Neal D. Saferstein, 37, of Mount Laurel, NJ, was sentenced today to 276 months in prison for running a multi-million dollar telemarketing scam that defrauded as many as 400,000 small businesses out of as much as $75 million, announced U.S. Attorney Zane David Memeger. Saferstein pleaded guilty October 30, 2009 to wire fraud, mail fraud, and two counts of filing false tax returns.
Saferstein was the President and Chief Executive Officer of GoInternet.net, Inc. (“GoInternet”), which did business at 20 N. Third Street, and 6 Strawberry Street, in Philadelphia. The court determined that GoInternet derived more than $58 million in gross revenues from a fraudulent telemarketing scheme that lasted from 2001 to 2004.
Co-defendant Tyrone L. Barr, 35, of Philadelphia, was Vice President of Customer Service and Regulatory Affairs. Barr was sentenced earlier this week to one year and one day in prison. Co-defendant Billy D. Light, 41, of Voorhees, NJ, was Chief Information Officer. Light was sentenced earlier this week to three years probation, with the first six months in home confinement, 100 hours of community service, and a $5,000 fine.
In addition to the prison term, U.S. District Court Judge Cynthia M. Rufe ordered Saferstein to pay the Federal Trade Commission Civil judgement of $58 million, and to pay a $100,000 fine.
The entire GoInternet business model was designed to defraud customers and potential customers into making monthly $29 payments for Internet-related services without their knowledge or authorization. GoInternet’s telemarketers duped customers into receiving a welcome packet without disclosing that the mailing would trigger monthly bills unless the customer called to cancel. The packets were then designed to look like bulk business mail to prompt it to be disregarded or thrown away. GoInternet engaged in “cramming.” It would place monthly charges on its customers’ local telephone bills, without authorization, which customers routinely paid without noticing. By approximately 2003, GoInternet employed over 1,000 telemarketers and was signing on approximately 7,500 new customers every week. By the end of 2003, GoInternet’s customer base included more than 350,000 businesses.
Saferstein prevented customers from receiving notices disclosing the cost of services, and delayed and prevented refunds from going to customers that had been defrauded and were promised refunds. Barr created fake sales-verification tapes which were purported to contain the telemarketer’s call to the customer and the customer’s consent. Saferstein used GoInternet corporate funds for significant personal expenses and the government alleged that he failed to report more than $1.7 million in income from the years 2000 to 2003.
Source: U.S. Attorney’s Office, Eastern District of Pennsylvania