FTC Pursues Alleged $70-Million Montana Crammers in Civil Complaint

Consumers’ phone bills received additional and allegedly fraudulent charges of $9.95 to $24.95 plus taxes and fees, totaling more than $70 million charged to consumers since January 2008, the FTC said. It said consumers have challenged some charges, resulting in the companies retaining less than $30 million of the charges. “The charges billed on behalf of Defendants usually appear on one of the last pages of a consumer’s multi-page telephone bill,” the complaint said. Hundreds of consumers have received the extra charges, the FTC added. It included hundreds of pages of documents of consumer accounts, which focus on the companies. “I am requesting this company be investigated for improper/fraudulent practices,” Maryland resident Debra Bryan said of American eVoice charges on her Verizon bill. “How many other unsuspecting phone customers are being charged? ... I was charged for 15 months.” Her Aug. 1 letter requested reimbursement of the full money charged to her account.

Targeted companies include American eVoice, Emerica Media, FoneRight, GVM, HearYou2, Network Assurance, SecuratDat, Techmax and VMP, as well as Bibliologic, Ltd. as a relief defendant. Bibliologic is a nonprofit created in December 2009 and received “ill-gotten assets derived from the unlawful acts and practices alleged in this Complaint,” the FTC said. The companies named in the complaint have been “led by Steven Sann” and “carried out their cramming operation through a maze of interrelated companies,” the FTC said.

The FTC wants the targeted parties stopped and to pay the money back. It asked the court for “such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief, including ... a preliminary injunction and an order freezing assets.” The agency requested a “permanent injunction” to avoid future problems. Consumers should receive money and there should be an accounting for all money acquired through cramming, the FTC said. The request asked the court to freeze the defendants’ assets. It wants to forbid them from “transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any asset, or any interest therein,” that request said (http://xrl.us/bobvqb).

But on Friday, attorney Michael Sherwood, representing multiple defendants including the alleged leader of the cramming operation, asked for a stay of the proceedings. “After a year and a half long investigation, [the FTC] chose to bring this action at the same time that the United States Government is conducting an active criminal investigation against Mr. Sann related to the exact same conduct underlying the Plaintiff’s case herein,” Sherwood’s request said. This “two-pronged attack” would cause defendants to “suffer substantial and unnecessary prejudice to their constitutional rights,” Sherwood said. The FTC is looking into “underlying conduct ceased long ago, so there is no urgent need for this case to proceed on a preliminary injunction basis, or at all, while the criminal matter is sorted out,” his filing said, arguing that the current lawsuit is unnecessary. “Two nationwide class action settlements have made it possible for consumers to obtain full relief,” Sherwood said. “Those settlements have been preliminarily approved by the United States District Court for the Northern District of California.” The request pointed to the Moore v. Verizon settlement (http://bit.ly/Wqmy9Q) and said the defendants were compelled to provide refunds through that. The FTC, due to these settlements, “is now barred from seeking damages on behalf of allegedly injured consumers billed through Verizon and AT&T,” Sherwood said.

"Sann cannot possibly defend himself in this [FTC] civil action without waiving his Fifth Amendment privilege against self-incrimination,” the request said. “Given that the United States Government is simultaneously proceeding on parallel tracks concerning the same facts and circumstances, there can be little doubt that Mr. Sann’s civil discovery responses will be used against him to further the criminal investigation and prosecution.” Sann plans to decline to testify, Sherwood said. Sherwood said that since “at least the fall of 2011, a federal grand jury has been investigating Mr. Sann and the businesses to which he is alleged to be related.” That refers to an ongoing investigation on behalf of the U.S. attorney’s office of Montana, which that office confirmed to Sherwood, his request said. It described search and seizure warrants carried out in November 2011 and said “significant records relating to [Sann’s] business were seized by the federal government” and aren’t accessible now. There’s now potential for defendants to face both civil and criminal charges, thanks to the FTC’s actions, the attorney argued.