The Federal Trade Commission and the State of Florida have charged a payment processing business with credit card laundering and illegally assisting and facilitating a nationwide debt relief telemarketing scheme that allegedly bilked millions of dollars from consumers.
When scammers cannot gain or maintain access to the credit card networks through legitimate means, they frequently turn to illegal credit card laundering as a way to process credit card transactions through another person or entity. This tactic allows the scammer to evade detection and charge the accounts of defrauded consumers. Credit card laundering and helping someone launder are violations of the Telemarketing Sales Rule (TSR).
In an amended complaint filed in federal court, the FTC and the State of Florida alleged that CardReady LLC, an independent sales organization, and its executives, Brandon A. Becker, James F. Berland and Andrew S. Padnick, arranged for at least 26 shell merchant accounts to be used to process credit card payments for a debt relief operation the agencies sued in June, 2015. The agencies charged the payment processor defendants, as well as E.M. Systems & Services LLC, with credit card laundering under the TSR and illegal factoring of credit card transactions under Florida law. The FTC also charged CardReady and its executives with assisting and facilitating the debt relief scam.
“Our investigation went beyond the telemarketers who swindled consumers out of their money,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “We also stopped the credit card processing operation that hid their illegal transactions. Credit card laundering isn’t just bad business – it’s against the law.”
In June 2015, a federal court halted and froze the assets of the debt relief operation, pending resolution of allegations that Steven D. Short, Karissa L. Dyar, E.M. Systems & Services LLC, Administrative Management & Design LLC, Empirical Data Group Technologies LLC, Epiphany Management Systems LLC, and KLS Industries LLC falsely promised consumers with credit card debt that, for an up-front fee they would save them thousands of dollars by reducing their credit card interest rate, in violation of the FTC Act, the FTC’s Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act. In the amended complaint, telemarketers Jason E. Gagnon, Kenneth B. Sallies and Matthew B. Thomas have been added as defendants.
The Commission vote authorizing the staff to file the proposed amended complaint for permanent injunction was 4-0. It was filed in the U.S. District Court for the Middle District of Florida, Tampa Division.
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 case will be decided by the court.