KARE 11 Investigates: Inside one of Minnesota’s biggest phone scams
According to federal charges, a turnstile robocall telemarketing program in Minnesota cost 150,000 people – including vulnerable seniors – about $ 300 million nationwide.
MINNEAPOLIS – Across the country, people received calls from call centers in places like Fridley, St. Louis Park, and South St. Paul. On the other end of the line, a caller pretended to offer an opportunity to save money.
But federal charges outlining the alleged system state that the real aim was to get people to pay for magazines they didn’t want or need.
And it worked, federal officials say, valued at $ 300 million.
“The magazine fraud was an outright fraud,” said US assistant attorney Joe Thompson. “You lied directly to people.”
According to the public prosecutor’s office, 33 of the 60 people accused so far have already pleaded guilty and are waiting to be convicted.
“You made it seem a lot”
Laura Greene of rural Washington has stacks of unopened magazines in her home, courtesy of Viking Magazine in Burnsville.
The owner, David Moulder, sits near the top of a pyramid that has been charged with phone fraud in a nationwide case.
On the phone, Laura says she agreed to buy magazines for $ 24 a month. But the price kept going up without their approval. Soon, she says, was billed $ 64 several times a month.
When she tried to complain, the person on the other end of the line spoke in circles, she said.
“I was very confused,” said Laura.
“Did you feel like they were chasing a bit of the confusion?” KARE 11 asked. “Yes,” she said.
“I said I just want this to end. I can’t afford that, ”she recalls. “And then they said I could withdraw $ 1,000 and then they would finish it for me.”
According to federal investigators, this was a ploy that was part of a program that involved more than two dozen magazine companies, many of which were headquartered in Minnesota.
Search warrants reveal how investigators uncovered what is known as a massive conspiracy after the Minnesota attorney general blew up Wayne Dahl in 2017.
Records show that Dahl ran your Chaska-based Your Magazine Service – or YMS.
The FBI sent a questionnaire to its victims. It turned out that the victims of YMS were also charged by other magazine companies.
“I had never seen anything like it before,” said AUSA Thompson, the case’s lead prosecutor.
The answers baffled even seasoned prosecutors.
A letter from the son of a victim reads: “Wake up … There is an entire industry chasing after people like my mother.”
Up to $ 1500 per month for magazines
According to the investigators, companies have worked together to buy and sell “lead lists” with the names of the magazine subscribers. The more susceptible the customer, the more valuable the lead.
Then companies would use automated dialers to call in and impersonate their current magazine company and ask if subscribers wanted to cut their payment.
Often customers said yes.
But prosecutors say they really have been signed up for new subscriptions and new fees.
“We have also seen many victims – mostly elderly and otherwise vulnerable – being indicted by 10, 12, or even 15 magazine companies at the same time,” Thompson said.
Credit card statements show victims were billed up to $ 1,500 a month for magazines.
An older man told investigators, “I always thought if I paid it would end. … never did. “
“They essentially ambushed her,” Thompson said.
According to court records, the telemarketers scared those who didn’t pay. A search warrant states that “fraudulent magazine companies” have even “threatened legal action if older people have not paid”.
“Some of these victims, who were hit over and over, received calls every day, several calls a day – essentially harassing them,” Thompson said.
Overall, prosecutors estimate that around 150,000 victims across the country were defrauded of $ 300 million.
At least 14 Minnesotans were charged in the case. They range from suspected directors of the program like Moulder to those who work in the call centers.
Companies allegedly “involved in fraudulent magazine sales” include Brian Williams, Jared Michelizzi, Stacey Persons and Eric Esherick.
Williams, Michelizzi and individuals have all pleaded guilty. Esherick has pleaded not guilty, as has David Moulder.
Monica Sharma-Hanssen and Timothy Hansen owned and operated the Midwest Publishers Home Office outside of St. Louis Park.
KARE 11 spoke to Tim Hanssen in front of his house in Excelsior. He called the charges against him and his wife “absurd” and denied cheating on seniors.
He claims they were set up and fell victim to a fraud committed by Dahl. “We basically got into it,” he said.
According to a warrant in the case, federal investigators put the name of an undercover agent on lead lists and telemarketers from Hanssen’s company, who called the agent with a fraudulent script – falsely claiming to be their current magazine company.
When Hanssen was confronted by KARE11 with the fact that the warrant claims they were caught in the act, he said, “No … We are just two people who have been doing legitimate, honest and impending business for nearly 30 years.”
The Hanssens pleaded not guilty and are waiting for the trial.
Acting US attorney for Minnesota District, Anders Folk, says the charges were intended to serve as a warning that vulnerable people are being attacked.
“Our message to people is to be aware of this,” said Folk. “To educate the people around them of the fact that these systems exist.”
He says people should check in with more vulnerable friends and relatives – and even ask to have their finances checked if they suspect they are a victim of fraud.
The Minnesota Attorney General also has tips on how to avoid similar magazine scams.
“The best advice we can give people is to be vigilant, not to be afraid to report it and to know that law enforcement will follow up and take action,” he said.
Defendants convicted in the case could be jailed and sentenced to pay millions in restitution.
As for the victims, however, it is unclear how much money they will get back.