The Justice Department announced that a jury found a former senior executive and a former sales manager of Epsilon Data Management LLC (Epsilon) guilty of federal criminal charges related to the targeting of millions of U.S. consumers for mass-mailing fraud schemes.
Robert Reger, 57, of Boulder, Colorado, and David Lytle, 64, of Leawood, Kansas, were found guilty of conspiracy to commit mail and wire fraud and numerous counts of substantive mail and wire fraud.
According to evidence presented at the two-week trial, the defendants were key participants in a scheme that knowingly sold targeted lists of consumers and their addresses to perpetrators of fraud schemes involving the sending of false and deceptive mail to consumers over the course of 10years. The defendants committed the crimes while working at data broker Epsilon which used transactional data collected from marketing clients to predict new “responsive buyers” using computer algorithms and a database of 100 million U.S. households. The jury found the defendants knew that their scheme was providing data to fraudster clients. Evidence at trial showed that the defendants used Epsilon’s algorithms to predict new lists of consumers most likely to respond to the frauds and that the defendants’ business unit worked with dozens of clients with scam letters promising large prizes or falsely personalized astrological mailings promising wealth.
As part of the scheme, the conspirators sold the names and address of millions of U.S. consumers to perpetrators of schemes engaged in fraud, knowing that their fraudster clients were targeting elderly and vulnerable people. Evidence at trial showed that the defendants sold nearly 100 lists to just one fraudster client, and that the defendants had many other fraudster clients with scam letters. At trial, elderly victims and their adult children testified about the scam letters victims received falsely promising cash prizes. Evidence showed that each of these victims were targeted for fraud by members of the conspiracy. A number of current and former Epsilon employees also testified, along with three witnesses who previously pleaded guilty to conspiracy to commit mail fraud: a list broker and two Epsilon clients who operated mail fraud schemes.
“This case serves as a warning that the Justice Department Consumer Branch and its law enforcement partners will hold corporate executives accountable for fraudulent use of consumer data,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will investigate and prosecute individuals who use sophisticated technology to defraud consumers.”
“Defrauding elderly and vulnerable consumers will not be tolerated in the State of Colorado,” said U.S. Attorney Cole Finegan for the District of Colorado. “This case is an example of the responsibility both executives and companies hold when it comes to gathering and selling personal data, and I hope other companies take note of the serious outcomes of this case.”
“The U.S. Postal Inspection Service (USPIS) sees the conviction of these individuals as a significant victory in our ongoing efforts to protect older adults from fraud and exploitation,” said Inspector in Charge Eric Shen of USPIS’ Criminal Investigations Group. “These criminals preyed on some of the most vulnerable members of our community, and today's verdict sends a clear message that such predatory behavior will not be tolerated. We will continue to work tirelessly to ensure justice is served and to prevent these crimes from happening in the future.”
Evidence at trial showed that Robert Reger worked at Epsilon from 2005 to 2017, where he led sales teams after building and leading the sales unit engaged in fraud, the Direct to Consumer Unit. When Reger left Epsilon, he was senior vice president overseeing the Direct to Consumer Unit. In convicting Reger, the jury found he intentionally joined in the conspiracy and had specific intent to defraud victims of the schemes.
David Lytle worked at Epsilon from 2012 to 2018 as a business development manager recruiting clients for the Direct to Consumer Unit and was responsible for signing up many of the clients engaged in fraud.
The jury found that Reger and Lytle were guilty of conspiracy to commit mail or wire fraud based on evidence that members of the conspiracy knew they were routinely selling consumer data to fraudsters.
The jury found both Reger and Lytle guilty of seven counts of mail fraud. Evidence at trial showed that the conspirators sold lists of consumers to fraudsters, which caused victims to send checks in response to letters promising large cash prizes. The jury found also Reger guilty of six counts of wire fraud and Lytle guilty of 12 counts of wire fraud in connection with electronic shipments of names and addresses and other emails that carried out the objectives of the scheme to defraud.
A sentencing hearing is scheduled on Sept. 30. Reger and Lytle both face a maximum penalty of 20 years in prison for each count.
In 2018, former Epsilon Vice President Steven Fritz Kessler pleaded guilty to conspiracy to commit mail fraud for his participation in the fraudulent scheme.
The defendants’ former employer, Epsilon resolved its criminal liability via a deferred prosecution agreement in 2021, paying $150 million in penalties and victim compensation. That victim compensation effort has returned $122 million to more than 200,000 victims of fraud schemes for which Epsilon provided data.
USPIS’ Transnational Elder Fraud Strike Force investigated this matter.
Senior Trial Attorney Alistair Reader and Assistant Director Rachael Doud of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Rebecca Weber for the District of Colorado prosecuted the case. Senior Trial Attorney Ehren Reynolds and former Assistant U.S. Attorney Hetal Doshi for the District of Colorado also assisted in the case, along with outstanding support staff from the Civil Division’s Consumer Protection Branch and the U.S. Attorney’s Office for the District of Colorado.
If you or someone you know is age 60 or older and has experienced financial fraud, experienced professionals are standing by at the National Elder Fraud Hotline at 1-833-FRAUD-11 (1-833-372-8311). This Justice Department hotline, managed by the Office for Victims of Crime, can provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is open Monday through Friday from 10:00 a.m. to 6:00 p.m. ET. English, Spanish and other languages are available.
More information about the department’s efforts to help American seniors is available at its Elder Justice Initiative webpage. For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at www.justice.gov/civil/consumer-protection-branch. Elder fraud complaints may be filed with the Federal Trade Commission at www.reportfraud.ftc.gov/ or at 877-FTC-HELP. The Justice Department provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov.
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