Court Halts Bogus Check Scam Targeting Lottery Winners; Money Transfers Used to Defraud Consumers

A federal district court has halted a bogus lottery and prize-promotion scam that provides victims with counterfeit cashier’s checks and false promises of large cash prizes, pending trial.

According to the Federal Trade Commission, the defendants mail letters congratulating consumers on winning a lottery or sweepstakes, and enclose a fake check. They tell consumers the check is for taxes or fees that must be paid before the “winnings” are paid out. Consumers are instructed to deposit the check and wire back a portion of the proceeds. Consumers who wire the requested funds receive no winnings. The FTC alleges the fake checks are hard to distinguish from a genuine check, and often is accepted by the bank and credited to the consumer’s account. Later it is determined to be counterfeit, and the consumer is out the paid “fee.” The court order also freezes the defendants’ assets.

In its complaint, the FTC charged two Canadian companies and their principals with sending letters to U.S. consumers telling them that they have won a large cash prize in a lottery or sweepstakes they never entered. The letters contain a check that appears to be drawn on a legitimate U.S. bank in amounts ranging from $2,500 to $3,800. The letters claim that the money can be used to pay taxes or certain fees that must be paid before consumers can claim their “winnings.” Prize amounts supposedly range from $250,000 to $750,000.

Consumers are instructed to call a phone number to receive directions on how to claim their winnings. The bogus operators instruct them to deposit the check in their bank account and send a Money Gram transfer to cover the fees or taxes associated with their “winnings”. The consumers deposit the checks and wire the money, only to learn that the checks were counterfeit and they are out any money they sent to pay the “fees.” In some cases, instead of receiving a counterfeit check, consumers are cold-called by telemarketers who persuade them to send the taxes or fees in order to receive their prize winnings. These consumers also receive nothing in return for their payment despite sending individual payments of up to $24,000.

The FTC charged the defendants with violating the FTC Act and the Telemarketing Sales Rule, including the Rule’s Do Not Call provisions. The agency will seek a permanent halt to the deceptive practices and ask the court to order the defendants to give up their ill-gotten gain.

In related law enforcement actions, the Business Practices and Consumer Protection Authority of British Columbia has filed civil charges against the defendants in Vancouver, British Columbia, seeking to freeze their Canadian-based assets. The U.S. Attorney in Los Angeles has filed a criminal action against defendant Odowa Roland Okuomose, who was arrested in British Columbia on November 6, 2007, on a U.S. warrant based on a criminal complaint filed in federal court in Los Angeles.

The FTC complaint named Cash Corner Services, Inc.; Family Choice Store, Inc.; and their principals, Odowa Roland Okuomose and Evelyn Okuomose, based in British Columbia, Canada.

The case was coordinated under Project Emptor, the British Columbia Telemarketing Task Force, which includes the Business Practices and Consumer Protection Authority of British Columbia, the Royal Canadian Mounted Police, the Canadian Competition Bureau, the FTC’s Northwest Region, the FBI’s Los Angeles office, and the U.S. Postal Inspection Service.

To assist the FTC’s foreign partners, the FTC staff employed the U.S. SAFE WEB Act. Passed by Congress last year, the Act recognizes that practices harmful to consumers, such as telemarketing and mail fraud, are increasingly global in scope, and it strengthens the FTC’s ability to cooperate with foreign counterparts in combating these practices. Specifically in this matter, the Act permitted the FTC staff to share key information obtained in the FTC investigation with Canadian partners for use in the related Canadian law enforcement investigation and proceeding.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Western District of Washington in Seattle.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.