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Thread: The biggest telemarketing sting in U.S. history

  1. #1

    Default The biggest telemarketing sting in U.S. history

    This was in Asbury Park Press Sunday, I just received it. Its not as accurate as the circumstances were portrayed in the Zengrifter Interview beginning on page 21. If any reader has doubts which is more accurate, just note that the plea was $200+ million "securities fraud RICO" yet the final jail time was 14 months and no restitution.

    Obviously something in the article is amiss, but its still an interesting read. Oh, and the final net #busts was much higher. zg

    ---------------------

    Elaborate sting disconnects phone scammers
    Ex-prosecutor gone bad assists in FBI probe

    Asbury Park Press on 06/18/06

    BY GARY DECKELNICK
    AND JAMES A. QUIRK
    STAFF WRITERS

    It was an unprecedented meeting, and not the kind you'd expect to find in a conference room in the middle of the FBI's Red Bank office. At one table sat a former U.S. attorney from West Virginia; a California braggart; a Freehold con artist. All were criminals who made millions from nationwide telemarketing scams. They had been caught and, in return for reduced jail time, agreed to betray each other and wear wires for the FBI.

    They had not expected to see each other again. Now, as they sat face to face, tempers flared. Fists almost flew. And the agents in the room let it happen.

    "It was like the Jerry Springer show," recalls Susan Pigliacelli, the FBI agent from the Red Bank office who headed what turned out to be the largest and most complex telemarketing prosecution in the United States.

    The men had been brought to the conference room that day in late summer 1998 to work together once again, but now their bosses would be the federal government.

    Their task: To use their criminal minds and put together the best telemarketing sting operation in U.S. history. The FBI and U.S. Postal Inspection Service wanted a phony company and a phony plan that boiler room telemarketing managers would love to sell. The sting was to be an elaborate part of Operation Busy Signal.

    The federal authorities got what they wanted. By the time it was completed, the investigation led to the conviction of about 35 men, including the leaders of five large national telemarketing scams. One of the men convicted, Marcus K. Dalton, then of Colts Neck, pleaded guilty to defrauding victims of more than $180 million, and other boiler room operators across the country raked in tens of millions themselves.

    "That number is not surprising," said Bernie Bicoy, the president of Venture Research Institute, a private investment club that specializes in providing protection against fraud. "It's hard to believe, but there are 90 new scams introduced in the United States every day."

    Because of all the people involved, this was among the most complex telemarketing case this country has prosecuted, said assistant U. S. attorney Robert Kirsch, who became the lead prosecutor in 2003 and tried the case involving the hidden owners of a fraudulent commodities company headquartered in the Bahamas. The owners, Charles P. Hoffecker and Charles E. Myers, both of Florida, are to be sentenced Monday morning in federal court in Newark.

    The federal investigation ran from January 1996 to December 1998.

    To root out the full scope of the telemarketing scheme, Pigliacelli and U.S. Postal Inspector John V. Barrett would find themselves traveling all over the country, and even to the South Pacific. Unfortunately for the agents, they could not rack up frequent-flier miles for all their traveling — all of their receipts had to be handed in to the government, they said.

    Both Pigliacelli and Barrett are married; Pigliacelli has a daughter, and Barrett has three children. As the investigation picked up steam, the agents would find themselves away from home for five days out of the week. At one point, while they were pursuing leads in San Diego, the agents worked for three days straight without sleeping.

    "It was very hard," Pigliacelli said. "But (her daughter) knew what I was doing, and she understood what was going on. We told her that there were people taking advantage of senior citizens like grandma and grandpa, and they had to be stopped."

    Operation Busy Signal started small in 1996, when federal agents began investigating a $10 million telemarketing scam called Northeast Telecom Inc., operated by Barry Lichtenthal in Freehold.

    Lichtenthal pleaded guilty Dec. 16, 1998, to charges of defrauding people of more than $5 million, and was sentenced to 30 months in prison in 2000.

    The investigation into Northeast Telecom led authorities to John A. Field III, a former U.S. attorney from West Virginia. Lichtenthal wore a recording device for the FBI — a wire — and met with Field at a Virginia rendezvous that was also filmed by investigators.

    Over the years, Field had collected a $1,500-a-week retainer from Northeast Telecom because he knew how to guide his clients around the very laws he once enforced, according to the FBI.

    At the meeting, Lichtenthal left Field a briefcase filled with $3,000 cash, which was actually supposed to contain $250,000.

    Federal agents were there to meet him with the videotape of Field taking cash from Lichtenthal. Field flipped quickly and began working for the federal authorities.

    Of all the men caught up in Operation Busy Signal, Field emerges as both a tragic figure and a key cooperating witness for the federal authorities. Field served as U.S. Attorney in Charleston, W.Va., from 1972 to 1977 — appointed by President Richard M. Nixon at 34, he was one of the youngest men to become a U.S. Attorney — and was also director of enforcement for the U.S. Commodity Futures Trading Commission from 1977-80.

    Consumed with greed, "booze and broads," Field became a sort of "consigliari" — an attorney to criminals who were plugged in to the burgeoning telemarketing scam underworld, Barrett said.

    By flipping Field, the authorities gained an effective doorway they would exploit to the fullest throughout the rest of the investigation.

    "He did an unbelievable job," Pigliacelli said of Field. "He put his life on hold and did what he was told to do."

    In 2000, Field was sentenced to two years in prison. Neither Barrett nor Pigliacelli would say where Field lives now.

    "He plays golf," Barrett offered.

    Lichtenthal also gave up Marcus K. Dalton to the authorities. Known as "The Grifter," Dalton was a telemarketing genius who made millions while maneuvering around the Federal Trade Commission and the Securities and Exchange Commission, which would often shut down Dalton's questionable businesses after they had bilked people out of their money.

    Authorities have alleged that Dalton embarked on his odyssey of telemarketing scams in 1992. The headquarters for what would become Dalton's national empire was his home in Laguna Beach, which Pigliacelli described as a breathtaking mansion perched high on a cliff overlooking the Pacific. He called it the "Wireless Embassy."

    "I can sit at my desk and see dolphins and whales and sea otters," Dalton once bragged to Forbes magazine in 1995.

    Dalton pleaded guilty in 1998 to federal racketeering charges of defrauding people for more than $180 million by selling fake stocks in nonexistent businesses, such as a cable operation and South Sea Satellites, a wireless venture in American Samoa, an island in the South Pacific. In 2000, he was sentenced to 30 months in prison.

    Dalton "was party to every scheme we looked at, either controlling it or acting as a central figure," Barrett said.

    Once the federal authorities had men like Dalton and Field working for them, they decided to cast a wider net.

    Pigliacelli said she acted as the manager of a phony company called United Currency Exchange. Working with her elite cadre of professional con men, federal agents created elaborate, full-color brochures, printed on glossy paper, that they distributed to operators of boiler rooms across the country, who were eager to take part in what they thought was an easy scam.

    United Currency Exchange was designed to seem like it managed a foreign currency trading fund called Unex 2100. Federal authorities even created a fictitious president of the company, Dr. Thomas A. Pritchard, who sagely advised in the brochure: "The individual investor needs to perceive change and capitalize on it."

    With master criminals like Dalton on their side, authorities found that it was easy to find people who wanted in on the action. The foreign currency switch with United Currency Exchange was billed as a quick-hit scam: Blitz gullible callers by phone, rake in the cash and get out within six months, before the authorities could take notice, Pigliacelli said.

    "These guys were brilliant, real con artists who had been doing this for years," Barrett said.

    But anyone who agreed to scam victims through United Currency Exchange was doomed from two ends. Not only were all the men pushing the scam plan working for the federal authorities, but the list of people they distributed for the boiler room managers and their crews to victimize were actually retired FBI agents and postal inspectors and volunteers from the AARP. Almost 300 such people volunteered to help in Operation Busy Signal, and many more would have joined the case if given the opportunity, Pigliacelli said.

    "We had people in every state of the country," Barrett said.

    The United Currency Exchange undercover sting ran from August to December of 1998, with all of the telemarketing calls taking place in the last two weeks of the sting. Every owner-operator who took the bait offered by United Currency Exchange — at least 16 people — have been subsequently charged and prosecuted, Pigliacelli said. All of their boiler room operations were shut down.

    Though the case consumed three years of their lives, Pigliacelli and Barrett said they often forged on, knowing how many people were victimized by the men they shut down.

    "A lot of good people lost so much money," Pigliacelli said. "There was a woman in California who lost $1 million, and would just call us and cry and cry."

    The woman never recovered her money.
    Last edited by zengrifter; June 21st, 2006 at 04:06 PM.

  2. #2

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    Selling fake securities sure is a dirty, and risky AP technique!

  3. #3

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    Quote Originally Posted by ScottH
    Selling fake securities sure is a dirty, and risky AP technique!
    If you read my interview -pages 21 thru 25- you would know that I didn't sell "fake securities"! zg

  4. #4

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    Quote Originally Posted by zengrifter
    If you read my interview -pages 21 thru 25- you would know that I didn't sell "fake securities"! zg
    I read your interview and I know about the FCC Lottery deal. But here is the quote that I found interesting from this post.

    "Dalton pleaded guilty in 1998 to federal racketeering charges of defrauding people for more than $180 million by selling fake stocks in nonexistent businesses..."

    I didn't remember that from the interview, but when I went back to check I found this quote from your interview.

    "In the late ‘90s his victories would sour amidst federal allegations of fraud and racketeering, involving the sale of more than $270 million in so-called “unregistered securities,” leading to a RICO-conspiracy plea and conviction."

  5. #5

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    Quote Originally Posted by ScottH
    "Dalton pleaded guilty in 1998 to federal racketeering charges of defrauding people for more than $180 million by selling fake stocks in nonexistent businesses..."
    Not true or accurate. There were no "fake stocks in nonexistant businesses"

    Quote Originally Posted by ScottH
    "In the late ‘90s his victories would sour amidst federal allegations of fraud and racketeering, involving the sale of more than $270 million in so-called “unregistered securities,” leading to a RICO-conspiracy plea and conviction."
    Accurate - “unregistered securities” zg

  6. #6

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    Quote Originally Posted by zengrifter
    Not true or accurate. There were no "fake stocks in nonexistant businesses"


    Accurate - “unregistered securities” zg
    Can you explain what the article called "so called 'unregistered securities''? After reading the "fake stocks in nonexistant businesses" part of the post, and then seeing quotes around unregistered securities in the interview made me wonder. Anytime there are quotes around something like that, something else is going on. Whatever it was, it had to be illegal since you went to prison camp!
    Last edited by ScottH; June 23rd, 2006 at 02:10 PM.

  7. #7

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    So called "unregistered securities" are potentially a myriad of investment concepts that fall in to a huge grey area of securities laws.

    When I entered my plea I "admitted" that the $200+ million in investments that I had promoted were "unregistered securities". Prior to this I was quite an expert in creating 'non-securities' which were not subject to securities laws - ie, all 'investments are not securities'.

    Had I gone to trial I might have been acquitted of any wrong doing, or I might have gotten 10+ years. The system tends to force a plea arrangement regardless of the facts. zg

  8. #8

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    Quote Originally Posted by zengrifter
    So called "unregistered securities" are potentially a myriad of investment concepts that fall in to a huge grey area of securities laws.

    When I entered my plea I "admitted" that the $200+ million in investments that I had promoted were "unregistered securities". Prior to this I was quite an expert in creating 'non-securities' which were not subject to securities laws - ie, all 'investments are not securities'.

    Had I gone to trial I might have been acquitted of any wrong doing, or I might have gotten 10+ years. The system tends to force a plea arrangement regardless of the facts. zg
    Are you saying that you were selling real investment oppurtunities and not just scamming people out of money like the article said? What type of investment oppurtunities were you selling?

  9. #9

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    Quote Originally Posted by ScottH
    Are you saying that you were selling real investment oppurtunities and not just scamming people out of money like the article said? What type of investment oppurtunities were you selling?
    Scott, STOP IT!! - Interview page 21-25!!! zg

  10. #10

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    Quote Originally Posted by zengrifter
    Scott, STOP IT!! - Interview page 21-25!!! zg
    Alight, I think I understand it now. The article you posted is what confused me! But I guess you did say it wasn't completely accurate...

  11. #11

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    Another example of innaccurate reporting -

    -----------------
    Follow through
    Forbes, January, 1999 by Susan Adams


    The grifter cops a plea

    THREE YEARS AGO FORBES exposed con man Marcus Dalton (Sept. 11, 1995), who had spent almost two decades running securities telemarketing scams that bilked investors out of as much as $200 million. Fellow scammers and law enforcement authorities across the country picked up on our headline and dubbed Dalton "the grifter."

    When he saw our story, says Assistant U.S. Attorney John J. Carney, "It lit a fire -- there was no way the government was going to permit it." Keeping his word, Carney got the goods on Dalton, who pled guilty in late December to conspiracy to commit racketeering.

    Facing a life term, Dalton, 45, helped the government crack telemarketing "boiler rooms" across the country where con artists hawked worthless stakes in schemes like wireless cable operations and television programming. After Dalton helped finger some of them, seventy other defendants eventually pleaded guilty. ...
    "The dogs bark but the caravan moves on."
    .....................The Zengrifter Interview (PDF) |
    The Zengrifter / James Grosjean Reputation Debate
    -----------------------------------------
    “Truth, like gold, is obtained not by growth, but by washing away all that is not gold.” — Leo Tolstoy........
    "Is everything a conspiracy? No, just the important stuff." ZG

  12. #12

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    Quote Originally Posted by zengrifter View Post
    -- Unfortunately for the agents, they could not rack up frequent-flier miles for all their traveling — all of their receipts had to be handed in to the government, they said. --
    BUT, I got to keep MY frequent-flyer miles! z(comp-whore)g
    "The dogs bark but the caravan moves on."
    .....................The Zengrifter Interview (PDF) |
    The Zengrifter / James Grosjean Reputation Debate
    -----------------------------------------
    “Truth, like gold, is obtained not by growth, but by washing away all that is not gold.” — Leo Tolstoy........
    "Is everything a conspiracy? No, just the important stuff." ZG

  13. #13

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    Special Day! Today was moi's LAST DAY of federal probation!


    Cheers mates! zg
    "The dogs bark but the caravan moves on."
    .....................The Zengrifter Interview (PDF) |
    The Zengrifter / James Grosjean Reputation Debate
    -----------------------------------------
    “Truth, like gold, is obtained not by growth, but by washing away all that is not gold.” — Leo Tolstoy........
    "Is everything a conspiracy? No, just the important stuff." ZG

  14. #14

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    Quote Originally Posted by zengrifter View Post
    Special Day! Today was moi's LAST DAY of federal probation!


    Cheers mates! zg
    Congratulations!

    I bet your'e glad thats over.

    what's next?
    Last edited by Brutus; September 9th, 2007 at 10:50 AM.

  15. #15

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    Quote Originally Posted by Brutus View Post
    what's next?
    A Las Vegas newspaper, alternate-currency based barter systems, and then the final frontier -
    "The dogs bark but the caravan moves on."
    .....................The Zengrifter Interview (PDF) |
    The Zengrifter / James Grosjean Reputation Debate
    -----------------------------------------
    “Truth, like gold, is obtained not by growth, but by washing away all that is not gold.” — Leo Tolstoy........
    "Is everything a conspiracy? No, just the important stuff." ZG

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