Agencies Take Action Against Mail Fraud Schemes

The agencies took action under Executive Order 13581, which authorizes the Office of Foreign Assets Control (OFAC) to sanction "significant transnational criminal organizations and those who support them," OFAC Acting Director John Smith said.

The Department of Justice and the Treasury Department announced enforcement action Sept. 22 in connection with alleged widespread mail fraud schemes aimed mainly at older Americans—schemes that typically involve fictitious lotteries, sweepstakes, or psychic healing of some sort, Chief Postal Inspector Guy Cottrell said during a news conference to announce the actions.

John Smith, acting director of the Treasury Department's Office of Foreign Assets Control, said the agencies took acation against PacNet, which he called "a third-party payment processor of choice for perpetrators of a wide range of mail fraud schemes. PacNet has a nearly 20-year history of knowingly processing payments related to these fraudulent solicitation schemes which result in the loss of millions of dollars for U.S. consumers," Smith added.

The agencies took action under Executive Order 13581, which authorizes the Office of Foreign Assets Control (OFAC) to sanction "significant transnational criminal organizations and those who support them," Smith said. He said OFAC has designated 12 individuals and 24 entities in 18 countries that comprise the PacNet Group and are controlled by executives or other linked companies; the Treasury action means property such as bank accounts in financial transactions are frozen, he added.

"We are here today to announce a series of major law enforcement actions against companies and individuals involved in mass-mailing schemes that have defrauded millions of Americans," U.S. Attorney General Loretta Lynch said, according to a transcript of her remarks posted to the DOJ website. "The actions taken by the department and our agency partners include bringing criminal charges, filing civil injunction complaints, imposing economic sanctions, seizing criminal proceeds and executing search warrants. . . . Each year, Americans receive tens of millions of fraudulent letters. Many of the letters, for example, falsely claim that the recipient has won cash or valuable prizes. In order to collect these benefits, the letters say, the recipient need only send in a small amount of money for a processing fee or taxes. The perpetrators of these mass-mailing schemes target elderly individuals and those in vulnerable financial situations and their activities have cheated Americans out of hundreds of millions of dollars. The fraud is massive in scale and global in scope, and it can be devastating on an individual level.

"The schemes involve a complicated web of actors located across the world," Lynch said. "For example, the actions announced today include criminal charges and a civil injunction action against a Turkish resident whose direct-mail schemes defrauded U.S. victims out of more than $29 million; a seizure warrant against the bank account of a Canadian payment processor that laundered money for more than 100 mass-mailing fraud campaigns and an order designating the payment processor as a significant Transnational Criminal Organization; and a consent decree that would impose a permanent injunction against two so-called 'caging services' in the Netherlands, which received and processed victim payments, and also tracked victims' personal information. The companies and individuals named in these actions operated different parts of mass-mailing fraud schemes in different parts of the world. But they all acted with the same malicious intent: to take advantage of elderly individuals and other vulnerable citizens."

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