Canadian Man Sentenced For Consumer Fraud
“Advance Fee” Scheme Stole From Thousands of U.S. Consumers
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that Paul Price, 57, of Toronto, Canada, was sentenced on January 16, 2014, in U.S. District Court in East St. Louis, Illinois, to ten years in federal prison for his role in an advanced fee credit card scam that defrauded tens of thousands of U.S. consumers of over $10 million. Mr. Price's ex-wife, Elissa Wells, 50, of Toronto, Canada, who was also involved in the scheme, received a 55 month sentence on October 21, 2013 for her role in the offense. The Prices were originally indicted on May 22, 2008, after the successful conclusion of litigation in Canadian Courts to obtain evidence seized in a search of their business done at the request of the U.S. Attorney for the Southern District of Illinois. The Prices were recently extradited to the United States from Canada after the conclusion of legal proceedings there.
Companies operated by the Prices made “cold” calls to U.S. residents with credit problems representing that their companies could provide Visa or MasterCards to consumers for an advanced fee of several hundred dollars. However, neither defendants nor any of the companies they operated had any business relationship with Visa or MasterCard and were not in any way authorized by either to issue or market credit cards. Consumers received nothing of value for the several hundred dollars that the scan companies took from their bank accounts through electronic debits. The scheme operated from August 1999 until November 2004 when their offices were raided by members of various Canadian law enforcement agencies.
The scam operated by the Prices was one of five major advanced fee credit card schemes prosecuted by the U.S. Attorney's Office for the Southern District of Illinois between 2003 and 2008. The five scams prosecuted by this office represented over 600,000 victims with total losses exceeding $120 million dollars. None of the 600,000 victims received a credit card as a result of the fees they paid these scam companies.
According to a study done at the behest of the Federal Trade Commission in 2004, during the operation of these scams, approximately 4 1/2 million U.S. consumers, about 2.1 percent of the U.S. adult population, had been the victim of an advanced fee credit card or advanced fee loan scam. Based upon complaints received by the Federal Trade Commission, Toronto was the number one source city. Evidence introduced at the trial of one Canadian telemarketer in U.S. District Court in East St. Louis established that a single related scam company in Toronto operated five boiler rooms with 250 telemarketers on the phone simultaneously collecting tens of millions of dollars of advanced fees from U.S. consumers seeking a credit card, yet failing to provide even a single consumer with a single credit card.
Of the five scams that were prosecuted, three were Toronto based, one was based in Utah but utilized boiler rooms in Canada, the Caribbean and India, and the fifth was based in Florida.
Eleven individuals were indicted for mail and wire fraud. Nine pleaded guilty and received federal prison sentences ranging from 4 1/2 years to twenty years. Two went to trial and after being convicted by a jury received sentences of 23 and 29 years respectively. Three defendants were extradited from Canada after a lengthy legal process, two were caught as they entered the U.S. from Canada, four waived extradition from Canada and two were U.S. Citizens arrested in the United States. As a result, the advanced fee credit card scheme appears to have been completely eradicated.
"I could not be happier that this sad and sordid chapter in the annals of consumer fraud has been brought to such a decisive conclusion." said United States Attorney Wigginton. "The lessons these prosecutions should teach is that those who think they can hide behind international borders and scam U.S. residents will ultimately feel the long arm of American justice." Wigginton had high praise for the work of the Federal Trade Commission and the U.S. Postal Inspection Service. "These agencies are the vanguard of consumer protection in the United States. The FTC is an aggressive consumer protection agency that does an outstanding job of identifying and targeting threats to the American consumer. U.S. Postal Inspectors are the nation's preeminent fraud investigators." Wigginton noted.
“Consumers should never pay money in advance to get a credit card or loan,” said C. Steven Baker, Director of the Federal Trade Commission’s Midwest Region. “This scam ripped off over 40,000 people, who lost millions of dollars. The great work done by the Southern District of Illinois shows how enforcers in the United States and Canada can work together through the Toronto Strategic Partnership in fighting cross-border fraud."
This case arose out of the Toronto Strategic Partnership. The Partnership includes the FTC, the U.S. Postal Inspection Service, Competition Bureau Canada, the Toronto Police Service Fraud Squad – Mass Marketing Section, the Ontario Provincial Police Anti-Rackets Section, the Ontario Ministry of Consumer Services, and the Royal Canadian Mounted Police.