Opinion ID: 4716
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: This case involves a telemarketing scheme operated from November 1, 1989 through July 31, 1990, involving 18 defendants and over 3500 victims nationwide. Appellant, Douglas Cox, started the boiler room operation and became its president. It was called the National Awards Center (NAC) and was based in Arlington, Texas. Appellant, Garrett Tansley, as a representative of a Florida mailout center, Marketing Response Group (MRG), caused numbered postcards to be mailed throughout the United States guaranteeing that the recipient had won at least one of Top 5 Fabulous Premiums, each having stated retail values ranging from $500 to $25,000. If the recipient called the number inquiring about their prizes, he would be subjected to a high-pressure phone sale by a scripted salesperson. The callers would be asked to purchase a water filter worth about $45 for $429 and told that they would then be eligible for two prizes. The phone seller would request the caller's credit card number and would reassure the buyer that the potential awards included a $25,000 car, a $5,000 cashier's check, $5,000 in retail merchandise checks, men's and ladies' diamond watches valued at $500 and a $1,000 U.S. Savings Bond. In reality the only gifts ever sent were the merchandise checks worth from $0 to $7 and the watches worth between $15 and $30 each. The misrepresentations in the sales pitch included statements that the 2 Environmental Protection Agency (EPA) would require all homes to have the filter within a year, that the chlorine in water caused cancer, hardening of the arteries and other diseases and that the filter would also remove all algae, rust, bad tasting odors and radon gas from the water. There was testimony that in reality, the tap water had no threat of chlorine poisoning and that other various alleged harms were fabricated. If a person would not purchase a filter he would then be asked to send in $12.95 to obtain his or her prize, invariably the worthless merchandise checks. The callers were also told that only two percent received white postcards and that very few also had the high number of 5000 on them and this meant that they had a very high probability of winning. In reality all of the cards were white and had the number 5000 printed on them and were identical in all respects. NAC then had to find various companies to launder the various credit card purchases because most banks would not handle telemarketing transactions. The middlemen entities would send the purchases though their own merchant accounts in order to launder the credit card monies. These processors are called factors and included the United Financial Group, Inc. having a merchant account with Malibu Savings Bank, Costa Mesa, California; American Data Base Corporation having a merchant account at Huntington National Bank, Shaker Heights, Ohio; and S & G Enterprises having a merchant account at Vermont National Bank, Rutland, Vermont. There was substantial testimony supporting the convictions of 3 Cox and Tansley. Both men were convicted of conspiracy in count one of the indictment delineating the objects of the agreement as 1) mail fraud, in violation of 18 U.S.C § 1341; 2) wire fraud, in violation of 18 U.S.C. § 1343; 3) bank fraud, in violation of 18 U.S.C. § 1344; 4) the engagement of an unlawful lottery, in violation of 18 U.S.C. § 1302; and 5) the laundering of monetary instruments, in violation of 18 U.S.C. § 1956(a) (1) and (A) (i). Tansley was charged with wire fraud in count 2, but he was found not guilty of sending a fax interstate to Cox detailing the operation. The indictment went on to charge Cox with a total of 15 counts. Cox was sentenced to imprisonment for 121 months each on count 1 for conspiracy, and counts 3 through 9 and 27 for wire fraud. He was further sentenced to 60 months each on counts 28 and 29 for bank fraud and counts 30 through 33 for money laundering. All sentences are to run concurrently. He was further sentenced to a three year term of supervised release and ordered to pay $5,577 restitution and a $750 special assessment. Tansley was sentenced on count 1 to 55 months imprisonment, to a three year supervised release, ordered to pay $5,577 restitution and a $50 special assessment.