Cramming
of Unauthorized Service Charges, Membership Fees, Subscriptions
or Payments on Bank Accounts, Credit Cards or Telephone Bills
Fraud
NEW YORK Feb. 11/04 (AP) —A Gambino crime family captain
and nine underlings rang up millions in unauthorized charges
from unsuspecting telephone customers, prosecutors charge.
An indictment unsealed Tuesday accuses the mobsters' company,
USP&C, of luring customers into calling ostensibly free
800 telephone numbers and then tacking on service charges frequently
exceeding $40 to monthly bills. The scheme is known as telephone "cramming."
The scheme generated as much as $600,000 a day between 1997
and 2001, and about $100 million in profits, according to prosecutors.
Proceeds allegedly were laundered through a series of shell
companies.
Four of the defendants had already been charged with a $230
million Internet fraud scheme believed to be the largest ever
prosecuted.
In the Internet scheme, defendants are accused of launching
pornographic Web sites offering free tours for anyone who presented
credit card information as proof of age, promising: "Your
card will not be billed."
Consumers around the world were charged recurring monthly
rates of $90 until they realized they had been cheated, prosecutors
said.
Update 02/05
(AP) Six reputed members of the Gambino crime family pleaded
guilty to ringing up more than $650 million in unauthorized
charges on telephone customers' credit cards and phone bills.
Prosecutors say Gambino captain Salvatore Locascio, made member Richard
Martino and four mob associates pleaded guilty to charges including money
laundering and conspiracy to commit mail fraud.
They face sentences ranging from less than two years to 10 years in prison
and they have agreed to forfeit millions of dollars in proceeds from
the scheme.
"The perpetrators of one of the largest consumer frauds in history will serve
significant time in prison," U.S. Attorney Roslynn Mauskopf said in a statement.
Prosecutors said the men set up shell corporations advertising free services
such as psychic readings, phone sex and horoscopes. Calling the numbers,
however, triggered unauthorized monthly charges on customers' phone bills,
eventually grossing more than $420 million for the Gambino members and
their associates.
Prosecutors said Martino was also charged in a scheme that placed unauthorized
charges on the credit cards of customers seeking free tours of porn Web
sites. Prosecutors said $230 million in fake charges was charged to consumers
who believed the sites needed their card numbers to verify their ages.
The head of a Kansas City-area phone company pleaded guilty last month
to conspiracy to commit mail and wire fraud for his role in the scheme.
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