Tully Lovisa, Shaun Sullivan, and Lorraine Chalavoutis were recently indicted in New York federal court. They were charged with mail fraud and money laundering for their participation in a fraudulent mass-mailing scheme. Their actions tricked hundreds of thousands of consumers—many of them elderly—into paying at least $30 million in fees for falsely promised cash prizes.
Attorney General Jeff Sessions, Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Peter R. Rendina, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the indictment, according to a US Department of Justice press release titled “Three Long Island Residents Arrested In Elder Fraud Scheme”
“Earlier this year, when we announced the largest elder fraud sweep in history, we sent a clear message: we will hold perpetrators of elder fraud schemes accountable wherever they are,” Sessions said. “When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the Department’s disposal–criminal prosecutions to punish offenders, civil injunctions to shut the schemes down, and asset forfeiture to take back ill-gotten gains. Today’s indictment shows we are following through on this promise, and fraudsters everywhere should take note of it.”
The fake prize-promotion mailings said that recipients could receive a large cash prize, in exchange for paying a modest fee. However, none of them did. The scheme began after the Federal Trade Commission (FTC) sued Lovisa in 2010 for sending deceptive prize-promotion mailings.
In response to that suit, a federal court in California enjoined Lovisa in December 2010 and April 2012 from any involvement with prize-promotion mailings. Nonetheless, she conspired with Sullivan and Chalavoutis to create numerous prize-promotion companies using straw owners and aliases to continue defrauding consumers. Chalavoutis opened bank accounts in the name of straw owners and helped conceal the involvement of Lovisa and Sullivan in controlling the operation.
Prosecutors also claim that Lovisa submitted a false compliance report to the FTC, in which he claimed not to be involved in prize-promotion mailings. The additional wire fraud and money laundering charges involve Lovisa’s further deception of the FTC concerning the court-ordered sale of a house he owned in Nevada. According to the indictment, Lovisa arranged a sham sale of the house for $155,500 in 2012 that allowed him to maintain control of it and only give the FTC proceeds of that sale. Lovisa subsequently sold the house in April 2015 for $540,000.
If convicted, the defendants face up to 20 years’ imprisonment for mail fraud, wire fraud, and conspiracy. Each charge also carries a statutory maximum fine of $250,000 or twice the gross gain or gross loss from the offense.
Reference: US Department of Justice (July 11, 2018) “Three Long Island Residents Arrested In Elder Fraud Scheme”