, in San Francisco and made their initial appearances in San Francisco that day. Roy Lin was released on a $50,000 bond. John Lin currently remains in custody pending the resolution of detention hearing. The defendants’ next scheduled appearance is at 10:00 a.m. on April 5, 2012, for identification of counsel and for a detention hearing (as to John Lin) before United States Magistrate Judge Maria-Elena James.
The maximum statutory penalty for each count of mail fraud and for the conspiracy count in violation of 18 U.S.C. §§ 1341 and 1349, respectively, is 20 years’ imprisonment, and a fine of $250,000, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Hallie Mitchell and Kyle Waldinger are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Elizabeth Garcia and Rayneisha Booth. The prosecution is the result of an investigation by the United States Postal Inspection Service and the Criminal Investigation Division of the Internal Revenue Service.
Please note, an indictment contains only allegations against an individual and, as with all defendants, the Lins must be presumed innocent unless and until proven guilty.