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April 30, 2004

Alleged Nationwide Scheme Preying on Elderly Must Stay Out of Iowa and Take Iowans off Prospect List

"We alleged mailings were used to identify elderly consumers who are vulnerable to big-ticket telephone scams mostly operating out of Canada," Miller said.

DES MOINES. Attorney General Tom Miller said that a Polk County District Court Judge today completely banned a direct mail and telemarketing operation from doing any business in Iowa.

Miller's office seized about 12,000 pieces of mail that were headed to the defendant in the consumer fraud lawsuit, Richard Panas of Rock Hill, South Carolina. "This mail was from vulnerable older people all over the country who had been tricked into sending checks to Panas in response to his bogus prize mailings," Miller said.

Judge Robert B. Hanson today also ordered Panas and his companies to immediately remove all Iowa names and addresses from the "lead" or "prospect" lists he sells.

"Panas runs one of the largest list-broker operations in the country," Miller said. "When people responded to his deceptive prize mailings, they would go on lists - lists used by other con-artists for big-ticket fraud schemes, such as telemarketing scams operating from Canada."

Miller applauded Ken Herndon, the owner of "PKG's" mail service store in Clive, for his cooperation in thwarting Panas's scheme. Late last year, Panas set up a mailbox at the business, which soon began receiving huge amounts of mail headed to Panas from mostly older people around the US and Canada.

Miller's office asked a court for permission to seize the mail, arguing that it represented a predatory scheme to cheat the elderly. "First, Panas and his cohorts tricked vulnerable older people into sending checks in pursuit of huge prize winnings," he said. "Then Panas would profit again by selling the list of victims - a very hot list of vulnerable senior citizens. Finally, people on such lists would be preyed upon again by other unscrupulous schemes."

The Court today also ordered Panas to pay $75,000 to the State, to be used for continued work to prevent consumer fraud against older Iowans.

The Court also ordered that Panas and his companies would be subject to a civil penalty of $360,000 if they violate the requirements of the Consent Judgment filed today.

In addition to taking Iowans off of all the lists he sells, Judge Hanson prohibited Panas from sending any mail into Iowa, sending mail from anywhere in Iowa to other locations, and using an Iowa mail address with any solicitation.

"I think we have thoroughly prohibited Panas from operating in Iowa," Miller said. "We also are working with other state and federal officials and providing whatever information we have that may be helpful to them."

Background on the seized mail:

The seized mail in Iowa came from consumers across the U.S. and Canada. It will go back to the consumers. Iowa consumers totaled under 100 of the 12,000 pieces, and they already have been informed about the situation.

The impound order covered mail coming to the "PKG's" mail drop box in Clive arranged in mid-November by Richard James Panas of Rock Hill, South Carolina, after the Iowa Attorney General's Office learned that Panas was under active investigation by federal authorities, and that Nevada authorities had issued an arrest warrant for him. PKG's was NOT subject to the consumer fraud investigation and cooperated fully with the Attorney General's Office.

The seized mail came from consumers in response to several prize-oriented mail solicitations sent by Panas under various business names. "The solicitations misled many people to think they had won or might likely win huge prizes of thousands or millions of dollars," Miller said. The mail asked for a small payment of $10 or $20 for things like 'administration' or 'pre-processing' fees.

"The mailings are illegal themselves," he said. "They violated our consumer fraud laws and especially our Prize Promotions law that has many specific requirements aimed at protecting people from deceptive solicitations."

Panas's List-Broker Operations, and Canadian Telemarketing Scams:

One of Panas' businesses, "RP Associates," operates a web site that sells a variety of "lead lists" related to sweepstakes and prizes. List names include "Award Notification Responders," "Dream Come True Sweepstakes Entrants," and many others. Iowans' names now must be removed from lists offered by Panas and his businesses.

Miller said most "boiler-room" big-ticket phony prize schemes now operate from outside the U.S., especially from Canada. The "undercover telephone sting" pioneered by the Iowa Attorney General's Office during the 1990s, and then employed by U.S. agencies and other states all over the country, largely has driven large, organized, big-loss telemarketing operations out of the U.S. "Unfortunately, they are flourishing in Canada - and calling our people in the U.S.," he said.

A typical big-ticket telemarketing scam from Canada would involve a call to a vulnerable older Iowan, a pitch that the Iowan had won millions of dollars in a lottery or sweepstakes or prize promotion - and a requirement that the Iowan pay $1,000, $3,000, $5,000 or even more to collect the prize. (The scammers use many ruses to justify the payment the victim must make to get the millions in prize money - paying taxes in advance, customs fees, etc.)

"As always, these telemarketing scams rely on targeting vulnerable older persons who may not have quite the same judgment they had in earlier years," Miller said. "They are cynical and vicious schemes and we continue to fight them. Even though we have driven most of the perpetrators out of the U.S., we continue to discover Iowans who are victimized and lose thousands of dollars."

"Now we've protected Iowans at least from the lists generated by Richard Panas," Miller said.

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