Kara Singleton Adams, from Georgia, was found guilty last week on charges of wire fraud, conspiracy, and structuring financial transactions, relating to a $25 million nationwide telemarketing fraud scheme. Already convicted in this scheme are three co-defendants including Adams’ husband, Jason James Eyer, James Adolph Schoenholz, and Brittany Dunphy. All three pleaded guilty to related charges before Adams’ trial and Schoenholz and Dunphy testified at the trial.
United States Attorney Sally Quillian Yates said, “This multi-million dollar fraud scheme used simple tactics. It started out with automated phone calls to consumers in almost every state in the United States, and the scheme quickly escalated to high-pressure telemarketing sales pitches. Many citizens are struggling in this economy and have incurred significant credit card and other debt. This case demonstrates that people need to carefully research any person or firm who makes promises to reduce or eliminate debt in a way that seems too good to be true, because fraudsters are out there seeking to prey on their economic situation.”
“The U.S. Postal Inspection Service is continuing to investigate and will pursue such criminal activity which centers on consumers and tries to take advantage of them. These are complex schemes and they have the potential to take millions of dollars from victims, and we will continue to track them down,” said Shelley Binkowski, Acting Postal Inspector in Charge of the Atlanta Division.
John Sours, Administrator, Governor’s Office of Consumer Protection, said, “This has been a long, involved case. We are gratified by the jury’s decision, and we would be remiss if we did not thank our partners in this effort, the United States Postal Inspectors and the United States Attorney’s Office.”
Adams was found guilty on 9 counts of wire fraud, 7 counts of structuring financial transactions and 2 counts of conspiracy, after a two-week-long trial. The jury found her not guilty on two additional counts of structuring financial transactions. The jury reached their verdicts after approximately 4 hours of deliberation.
According to United States Attorney Yates, the indictment, the charges, and evidence at trial:
Starting in 2008 and continuing through December of 2009, Adams, Eyer, Schoenholz, and Dunphy conspired to defraud consumers with credit card interest rate reduction programs through a variety of schemes and companies. Using various company names, the defendants initiated automated telephone calls to consumers throughout the United States to promote the sale of the defendants’ credit card interest rate reduction program. Consumers were either greeted by a prerecorded message instructing them to “press 1 now” if they would like to have their credit card interest rates lowered or directly solicited by a live telemarketer offering to lower the consumers’ credit card interest rates. Consumers who pressed “1” were connected to a live telemarketer, who used a script promising to substantially lower the consumers’ credit card interest rates and save the consumers thousands of dollars in interest payments. The telemarketers claimed they had a special relationship with the creditors which would allow them to negotiate lower rates on the consumers’ behalf.
The consumers were told they would become debt-free much faster, typically three to five times faster, than they would without the program. Consumers were also guaranteed that their monthly payments would be no higher than their current monthly payments on their credit card accounts. The consumers were assured there was no out-of-pocket cost associated with the interest rate reduction program. They were promised that the savings of the program would cover the cost of the program, which was between $749 and $1,495. Consumers were also told that this savings would be realized within 30-45 days and were promised a full refund of their purchase price if they did not achieve $4,000 in savings.
According to the evidence, the victims did not in fact receive what they were promised. The defendants had no special relationships with any creditors. In many instances, no attempt was made to negotiate a lower interest rate for consumers’ credit cards. Even when the telemarketers actually cold-called a victim’s credit card company, the rates were rarely lowered and the victims did not save the thousands of dollars promised in the sales pitch.
Adams, Eyer, Schoenholz, and Dunphy then took additional steps to mail those victims a fake “financial analysis” payment plan with figures which had been purposefully manipulated to show a savings of at least $4,000, when, in fact, no savings had been realized. The defendants used this falsified payment plan “savings” to claim that they had satisfied the program’s guarantee and deny the victims who sought refunds of the $749 to $1,495 in fees that they had paid.
The companies involved in the scheme included “Economic Relief Technologies,” (ERT), formerly at 1820 Water Place, Suite 250, Atlanta; “SafeRide Warranty,” formerly at 1820 Water Place, Suite 255, Atlanta; and “VP Marketing,” (VPM), formerly at 1820 Water Place, Suite 195, Atlanta, Georgia.
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The group also used many other names, such as “Clear Breeze Solutions;” “Money Works;” “Client Services;” “Financial Protection Center;” “Life Change Solutions;” “Express Debt Elimination;” “Capital Resources;” Express Corp Advisor;” “Express Corp;” “Card Services;””Credit Services;” “Americare Software Solutions;” “A Better Tomorrow;” “Helping Hand Resources;” “Auto Protection Center;” “Warranty Services;” “Auto War;” “Assured Warranty;” “Debt Suite, Inc.;” “Total Curb Appeal, LLC;” “Debtworks Software, LLC;” “DM Associates, LLC;” “VersaDebt Corp;” and “FYI Tech, Inc.”
The victims were located in a total of 46 states with the losses totaling over $25 million. Adams and Eyer spent millions of dollars from the proceeds from operating the scheme in a little over a year at a variety of luxury hotels, high-end retailers, jewelers, casinos, exotic automobiles, as well as payments to private tutors for their children.
On November 30, 2009, the Federal Trade Commission obtained a temporary restraining order against Adams, Eyer, and Schoenholz and a federal judge appointed a receiver to take over the companies and find any and all assets derived from the fraud. Evidence at trial showed that at that same time, the three were in the Philippines, attempting to start up an identical business. While in the Philippines, Adams contacted her family members, Leiah Watson and Roger Dale Watson, instructing them to remove company documents and computers from her Marietta residence and hide them, in violation of the federal judge’s order, in an attempt to obstruct the FTC receiver’s investigation. Dunphy later obtained the computers and documents, sold the computers and wired the proceeds to Eyer in the Philippines.
Eyer has already agreed to a binding plea agreement in which he will serve 10 years, 6 months in prison. Leiah Watson and Roger Dale Watson pleaded guilty to charges of violating a court order on October 6, 2011, and will be sentenced in December of this year.
Sentencing for Adams and Eyer is set for January 5, 2012. Adams faces a maximum sentence of 25 years for each wire fraud count, 5 years for each conspiracy count, and 10 years for each structuring count. She also faces a fine of up to $500,000 for each structuring count – Source.
I hate to think about the life they’ve now made for their children since they will both more than likely be serving jail time.
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