Markets Wired

The Federal Trade Commission has moved to shut down a medical discount scheme that scammed seniors across the country by offering phony discounts on prescription drugs and pretending to be affiliated with Medicare, Social Security, or medical insurance providers.

In a complaint filed against the operators of the scam in the United States and Canada, the FTC alleges that seniors in the U.S. were targeted by the deceptive calls.  The callers convinced their victims to turn over their bank account numbers and used that information to debit money from victims’ accounts.

“This scam, which targeted and deceived our nation’s seniors, is as cynical and wanton as they come,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We look forward to bringing this operation to a halt and working to get relief for the victims.”

According to the FTC’s complaint, the telemarketing calls pitched a prescription drug discount card that, victims were told, would provide substantially discounted or even free prescription drugs.  Many victims were led to believe they had to purchase the card to continue receiving their Medicare, Social Security, or medical insurance benefits. 

In fact, the prescription drug discount cards the defendants provided to consumers are available for free by calling a toll-free number or visiting a website.  The cards generally do not provide any discounts to consumers who already have insurance either through a government program or a private insurer.

The scam was run from both sides of the border.  The defendants contacted consumers from a telemarketing boiler room in Montreal.  The U.S. defendants then used the bank account information consumers provided in the calls to take approximately $300 from consumers’ bank accounts using a “demand draft.”  Not all consumers who paid for the purported discount card even received it – some victims received nothing at all for their money. 

The defendants are charged with violating Section 5 of the FTC Act by deceptively presenting themselves as government or insurance representatives, as well as by telling consumers that the discount plans they were selling could provide substantial discounts on prescription drugs.  In addition, the defendants are charged with violating the FTC’s Telemarketing Sales Rule for their deceptive acts and for calling consumers whose numbers were on the National Do Not Call Registry.  A federal judge in the U.S. District Court for the Northern District of Illinois issued a temporary restraining order halting the defendants’ deceptive scheme and freezing their assets.

The U.S.-based defendants in the case include AFD Advisors, LLC, of Wisconsin, which also does business as AFD Medical Advisors; AMG Associates, LLC, of Delaware, which also does business as AMG Medical and AMG Medical Associates; Aaron F. Dupont, individually and as an officer of AFD Advisors and AMG Associates; CAL Consulting, LLC, of Georgia,  which also does business as Clinacall; Charles A. Lamborn, III, individually and as an officer of CAL Consulting; and Park 295 Corp, of New York.

The Canadian-based defendants are 9262-2182 Quebec Inc; Stephanie Scebba, individually and as an officer of 9262-2182 Quebec Inc.; 9210-7838 Quebec Inc; and Fawaz Sebal, also known as Frank Sebag, individually and as an officer of 9210-7838 Quebec Inc.
           
The FTC would like to thank the Canadian Anti-Fraud Centre; Wisconsin Department of Agriculture, Trade and Consumer Protection; Oregon Department of Justice; and Better Business Bureau of Wisconsin for their valuable assistance with this matter. 

The FTC also would like to acknowledge the Royal Canadian Mounted Police and the Centre of Operations Linked to Telemarketing Fraud (Project COLT) for their valuable assistance.  Launched in 1998, Project COLT combats telemarketing-related crime and includes members of the Royal Canadian Mounted Police, Sureté du Québec, Service de Police de la Ville de Montréal, Canada Border Services Agency, Competition Bureau of Canada, Canada Post, U.S. Department of Homeland Security (U.S. Immigration and Customs Enforcement and the U.S. Secret Service), the U.S. Postal Inspection Service, the Federal Trade Commission, and the Federal Bureau of Investigation. Since its inception, Project COLT has recovered $22 million for victims of telemarketing fraud.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.

NOTE:  The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.  The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.