The owner and two employees of a Fridley-based company pleaded guilty to fraud Tuesday, Nov. 24, in a wide-ranging federal case over a $300 million telemarketing scheme.
Stacey Leigh Persons, 34, of Andover; Patrecia Nichole Shinn, 33, of Cambridge; and Leeann Garcia, 26, of Cambridge, each pleaded guilty to charges of conspiracy to commit mail fraud. A Florida resident and a Mississippi resident also pleaded guilty Nov. 24.
A total of 43 co-conspirators are named in the indictment filed Oct. 27. All together, they allegedly stole more than $300 million from more than 150,000 people, especially vulnerable seniors. Because the companies bought and sold lists of people with magazine subscriptions, many victims were defrauded by multiple companies — some were billed more than $1,000 a month in magazine subscriptions by up to 10 companies at one time, according to the indictment.
Persons owned and operated two companies, General Subscription Services and Amerimag Services, LLC, both of which were based in Fridley. Shinn and Garcia worked as telemarketers for Persons’ companies.
Persons obtained lists of customers with existing magazine subscriptions and directed her salespeople to use lies and misrepresentations to sign them up for new, expensive magazine subscriptions or to falsely claim to renew victims’ existing subscriptions, often at a reduced cost, according to the indictment.
Conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a fine of $250,000 or twice the loss caused by the fraud, whichever is greater. As part of their guilty pleas, Persons agreed to pay $6.9 million in restitution, Shinn agreed to pay $50,000 in restitution, and Garcia agreed to pay $15,000, according to the U.S. Attorney’s Office.
Case is ongoing
Five other alleged conspirators named in the indictment were based in Anoka County but have not pleaded guilty. They each face charges of mail fraud and wire fraud in addition to the conspiracy to commit mail fraud charges.
Jared Michelizzi owned and operated several companies, including West Side Readerz and Central Subscription Services, which were based in Fridley, according to the indictment.
Eric McGarrity, Andrew Landsem and Ballam Dudley all reportedly worked as telemarketers for Michelizzi’s companies. Two worked from the call center based in Fridley, and Dudley worked from his home in Fayetteville, Arkansas, the charges say.
Michelizzi also owned Pacific Beach Readers Club, a California-based company allegedly involved in fraudulent sales. He owned the company with Brian Williams, who also owned three St. Paul-based companies that reportedly engaged in magazine fraud, including Readers Club Home Office, Pacific Renewal and Tropical Readers, according to the indictment.
Eric Esherick, who owned the Andover-based Quality Readers LLC, has also been charged.
As part of the scam, company owners purchased lists of consumers with active magazine subscriptions through other companies, for as much as $10 to $15 per name, according to the indictment.
The telemarketers allegedly used these lists to pose as representatives of one of the victim’s existing subscriptions and offer them a renewal, often at a reduced cost. Instead, the telemarketers signed the victims up for new subscriptions — in some cases multiple times, according to the indictment. In other cases the callers would falsely claim the victims owed large balances for existing subscriptions and fraudulently offered to pay off the balance in exchange for a one-time payment, the charges say.
In an attempt to cover their tracks, telemarketers allegedly were instructed to record only the end of each call, when the victim verified they were purchasing the subscription package. The deceptive recordings were then used when victims challenged the charges or reported the fraud to the Better Business Bureau, state attorneys general or other regulatory officials, according to the indictment.
Owners operated each company under multiple names, in an attempt to spread complaints out among a number of companies to reduce the chance any single company would be investigated, according to the indictment. They also allegedly hid the identity and location of their companies by using virtual offices to register with out-of-state secretary of state offices to make identification of each company more difficult.