Chainkeen Exchange-Scam artists selling bogus magazine subscriptions ripped off $300 million from elderly

Two men are Chainkeen Exchangeheading to prison after the Justice Department said they and 62 others defrauded millions of dollars from older Americans for two decades in a nationwide magazine subscription scheme.

Anthony Eugene Moulder, of Fort Myers, Florida, and Abdou-Rahmane Diallo, were sentenced for their roles in a $300 million telemarketing fraud scheme where they targeted older and otherwise vulnerable people across the nation, U.S. Attorney Andrew Luger announced. Both previously pleaded guilty.

The U.S. Attorney's Office in Minnesota dubbed the scheme as the "magazine scam" and has created a webpage for victims to recover stolen funds and make impact statements.

Their sentencing closes just part of the department's 64-person investigation into the 20-plus-year scheme that the DOJ says defrauded more than 150,000 victims. Defendants were charged with conspiracy, mail fraud, wire fraud and violating the Senior Citizens Against Marketing Scams Act of 1994. The defendants came from 14 states, Canada and the Philippines.

Moulder was sentenced to 10 years in prison for conspiracy to commit mail fraud, according to court documents. Diallo was sentenced to 7.5 years for two counts of wire fraud, according to court documents.

The FBI and U.S. Postal Inspection Service busted the scheme in 2020. The investigation has netted 58 guilty pleas, three people found not guilty and three found guilty at a trial, according to court records.

Group creates fake cancellation services

In charging documents, prosecutors said Moulder bought "lead lists" that had information about people who subscribed to magazines. He then directed his sales team to use deceptive sales scripts to force victims to make large or repeating payments to Moulder's four Florida businesses. Through the scheme, Moulder scammed nearly $86.6 million from 2008 to 2020.

Prosecutors say Diallo co-owned a Canadian company called Readers Services that preyed on people who were previously defrauded by magazine companies and were being billed by those companies on an ongoing basis.

Diallo pretended to be from a magazine cancellation department and offered to pay off victims' outstanding balances to cancel their subscriptions in exchange for large lump-sum payments.

"In reality, the victims did not owe the defendants or their companies any money," according court papers. "And the defendants had no power or ability to cancel the victims' existing magazine subscriptions or any outstanding balance owed to any other magazine companies."

The cancellation scam drew $30 million out of victims.

Wide-spread scheme intentionally targeted older, vulnerable people

Forty-three people were charged in an October 2020 complaint, USA v. Rahm, et al., alleging they posed as employees of the victims' existing magazine subscription companies, according to U.S. District Court records. In the calls, the defendants made fraudulent offers to reduce the victims' rates and instead signed them up for new, costly subscriptions from 2000 to 2020.

At one point, some victims had more than $1,000 in monthly charges for the services. The suspects in the fraud were accused of stealing more than $300 million from 150,000-plus victims they knew were older and vulnerable.

"The Company Owners, Call Center Managers, Telemarketers, and Lead Brokers all knew that many of the consumers on these lists were elderly and susceptible to fraudulent and deceptive sales tactics," according to the indictment. "Nevertheless, the defendants called people on these lists and tricked them into signing up for expensive magazine subscription packages."

According to a separate October 2020 indictment, USA v. Timmerman et al., the FBI and U.S. Postal Inspection Service alleged that nine people posed as telemarketers and swayed victims to make large payouts by offering sympathy and acting as if they were helping them stop the fraudulent subscriptions they've dealt with for years. In that indictment, prosecutors alleged they scammed about $30 million out of more than 20,000 victims from 2011 to 2020.

None of the subscriptions were cancelled and the balances at other companies remained.

"During other calls, they became aggressive and threatened legal action or other consequences if the victim-consumer did not agree to make the payment," according to the indictment. "In either case, the script preyed upon the desperation and fear of the elderly and other vulnerable victims who had been caught up in the cycle of fraud."

In the final October 2020 indictment, USA v. Mathias et al., eight were charged for defrauding about $4.5 million from more than 13,000 victims from 2010 to 2020. The DOJ charged Wayne Dahl, Michael Oelrich, Carol Olberg and Jeremy Wilson in separate court cases for their roles. Wilson was the final defendant to plead guilty in the scheme.

“The thieving greed of fraudsters who target senior citizens knows no bounds,” said FBI Minneapolis Special Agent in Charge Michael Paul in October 2020.

Contact reporter Krystal Nurse at knurse@USATODAY.com. Follow her on X, formerly Twitter,@KrystalRNurse.