Three Long Island Residents Arrested In Elder Fraud Scheme
Defendants Sent Fraudulent Prize Promotion Mailings to Thousands of Consumers in the United States
A 12-count indictment was unsealed today in federal court in Central Islip charging Tully Lovisa, Shaun Sullivan and Lorraine Chalavoutis with mail fraud and money laundering for their participation in a fraudulent mass-mailing scheme that tricked hundreds of thousands of consumers, many of them elderly, into paying at least $30 million in fees for falsely promised cash prizes. The defendants were arrested today and are scheduled to be arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson.
Attorney General Jeff Sessions, Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Peter R. Rendina, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the indictment.
“Earlier this year, when we announced the largest elder fraud sweep in history, we sent a clear message: we will hold perpetrators of elder fraud schemes accountable wherever they are,” said Attorney General Jeff Sessions. “When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the Department’s disposal – criminal prosecutions to punish offenders, civil injunctions to shut the schemes down, and asset forfeiture to take back ill-gotten gains. Today’s indictment shows we are following through on this promise, and fraudsters everywhere should take note of it.”
“As alleged in the indictment, the defendants perpetrated a cruel hoax on their victims, many of them elderly and vulnerable, by sending promotional mailings that falsely claimed they would receive tens of thousands of dollars in prize money if they paid a fee,” stated United States Attorney Donoghue. “In so doing, Lovisa violated prior court orders directing him to stop engaging in mass mailing operations and his co-conspirators were well aware of prior enforcement action to stop this conduct. Protecting the elderly from brazen predators like the defendants is a priority of this Office and the Department of Justice.”
“These defendants showed a willingness to stop at nothing to bilk unwitting victims of their hard earned cash; many who were deliberately targeted because of their vulnerability,” stated USPIS Inspector-in-Charge Rendina. “Postal Inspectors remind you, if you have to pay to play, it’s a scam.”
According to the indictment, the defendants’ prize-promotion mailings claimed that recipients could receive a large cash prize in exchange for paying a modest fee and, in fact, none of them did. The scheme began after the Federal Trade Commission (“FTC”) sued Lovisa in 2010 for sending deceptive prize-promotion mailings. In response to that suit, a federal court in the Northern District of California enjoined Lovisa in December 2010 and April 2012 from any involvement with prize-promotion mailings. Despite these orders, Lovisa conspired with Sullivan and Chalavoutis to set up numerous prize-promotion companies using straw owners and aliases to continue defrauding consumers. Chalavoutis, who provided operational services, including opening companies and bank accounts in the name of straw owners, helped conceal the involvement of Lovisa and Sullivan in controlling the operation.
The indictment also charges Lovisa with perjury for submitting a false compliance report to the FTC in which he claimed not to be involved in prize-promotion mailings. The additional wire fraud and money laundering charges involve Lovisa’s further deception of the FTC related to the court-ordered sale of a house he owned in Las Vegas. According to the indictment, Lovisa arranged a sham sale of the house for $155,500 in September 2012 that allowed him to maintain control of it and only give the FTC proceeds of that sale. Lovisa sold the house in April 2015 for $540,000.
If convicted, the defendants face up to 20 years’ imprisonment for mail fraud, wire fraud and conspiracy. Each charge also carries a statutory maximum fine of $250,000 or twice the gross gain or gross loss from the offense.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant United States Attorney Charles P. Kelly of the Office’s Long Island Criminal Division, with Trial Attorneys Daniel Zytnick and Timothy Finley of the Justice Department’s Consumer Protection Branch.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.
Greenlawn, New York
Huntington Station, New York
Merrick, New York