Chief Operating Officer And Vice President Of International Cargo Airline Plead Guilty To Defrauding Their Employer
Audrey Strauss, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Superseding Indictment charging JENNIFER SHAH and STUART SMITH with conspiracy to commit wire fraud in connection with telemarketing and conspiracy to commit money laundering. The case has been assigned to United States District Judge Sidney H. Stein.
SHAH and SMITH were arrested earlier today and will be presented this afternoon in Salt Lake City federal court before United States Magistrate Judge Dustin Pead.
Manhattan U.S. Attorney Audrey Strauss said: “Jennifer Shah, who portrays herself as a wealthy and successful businessperson on ‘reality’ television, and Stuart Smith, who is portrayed as Shah’s ‘first assistant,’ allegedly generated and sold ‘lead lists’ of innocent individuals for other members of their scheme to repeatedly scam. In actual reality and as alleged, the so-called business opportunities pushed on the victims by Shah, Smith, and their co-conspirators were just fraudulent schemes, motivated by greed, to steal victims’ money. Now, these defendants face time in prison for their alleged crimes.”
HSI Special Agent-in-Charge Peter C. Fitzhugh said: “Shah and Smith flaunted their lavish lifestyle to the public as a symbol of their ‘success.’ In reality, they allegedly built their opulent lifestyle at the expense of vulnerable, often elderly, working-class people. As alleged, disturbingly, Shah and Smith objectified their very real human victims as ‘leads’ to be bought and sold, offering their personal information for sale to other members of their fraud ring. Working with our partners at the NYPD and the United States Attorney’s Office, SDNY, and with the assistance of HSI Salt Lake City, HSI New York worked to ensure that Shah and Smith will answer for their alleged crimes. As a result, their new reality may very well turn out differently than they expected.”
NYPD Commissioner Dermot Shea said: “These individuals allegedly targeted and defrauded hundreds of victims but thanks to the hard work of the NYPD and our law enforcement partners, this illegal scheme was brought to an end. I congratulate the NYPD detectives, Homeland Security Investigations, and the U.S. Attorney for the Southern District of New York for their hard work in bringing these persons to justice.”
According to the allegations in the Superseding Indictment:
From 2012 until March 2021, JENNIFER SHAH and STUART SMITH, together with others (collectively, the “Participants”) carried out a wide-ranging telemarketing scheme that defrauded hundreds of victims (the “Victims”) throughout the United States, many of whom were over age 55, by selling those Victims so-called “business services” in connection with the Victims’ purported online businesses (the “Business Opportunity Scheme”).
In order to perpetrate the Business Opportunity Scheme, Participants, including SHAH and SMITH, engaged in a widespread, coordinated effort to traffic in lists of potential victims, or “leads,” many of whom had previously made an initial investment to create an online business with other Participants in the Scheme. Leads were initially generated by sales floors operating in, among other places, Arizona, Nevada, and Utah. The owners and operators of those sales floors operated in coordination with several telemarketing sales floors in the New York and New Jersey area, including in Manhattan, and provided lead lists and assistance in fighting Victim refund requests to other Participants operating those floors.
SHAH and SMITH, among other things, generated and sold leads to other Participants for use by their telemarketing sales floors with the knowledge that the individuals they had identified as “leads” would be defrauded by the other Participants. SHAH and SMITH received as profit a share of the fraudulent revenue per the terms of their agreement with those Participants. SHAH and SMITH often controlled each aspect of the frauds perpetrated by other Participants on the individuals they had identified by, among other things, determining which “coaching” sales floor could buy leads from them, selecting the downstream sales floors to which the “coaching” sales floor was permitted to pass the leads, choosing the firms to provide “fulfillment” services, that is, documents and records purporting to demonstrate that the services the Participants claimed to provide to those Victims were actual and legitimate, setting how much the downstream sales floors could charge, and determining which “products” each of the downstream sales floors could sell.
To perpetrate the Business Opportunity Scheme, certain of the Participants sold alleged services purporting to make the management of Victims’ businesses more efficient or profitable, including tax preparation or website design services, notwithstanding that many Victims were elderly and did not own a computer. At the outset of the Business Opportunity Scheme, certain Participants employed by a purported fulfillment company sent a given Victim electronic or paper pamphlets or provided so-called “coaching sessions” regarding these purported online businesses, but at no point did the defendants intend that the Victims would actually earn any of the promised return on their intended investment, nor did the Victims actually earn any such returns.
SHAH and SMITH undertook significant efforts to conceal their roles in the Business Opportunity Scheme. For example, SHAH and SMITH, among other things, incorporated their business entities using third parties’ names and instructed other Participants to do the same, used and directed others to use encrypted messaging applications to communicate with other Participants, instructed other Participants to send SHAH’s and SMITH’s shares of certain fraud proceeds to offshore bank accounts, and made numerous cash withdrawals structured to avoid currency transaction reporting requirements.
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SHAH, 47, of Park City, Utah, and SMITH, 43, of Lehi, Utah, are each charged with one count of conspiracy to commit wire fraud in connection with telemarketing through which they victimized 10 or more persons over the age of 55, which carries a maximum sentence of 30 years, and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss praised the outstanding investigative work of HSI’s El Dorado Task Force and the NYPD. Ms. Strauss also thanked HSI Utah and the United States Attorney’s Office for the District of Utah for their support and assistance in this investigation.
This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Kiersten A. Fletcher, Benet J. Kearney, and Robert B. Sobelman are in charge of the prosecution.
If you believe you have been a victim of the scheme described above, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at 866-874-8900 or email@example.com. You may also report it to Detective Christopher Bastos at 917-480-7167 or firstname.lastname@example.org.
The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Superseding Indictment, and the description of the Superseding Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
James Margolin, Nicholas Biase