Missouri Attorney General issued the following announcement on March 7.
The operators of a sweepstakes scam that appeared to target senior citizens have agreed to forfeit a record $30 million in cash and assets and will be permanently banned from the prize promotion business under a settlement secured by the Federal Trade Commission and the State of Missouri.
“Protecting our most vulnerable citizens, including the elderly, is something that I dedicate myself to every single day,” said AG Schmitt. “With this record settlement, we sent a clear message to those who seek to perpetrate fraud within the State of Missouri: your actions will not go unpunished. I’m grateful for the opportunity to work with the Federal Trade Commission’s talented team to secure this settlement.”
“These defendants tricked millions of people—many of them older adults—into paying money to collect prizes that never materialized,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “With our valued partners in the Missouri AG’s office, we are working hard to protect older Americans against scams like these.”
The settlement with the FTC and the State of Missouri requires the defendants to turn over more than $21 million in cash, as well as two luxury vacation homes, a yacht, a Bentley automobile, and other personal property. This settlement is the largest forfeiture the FTC has ever obtained in a case against a sweepstakes scam, and sets the record for the State of Missouri in that regard as well.
The settlement stems from a case the FTC and the State of Missouri brought in February 2018. The complaint alleged that Kevin Brandes, William Graham, and corporations under their control sent tens of millions of deceptive personalized mailers to consumers around the world since 2013. The defendants’ mailers falsely told recipients they had won or were likely to win a substantial cash prize, as much as $2 million, in exchange for a fee ranging from $9.00 to $139.99. In September 2018, the FTC and the State of Missouri filed an amended complaint that named Charles Floyd Anderson and his corporate alter ego as additional defendants.
Some of the defendants’ mailers included notices, such as “Congratulations, You Have Just Won $1,230,946.00.” Other mailers invited recipients to play “games of skill” without clearly and conspicuously disclosing the total fees that the recipient would have to pay to play, or that the final round of the game involved a complex mathematical puzzle that few people, if any, could solve. Many consumers, including seniors, paid the defendants several times before realizing they had been scammed.
Under the agreement, a court-appointed receiver will wind down and dissolve the companies named in the complaint. The receiver will also liquidate the property forfeited by the defendants; the proceeds will be used, along with the defendants’ $21 million cash payment, to provide redress to victims. In addition, the agreement permanently bans the defendants from prize promotions, except those in which consumers sign up in-person.
The settlement imposes a monetary judgment of more than $114.7 million, which will be suspended after the defendants turn over the $30 million in assets and cash. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
Original source can be found here.