PHOENIX (CN) - Telemarketers targeted old people in a $7 million "home-based business" scam, Arizona's attorney general claims in court.
Arizona sued nine businesses, six people and a slew of banks and payment processors, in Maricopa County Court.
The attorney general claims that JST Merchant Services, Top Choice Merchants, BBS Merchant Group et al. told their suckers - many of them elderly - that they could earn big bucks from "advertising the respective company's credit and debit card processing and lending services to businesses and earning a commission for each sale made as the result of such advertising."
But "few if any consumers make any money from their investment because the business opportunity is a sham, and nothing more than a device with which the defendants have defrauded consumers, collectively, of millions of dollars," the attorney general says in the 34-page lawsuit.
The defendants' telemarketers charged their victims about $495 apiece for "card processing services," and told them they would get business leads that are "exclusive" and "hot, active, ready-to-buy," and "good leads from top companies," the attorney general says.
The telemarketers claimed, falsely, that their sales leads had a 16 to 18 percent response rate, and a sale closing rate of 4 to 6 percent. They charged $10 to $20 per "lead", "with many consumers paying tens of thousands of dollars for their advertising campaign," according to the complaint.
The state accuses the ring of consumer fraud, telemarketing violations and violations of the Arizona Organized Crime, Fraud and Terrorism Act. Attorney General Tom Horne claims the defendants conspired by "making initial contact with consumers over the telephone to sell the business opportunities by making false representations; obtaining consumers' authorization for payments to purchase the business opportunity and related products and services; creating websites for consumers to advertise JST/Top Choice/BBS's purported credit card processing and lending services; following up with consumers after the initial purchase of their business opportunity to convince them to invest thousands of dollars more to purchase advertising campaigns to promote their business opportunity; obtaining and sending purported exclusive, valuable leads to consumers as part of the consumer's advertising campaign, and; establishing and using various merchant accounts to process consumers' payments to the enterprise and to distribute the proceeds of the fraudulent scheme."
The" sales leads" were little more than random business names and addresses, and did not result in sales commissions, the state says. If a sucker did get a sales commission, it was "to placate the consumer and encourage him or her to continue purchasing advertising campaigns from the defendants," the complaint states.
Since Aug. 3, 2012, JST Merchant Services and Top Choice Merchants received at least $5 million from their suckers, and BBS Merchant Group sucked up $2 million, the attorney general says.
Also named as defendants are: JSTEBizServices; J and S Productions; E-Biz-Services; North Star Billing Services; United Tax and Accounting Consultants; United Online Merchants; Jeffrey A. Hankins; Thomas C. Mikla; Vyacheslav (Steve) Yagudayev; Scott Shocklee; Veronica Cabrales; and Brooke Marcus.
The state seeks disgorgement, treble damages and injunctions.
Most of the defendants appear to have operated out of Phoenix.