By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
With one phone call, the head guy moves the money from a U.S. post office box to Montreal.
The money fuels the phones in the boiler rooms, where the worker bees sell the stories that bring the checks. You have just won the lottery. You've been approved for this credit card. You qualify for a government grant. The marks on the other end of the toll-free line think they're talking to someone in the States, because that's where they'll send their money.
Using the primitive tools of a Houston P.O. box and a slapdash Web site registered through a third party, the folks behind MGR Solutions, a.k.a. MGR Today and a million other names, have been able to operate anonymously while racking up hundreds of consumer complaints across the country. By promising to help people land big government grants for education, housing or business, MGR has been able to grab its piece of a broader telemarketing scheme that U.S. Customs officials say costs consumers and businesses $700 million a year.
Nine years ago, U.S. and Canadian authorities formed a task force called Project COLT to crack down on cross-border telemarketing fraud. While the force has made dozens of arrests and recovered millions of dollars, for every boiler room they uncover, there are many more to take their place. For now, it seems, it's every consumer for him or herself.
Here's an example of what kind of people the friendly representatives at MGR can be:
Sheree Ross lives in Houston, where she works for a wastewater management company. Last year, her grandmother became ill and moved into Ross's home until they found her a good assisted living center. Her grandmother had been living in a trailer home on two lots in the Fifth Ward. Under the Homestead Act, Ross's grandmother became responsible for the taxes she had previously been exempt from having to pay.
One of Ross's coworkers mentioned a company she found online that helped people get thousands of dollars in federal grants. "Let Uncle Sam finance your business dream with a small business grant," proclaimed MGR's Web site. For a fee of $300-$400, MGR — which used a Memorial Drive address — would write and submit a highly specified grant proposal on the customer's behalf. While the advance fee might be a bit of a burden for some people, the company said it was worth it, that a few hundred could wind up bringing in a $25,000 grant. Plus, there was a "100 percent satisfaction guarantee."
Ross figured she could use the money to pay off her grandmother's land and to open a nonprofit animal shelter. Ross has always been an animal person. She rescued a few dogs abandoned after Hurricane Katrina, and is always taking in strays.
Ross says she left a message on MGR's toll-free line and immediately got a call back. The helpful grants adviser asked Ross a bunch of questions to see if she was even eligible for a grant. Income, criminal history, number of dependents. All that was needed now was a $389 money order to pay MGR's "underwriters" to prepare a proposal. Ross would have to fill out a questionnaire and sign a sketchy "disclosure agreement" that appears to have been cobbled together by someone who flunked out of an online law school.
Soon enough, the helpful grants adviser told Ross she qualified for a $32,000 grant. The advisor may well have told Ross she qualified for $1 billion.
"I ended up losing the property as well, because I didn't get the [grant] that, you know, never existed," Ross says. Looking back on it now, she realizes that she should've been more aware of the clues, as in how she would always get the same customer service rep every time she called in.
"I'm like, 'Man, they must not be a large call center'..." Ross says now.
Dozens of people with experiences similar to Ross's have shared their stories on consumer Web site www.ripoffreport.com. Hundreds have filed complaints with Better Business Bureau offices in Houston and elsewhere.
After a while, MGR reps just stopped answering the phone. If you go to MGR's Web site today, all you'll see is a message from Go Daddy, a Web domain registrar, telling the owner of the site to call Go Daddy's billing department. [This might be a good time to mention that, since no one behind MGR apparently uses real names, it was difficult to contact any company representatives for this story. No one from MGR responded to multiple voice mails and e-mails, and the company apparently has only issued one press release ever.]
And MGR no longer uses a Houston address — but that has nothing to do with the 22 complaints filed with the Texas Attorney General's Houston office. Actually, MGR lost its Houston address long before it abandoned its phone line and Web site.
Barry Wisnevitz, founder of U.S. Global Mail, where MGR rented a drop box, terminated MGR's account after doing some of his own research. After so many angry MGR customers came to his business demanding to speak with someone from MGR, Wisnevitz says, he wanted to find out more about the company.
"When that happens, I just do a little more research on the customer and try to figure out why somebody would come in and ask for them," he says, adding later, "I found out that this company is in fact having people pay for things and not provide them that service. At that point, I chose to cancel them."
So if the operators are no longer using the MGR name or a Houston address, should Texas authorities even be concerned anymore?
Well, only if they want to know the names and addresses of the person who rented the Houston P.O. box. Wisnevitz says he requires his customers to provide two forms of identification, along with notarized paperwork from the U.S. Postal Service.
"They can request the file and we can turn over the file in a heartbeat," Wisnevitz says of the state Attorney General's office. "We welcome that...I don't want people like that associated with my company, so that's why we kind of welcome the opportunity to have the law entities involved."
Wisnevitz adds: "The information that I have on them is pretty good information...and I just hope that, you know, one of the law authorities takes it a little step further because they can obviously nail this guy very easily because of the addresses and the files that I [have] on the guy."
Tom Kelley, a spokesman for the Texas Attorney General's office, stated in an e-mail: "As a policy, we don't acknowledge investigations or give information about our contacts with companies or individuals who may be engaging in deceptive or fraudulent practices. I strongly recommend that anyone who has a bad experience with such companies to file a complaint with us immediately at our consumer protection Web site, including complaints about MGR Solutions."
Just across the border from Montreal, in the small New York town of Champlain, sits an accidentally infamous mail service warehouse.
The good folks at Freeport Forwarding provide helpful services to many Canadian consumers and businesses in need of a U.S. address. But Freeport's convenient location is perfect for the practice of telemarketing fraud. Freeport's address, 1320 State Route 9, is like the Mark of the Beast. It is the address used by many telemarketing companies, including, at one point, MGR Solutions.
David Polino, president of the BBB of Upstate New York, is quite familiar with 1320 State Route 9. "Let me put it to you like this," he says. "With 1,500 total population in this little burg, we have over 350 'companies' operating out of that address."
Using addresses in Champlain and the neighboring hamlet of Plattsburgh, scammers are able to rip off an incredible number of people. Polino says his office has received more than 12,000 complaints in the last three years against businesses operating out of those towns. Moreover, he says, 40 percent of all business-to-business complaints from BBB offices worldwide are related to businesses in Champlain. (Deana Turner of the BBB of Greater Houston says her office has received 210 complaints and 2,558 inquiries about MGR this year.)
Polino says his office has worked with U.S. and Canadian authorities to try to track the scammers, but it's often like trailing a ghost.
"It's like quicksilver — you almost have one and then they're gone," he says. "They're just gone. There's no more address, the mail is returned. The next day, there's another [company] — similar name, similar mail address."
But even connecting a mailbox address with an actual person is not enough to nail them, says Sergeant Yves Leblanc of the Royal Canadian Mounted Police. Leblanc is a spokesman for Project COLT, the interagency task force charged with nabbing the scammers. (It consists of U.S. Immigration and Customs Enforcement, the U.S. Postal Service, the Federal Trade Commission, the FBI, the RCMP and provincial Canadian police forces.)
Leblanc says the typical setup includes a rented office space with cubicles for 15-30 people. Often, the people making the sales calls don't know they're in on a scam. That's why the boiler rooms have a "customer service department," where the head scammers handle disgruntled victims.
"They're not 100 percent sure what they're doing," Leblanc says of some of the sales callers, who are often students looking for extra pocket money. "Often, [when] some of them...figure out what they're doing is illegal, they'll just quit. And others will just turn a blind eye."
As for collecting the checks, "They're not afraid to open up boxes under real names," Leblanc says. "They'll use their brother's, sister's, friend's kind of thing...They'll receive the mail at Champlain; they'll send a runner to go pick up the mail once every two or three days. And they'll bring it back here and cash the checks."
Leblanc says officers in Montreal have shut down 15 government-grant boiler rooms in the last three months. But this doesn't mean that anyone was arrested — often, police only have the resources to knock on a door and issue a stern finger-wagging. Shooting for an actual arrest and prosecution is a bit trickier.
Leblanc explains: "U.S. Postal could get the names [for the rented post-office boxes] like right away. I could make a call and get the names. That's not the problem...Even if you shut down that box, they're just going to open up another one. You have to connect the box to the telemarketers up here...You can usually do that quite easily, that's not a major problem. But you have to get a U.S. attorney involved who wants to perhaps press charges..."
Sometimes, this works out brilliantly. An eight-month investigation by Project COLT resulted in the arrests last December of 40 alleged scammers — all Canadian citizens. Two hundred Canadian police officers had raided 50 boiler rooms, mostly in Montreal, where authorities say telemarketers ran government-grant and lottery scams.
This investigation is the feather in Project COLT's cap — an example of why U.S. Immigration and Customs Enforcement officials call the task force "a model for effective international law enforcement cooperation." Since Project COLT's 1998 inception, according to ICE, the task force's investigations have led to 1,215 indictments and the recovery of $15 million.
Yet, a closer look at these numbers reveals that Project COLT might need to wait a minute before patting itself on the back.
Using ICE's own estimation of telemarketing fraud costing $700 million a year, scammers have reaped $6.3 billion in Project COLT's lifetime. Which means this particular "model for effective international law enforcement cooperation" has recovered exactly two-hundredths of 1 percent of the money ripped off of U.S. consumers and businesses.
Part of this might be because there really isn't as much "cooperation" as Project COLT agencies give themselves credit for. Vermont Attorney General William Sorrell appears to be the only official to publicly address what he calls the task force's "hurdles to effective investigation and prosecution."
Testifying before a Senate subcommittee in 2001, Sorrel related the sad condition of extraditing indicted defendants from Canada to the United States. Citing "anecdotal information from law enforcement," Sorrell said it can take two years or longer to extradite a defendant.
"In an attempt to verify our anecdotal information," Sorrell said, "we asked the Department of Justice and the Federal Trade Commission for the average processing times for requests for [extradition assistance]. They were unable to give us that information readily, and as far as they know, they do not currently collect it."
Moreover, Sorrell alleged that his own investigators have had trouble getting information from Canadian authorities to bolster their cases.
"Our investigators and prosecutors have been stymied in their attempts to effectively investigate and prosecute these crimes," Sorrell said. "Canadian investigators frequently tell us that they do not have the resources to answer states' requests for investigative information, even if that information may be in existing files and computers."
Sorrell also lamented Project COLT's method of only working one major case at a time. "The effect is that many cases with U.S. victims are not being investigated and prosecuted at anything approaching the rate they should be, even while states like Vermont stand ready to prosecute Canadian telemarketing criminals."
All of which should be reassuring to the people behind MGR Solutions.
If Barry Wisnevitz at U.S. Global Mail takes an active role in making sure his customers aren't scammers, David Batrick might be considered the anti-Wisnevitz.
Batrick does brisk business with his company Nevada Corporation Services, which sets up corporate status for small business owners both inside and outside Nevada. In the proud tradition of gambling and legalized prostitution, Nevada also offers the ability to incorporate without ever publicly revealing the owner's name.
Many states, including Texas, require a corporation to disclose the names of its officers and directors, but Nevada allows a "nominee manager" option, which allows a person to list the name of a fake management company, rather than its actual director and officers.
For some reason, this interested the people behind MGR Solutions, who incorporated through Batrick and took the nominee manager option, thus making Silver State Management Services the manager of MGR Solutions. As entitled by Nevada law, Batrick is Silver State Management's director, president, treasurer and secretary.
This arrangement also attracted a company called Inner Concepts Inc., which launched a massive e-mail campaign last year offering free tickets to a taping of Oprah. All the Oprahphiles had to do was take a survey, which included giving personal information, and buy some products from the businesses Inner Concepts was pimping. Many Oprah fans were disappointed to find out they'd been duped.
Another company to hire the services of the make-believe Silver State Management was OneSource Financial, which purported to sell ATMs but disappeared after securities authorities in California and Colorado issued cease-and-desist orders to the company for allegedly misleading investors.
Batrick says he terminated OneSource's services — when he received a copy of one of the cease-and-desist orders. In fact, it takes quite a bit for Batrick to sever ties with one of his clients.
"We do this as a professional business," he says. "We're not scamming anybody. Those are our clients. And if the district attorney feels that it's got to a point where they need to stop that company, they'll issue a subpoena [to see Batrick's files], find out who they are and stop them."
Batrick assured the Houston Press that there was no link between Inner Concepts, OneSource Financial and MGR Solutions.
"I can tell you that I don't see any common ownership in any of these companies," he says. "These are just basically coincidences that [these] people are using our services."
Either Batrick lost his patience with questions from the Press, or he just naturally ends conversations by saying, "Put it in writing from your attorney if you have additional questions, please" and hanging up.
Ultimately, Batrick's business mantra boils down to this: "We don't know what or where the companies, you know, are doing business. We're just providing services for them."
Indeed, it's a business model that has served MGR Solutions very well. For anyone but a government agent with a subpoena, it's next to impossible to find out the names behind MGR Solutions. And according to the complaints on RipoffReport, MGR representatives often use common last names, making positive identification even harder.
The folks at MGR showed a bit more creativity with their supposed public relations officer, Michael Bollen. Responding to the RipoffReport complaints, "Bollen" fired off a press release in June 2006 that carries on the fine MGR tradition of crappy writing. Bollen starts by chastising the folks who are "condoning our good corporate name with innuendos." Plunging further into a maelstrom of idiocy, Bollen offers his customized definition of "government grants": "'Grants' is just a word, and many forms of assistance are available from a variety of private and government programs and go by other names, including, for example, 'subsidies,' 'insurance,' 'awards, 'preferential loans,' etc."
The kicker comes in the closing, when Bollen deftly borrows from the venerable I'm-Rubber-and-You're-Glue Playbook: "These posts are being used to blemish a spotless and untarnished name. If there is one shred of evidence that we are not a good corporate citizen, then please submit the facts, rather than wild and reckless accusations that are unfounded!"
The press release does not include Bollen's definition of the word "fact."
While MGR Solutions' Web site disappeared, there are plenty of others with identical copy, right down to the testimonies and photographs of satisfied customers.
But with all the shuffling around of copy and domain names, the Web sites sometimes look like someone couldn't keep their scams straight and made a mistake. For example, the phone number for Best American Grants, an MGR clone, appears in small print in one section of the Web site for a company called Consumer Assistance & Consulting Services, which supposedly sells products and services to protect consumers from telemarketing fraud. However, the main contact number for Consumer Assistance & Consulting is an entirely different number. Of course, both numbers go to the same place.
When the Press called the number for Best American Grants and asked to speak to a representative of that company, a guy named Tony said he'd never heard of it. He explained that he was an outsourced customer service rep for four other companies, whose identities he did not want to reveal. He insisted they did not include Best American Grants.
Tony didn't want to give a last name or connect the Press to representatives of any of the other companies. He insisted he could only talk with actual customers. I tried telling him that speaking to a company representative might really clear things up. Tony got mad and hung up. He did this a few times, both when he was reached on the government grants site and on the protect-you-from-government-grants Web site. By the end, unfortunately, it wound up getting personal.
I started to say: "I don't believe a word of what you're saying, and it would really help me out —" but he cut me off.
Before hanging up, he parted with this message: "You don't believe a word [of] what I'm saying? Well, I'm going to tell you something, you fucking dog. I don't talk to people who call me a liar, so fuck yourself."
These are the kind of people the government can't catch.