An e-mail spammer who promised people cash for stuffing envelopes in a bogus work-at-home scheme has agreed to pay more than US$200,000 to victims and may be sentenced to close to five years in prison for wire fraud, the U.S. Federal Trade Commission (FTC) announced Wednesday.
Nelson Barrero, one of the owners of Stuffingforcash.com Corp., American Publishing Inc., Sound Publications Inc., and Mailmax Inc., plead guilty in May to one count of wire fraud and one count of mail fraud in U.S. District Court in East St. Louis, Illinois, after an investigation by the U.S. Postal Inspection Service. Under sentencing guidelines, Barrero, of Weston, Florida, could go to prison for 46 to 57 months. Sentencing is scheduled for Sept. 5 in U.S. District Court in East St. Louis.
Barrero's lawyer in the FTC case, Charles Jaffee, said he had no comment on a settlement announced Wednesday. His lawyer in the criminal case, Frank Rubino, wasn't immediately available for comment.
Barrero and company employees Eduardo Gonzales and Ileana M. Morales have agreed to stop promoting work-at-home businesses and pay about US$221,600 back to victims, in the settlement with the FTC. The defendants are also barred in the settlement from disclosing information from their customer lists. The settlement does not include an admission of illegal activity.
Gonzales and Morales did not face criminal charges, said Bruce Reppert, the assistant U.S. attorney who prosecuted Barrero.
The FTC alleges that thousands of victims, most contacted through unsolicited e-mail, paid about US$40 each after signing up for envelope-stuffing work-at-home businesses at Stuffingforcash.com, Cashforstuffing.com or Mailmax Inc. The Web sites claimed those who signed up could earn US$2 for every envelope they stuffed, but those who received anything back from the defendants got materials urging them to solicit self-addressed envelopes from third parties and forward them to the defendants.
In July 2002, a U.S. district court judge shut down the Stuffingforcash.com Web sites, at the request of the FTC.
People who signed up with the Web sites, but did not receive the promised supplies or promised income, can file to receive their money back by going to the online complaint form at www.ftc.gov and typing "stuffing" in the subject line. Victims will be required to provide checks, credit card receipts, or other proof that they were victims of the scam.
Barrero allegedly made about US$2 million by persuading about 50,000 people that they could make up to US$2,000 a week by stuffing envelopes, Reppert said. "This was not a mega-corporation," he added. "They made a lot of money, but this was a mom-and-pop operation."
Since the judge shut down the business' mail drop box in Chicago, Illinois, the FTC has identified close to 1,000 victims and expects thousands more victims come forward, said Steven Wernikoff, a staff attorney in the FTC's Chicago office. The FTC investigation was prompted by hundreds of complaints from victims, he said.
The owners of the envelop-stuffing enterprise had started by advertising it through direct mail, but it moved to e-mail about a year before the FTC had the sites shut down, Wernikoff said. "This was a scheme that maybe started out small, and through efficient use of the Internet and e-mail, it got big," he added.
Wernikoff said he's unsure how many victims the FTC will eventually find. "We hope that people will complain to us," he said. "A lot of the time, people, when they lose US$20 or US$30, they just chalk it up to a loss and don't complain. That's unfortunate, because it's only when people complain to us that we can do something about it."