Court Halts Counterfeit Check and Prize Scam

At the request of the Federal Trade Commission, a federal court has ordered a permanent halt to a lottery and prize-promotion scam that used counterfeit cashier’s checks and false promises of large cash prizes to bilk consumers out of thousands of dollars each. The court’s order includes a $1 million judgment against the operators of the scam.

According to the FTC’s complaint, the defendants mailed letters congratulating consumers on winning a lottery or sweepstakes, and enclosed a fake check. They told consumers the check was for taxes or fees that had to be paid before the “winnings” were paid out. Consumers were instructed to deposit the check and wire back a portion of the proceeds. Prize winnings supposedly ranged from $250,000 to $750,000.

In the letters, consumers were told to call a phone number for directions on how to claim their winnings. The defendants’ bogus telephone operators instructed consumers to deposit the check in their bank account and send a MoneyGram wire transfer to cover the fees or taxes supposedly associated with their “winnings.” Consumers deposited the checks and wired the money, only to learn that the original checks were counterfeit and they were out any money they wired to pay the “fees.” In some cases, instead of receiving a letter and counterfeit check, consumers were cold-called by telemarketers who persuaded them to send the taxes or fees in order to receive their prize winnings. In both scenarios, consumers received nothing, despite the fact that some consumers sent in payments of as much as $24,000 for “fees.”

In addition to ordering the defendants to turn over ill-gotten gains, which the FTC will return to the consumers harmed if feasible, the U.S. District Court for the Western District of Washington granted the FTC’s request for a permanent injunction barring the defendants from engaging in further deception. In issuing its ruling, the court ruled that the companies, Cash Corner Services, Inc., Family Choice Store, Inc., and their principals, Odowa Roland Okuomose and Evelyn Okuomose, based in British Columbia, Canada, had violated the FTC Act and the Telemarketing Sales Rule, including the Rule’s Do Not Call provisions.

In an earlier decision in November 2007, the court preliminarily halted the counterfeit check scam and froze the defendants’ assets.

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 in 2006, 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 Federal Trade Commission works for consumers 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, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 072-3087)
(Civil Action No. C07-1755-RSM (W.D. Wa)