Dozens in O.C. Held in Telemarketing Fraud Inquiries

Three Orange County outfits and dozens of local employees have been snared in a nationwide crackdown that produced criminal charges against nearly 1,000 telemarketers over the last 2 1/2 years.

The state and federal probes featured undercover agents and volunteer retirees who posed as victims to record telephone solicitations by telemarketers.

The telemarketing outfits are accused of luring victims with fraudulent pitches for sweepstakes prizes, trips, jewelry, investments, or donations to charity.

As part of the scams, telemarketers allegedly sought elderly residents and people with bad credit to offer them credit cards for high fees, sold bogus investments in a wide range of merchandise, and told consumers they had won valuable prizes that could be collected only for a fee.

Dubbed “Operation Double Barrel,” this effort has become “the most extensive operation ever directed at dishonest telemarketing,” Attorney General Janet Reno said.

On Thursday, authorities announced plans to arrest 40 people on criminal charges. Locally, the County of Orange Boiler Room Apprehension Task Force (COBRA) participated in the investigation.

Investigators say three Orange County groups, using similar tactics, bilked people out of a total of $2.22 million.

Authorities said staff at Magtopia Inc. in Garden Grove and Santa Ana called elderly people, told them they had won valuable prizes and informed them that to collect, they must pay a fee for the award. Many people allegedly received nothing, while a few got inexpensive watches or magazine subscriptions worth less than what they paid.

From June 1995 to May 1997, the company allegedly received $1.1 million from nearly 1,900 victims across the country, authorities said.

Magtopia owner Robert Flarida, 30, of Anaheim Hills was arrested last week and charged with mail and wire fraud, and money laundering. Three other employees were arrested and charged with mail and wire fraud. They are Doreen Woods, 32, of Santa Ana; Jason Garcia, 30, of Midway City; and Rachel Bennett, 26, of Los Alamitos.

All four have pleaded not guilty.

On Wednesday, officials also arrested Huntington Beach resident Gregory Alan Reeves, 48, and charged him in a telemarketing scam that allegedly bilked at least 24 people out of $50,000 since May 1993. Reeves, who allegedly used the name Randall Fitzgerald during his telemarketing effort, has not entered a plea.

In another case, authorities accused four Orange County men of defrauding about 40 people out of at least $70,000 in less than a year. Arrested Wednesday were Jeff James Mortinson, 33, of Anaheim; Michael Keith Engelbart, 37, of Garden Grove; and Donald Chad Foster, 22, of Anaheim. Mitchell Brian Dow, 36, of Fullerton surrendered Thursday to the Orange County Sheriff’s Department. All have pleaded not guilty.

In Cerritos, Best Publishers and Pacific West Concepts were accused of running fraudulent magazine sales companies that allegedly bilked 800 people out of a total of $300,000 from January 1996 through April 10, 1997.

This week, authorities arrested company employees Gerald Ruiz, 46, of Buena Park, and Kenneth Cook, 41, of Cypress, charging them with mail and wire fraud. They have not entered a plea.

Authorities have also issued arrest warrants for Pacific West staff members Martha Manion, 49, of Irvine; Lorraine Howarth, 43, of Cypress; Melissa Hargiss, 39, of Las Vegas; and Mario Talamante, 26, of Montebello.

Since Double Barrel began in July 1996, 795 people have been charged with federal crimes, including wire and mail fraud, money laundering and racketeering, and 194 others have been charged with state crimes.

The investigation involved 20 U.S. attorney’s offices, 21 FBI field offices, 35 state attorneys general, the Postal Inspection Service, the Federal Trade Commission, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

“Our reach is now national in scope,” said Georgia Attorney General Thurbert Baker. “But to say we’ve cured the problem would be a misstatement.”

This week’s announcement culminates the second nationwide effort by federal and state law enforcement officials to crack down on telemarketing fraud.

Three years ago, in a similar sweep called “Operation Senior Sentinel,” officials said they had charged more than 500 alleged telemarketing con artists.

One of the cruelest scams, officials said, is the so-called “rip and tear.” Small groups of telemarketers working this scam typically call previous victims, pose as law enforcement officials, and say they can help recover some of the victims’ losses if the victims will pay more money for the recovery effort.

“Anyone who calls you, tells you they’re from the FBI and asks you to pay a fee so they can get your money back, is lying,” Reno said. “No federal law enforcement agency will ever charge fraud victims a dime when they try to get money back for victims.”

Officials called their effort “Double Barrel” because the involvement of federal prosecutors makes it possible to prosecute such crimes in federal or state venues.

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Bloomberg News and Associated Press contributed to this story.