Cross Border Con Artist Ordered to Pay $2.9 Million

The operator of a Canadian business directory scam who previously was ordered jailed by a U.S. district judge for violating a court-imposed asset freeze now has been ordered to pay $2.9 million to the Federal Trade Commission in consumer redress. He also faces criminal mail and wire fraud charges in the Southern District of Illinois.

In July 2004, the Federal Trade Commission charged a group of Canadian defendants, including Terrence Croteau, with scamming small businesses and charities in the United States out of millions of dollars by billing them for business directory services they did not order or authorize, in violation of federal law. The FTC charged that the defendants refused consumers’ requests to cancel the services, and used an in-house collections department to harass consumers whose accounts allegedly were past-due.

U.S. District Judge Matthew F. Kennelly granted the FTC’s request for a Temporary Restraining Order and Preliminary Injunction in the case, barring the illegal practices and freezing the defendants’ assets. In November 2004, Judge Kennelly found the defendants in contempt of court and ordered Croteau jailed for violating the court-imposed asset freeze when he transferred five real estate properties in Welland, Ontario, Canada, to another corporation, which then listed them for sale. Croteau remained at large until June 10, 2005, however, when he was arrested by federal marshals at the Newark, New Jersey airport.

Prior to that, on May 19, 2005, Judge Kennelly entered a final judgment in the Commission’s case that permanently bans Croteau and his companies from the business directory business, bars deceptive or misleading claims, bars the defendants from attempting to collect payment for listings in any business directory, bars them from selling or sharing their “customer” lists and orders them to give up $2,931,568 in ill-gotten gains, including $55,083.76 that had previously been deposited into the Court’s Registry.

The United States Attorney for the Southern District of Illinois yesterday indicted Croteau on charges related to the business directory scam. Croteau was charged with conspiracy, twenty counts of wire fraud, four counts of mail fraud, one count of use of a false and fictitious name in furtherance of mail fraud, two counts of mailing or transmitting threatening communications, and one count of making harassing telephone calls. He is being detained on the criminal charges in the Southern District of Illinois.

The corporate defendants in this case are 4049705 Canada Inc., d/b/a Pinacle, 3782484 Canada Inc, d/b/a M.D.S.C. Publishing.

The FTC received significant assistance in this case from the Niagara Regional Police Service, Ontario, Canada, and from the Toronto Strategic Partnership, a cross-border fraud law enforcement partnership which, in addition to the FTC, includes the Ontario Provincial Police, Anti-Rackets Section; the Toronto Police Service Fraud Squad; the Ontario Ministry of Consumer and Business Services; the Competition Bureau of Canada; the York Regional Police Service Fraud Squad; the United States Postal Inspection Service; the Royal Canadian Mounted Police; and the U.K. Office of Fair Trading.

Copies of the complaint and final judgment and order for permanent injunction are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.