New York City is coming back now better than ever. I could not kill it in my first seven years, and the COVID-19 Pandemic helped me. Crime is up, schools are the worst they have ever been, very few people want to ride the subways, because of all the stabbings and people being pushed onto the tracks. We can't go any lower, the only way is up, and I will have built a legacy. The envelope goes to Charlene Developer #9.
Jennifer Shah and Stuart Smith Allegedly Profited by Generating Lists of Victims for Targeting and Directing Co-Conspirators to Defraud Them
Audrey Strauss, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Superseding Indictment charging JENNIFER SHAH and STUART SMITH with conspiracy to commit wire fraud in connection with telemarketing and conspiracy to commit money laundering. The case has been assigned to United States District Judge Sidney H. Stein.
SHAH and SMITH were arrested earlier today and will be presented this afternoon in Salt Lake City federal court before United States Magistrate Judge Dustin Pead.
Manhattan U.S. Attorney Audrey Strauss said: “Jennifer Shah, who portrays herself as a wealthy and successful businessperson on ‘reality’ television, and Stuart Smith, who is portrayed as Shah’s ‘first assistant,’ allegedly generated and sold ‘lead lists’ of innocent individuals for other members of their scheme to repeatedly scam. In actual reality and as alleged, the so-called business opportunities pushed on the victims by Shah, Smith, and their co-conspirators were just fraudulent schemes, motivated by greed, to steal victims’ money. Now, these defendants face time in prison for their alleged crimes.”
HSI Special Agent-in-Charge Peter C. Fitzhugh said: “Shah and Smith flaunted their lavish lifestyle to the public as a symbol of their ‘success.’ In reality, they allegedly built their opulent lifestyle at the expense of vulnerable, often elderly, working-class people. As alleged, disturbingly, Shah and Smith objectified their very real human victims as ‘leads’ to be bought and sold, offering their personal information for sale to other members of their fraud ring. Working with our partners at the NYPD and the United States Attorney’s Office, SDNY, and with the assistance of HSI Salt Lake City, HSI New York worked to ensure that Shah and Smith will answer for their alleged crimes. As a result, their new reality may very well turn out differently than they expected.”
NYPD Commissioner Dermot Shea said: “These individuals allegedly targeted and defrauded hundreds of victims but thanks to the hard work of the NYPD and our law enforcement partners, this illegal scheme was brought to an end. I congratulate the NYPD detectives, Homeland Security Investigations, and the U.S. Attorney for the Southern District of New York for their hard work in bringing these persons to justice.”
According to the allegations in the Superseding Indictment[1]:
From 2012 until March 2021, JENNIFER SHAH and STUART SMITH, together with others (collectively, the “Participants”) carried out a wide-ranging telemarketing scheme that defrauded hundreds of victims (the “Victims”) throughout the United States, many of whom were over age 55, by selling those Victims so-called “business services” in connection with the Victims’ purported online businesses (the “Business Opportunity Scheme”).
In order to perpetrate the Business Opportunity Scheme, Participants, including SHAH and SMITH, engaged in a widespread, coordinated effort to traffic in lists of potential victims, or “leads,” many of whom had previously made an initial investment to create an online business with other Participants in the Scheme. Leads were initially generated by sales floors operating in, among other places, Arizona, Nevada, and Utah. The owners and operators of those sales floors operated in coordination with several telemarketing sales floors in the New York and New Jersey area, including in Manhattan, and provided lead lists and assistance in fighting Victim refund requests to other Participants operating those floors.
SHAH and SMITH, among other things, generated and sold leads to other Participants for use by their telemarketing sales floors with the knowledge that the individuals they had identified as “leads” would be defrauded by the other Participants. SHAH and SMITH received as profit a share of the fraudulent revenue per the terms of their agreement with those Participants. SHAH and SMITH often controlled each aspect of the frauds perpetrated by other Participants on the individuals they had identified by, among other things, determining which “coaching” sales floor could buy leads from them, selecting the downstream sales floors to which the “coaching” sales floor was permitted to pass the leads, choosing the firms to provide “fulfillment” services, that is, documents and records purporting to demonstrate that the services the Participants claimed to provide to those Victims were actual and legitimate, setting how much the downstream sales floors could charge, and determining which “products” each of the downstream sales floors could sell.
To perpetrate the Business Opportunity Scheme, certain of the Participants sold alleged services purporting to make the management of Victims’ businesses more efficient or profitable, including tax preparation or website design services, notwithstanding that many Victims were elderly and did not own a computer. At the outset of the Business Opportunity Scheme, certain Participants employed by a purported fulfillment company sent a given Victim electronic or paper pamphlets or provided so-called “coaching sessions” regarding these purported online businesses, but at no point did the defendants intend that the Victims would actually earn any of the promised return on their intended investment, nor did the Victims actually earn any such returns.
SHAH and SMITH undertook significant efforts to conceal their roles in the Business Opportunity Scheme. For example, SHAH and SMITH, among other things, incorporated their business entities using third parties’ names and instructed other Participants to do the same, used and directed others to use encrypted messaging applications to communicate with other Participants, instructed other Participants to send SHAH’s and SMITH’s shares of certain fraud proceeds to offshore bank accounts, and made numerous cash withdrawals structured to avoid currency transaction reporting requirements.
SHAH, 47, of Park City, Utah, and SMITH, 43, of Lehi, Utah, are each charged with one count of conspiracy to commit wire fraud in connection with telemarketing through which they victimized 10 or more persons over the age of 55, which carries a maximum sentence of 30 years, and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss praised the outstanding investigative work of HSI’s El Dorado Task Force and the NYPD. Ms. Strauss also thanked HSI Utah and the United States Attorney’s Office for the District of Utah for their support and assistance in this investigation.
If you believe you have been a victim of the scheme described above, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov. You may also report it to Detective Christopher Bastos at 917-480-7167 or christopher.bastos@nypd.org.
The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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Mayor Bill de Blasio today announced three new initiatives to maintain clean streets across New York City and help spur on the City’s recovery. These initiatives build on additional resources and programs launched last September to provide essential cleaning resources and tools in neighborhoods hardest hit by the COVID-19 crisis.
Life Alert Failed to Comply with New York Law Permitting Consumers for Personal Emergency Services to Cancel Contracts Within Seven Days of Signing
New York Attorney General Letitia James today scored a victory for potentially thousands of New Yorkers locked in illegal contracts. In an agreement with Life Alert Emergency Response, Inc., Attorney General James has negotiated for more than 5,500 New York consumers to cancel their current contracts with the company before the end of the 36-month contract they signed. Additionally, Attorney General James has negotiated for Life Alert to provide refunds to more than 700 New York consumers who unsuccessfully tried to exercise certain cancellation rights in the past. The agreement resolves an investigation into Life Alert’s failure to include certain mandatory cancellation provisions — required by New York law — into the personal emergency response service contracts.
“When the elderly and disabled fall and hurt themselves, they trust Life Alert to come to the rescue, but Life Alert violated that trust when they refused to honor consumers’ rights,” said Attorney General James. “Today’s agreement holds Life Alert accountable and ensures they not only protect seniors’ physical well-being, but their rights as consumers going forward as well. New York’s seniors can trust that I will always fight for their best interests.”
The California-based personal emergency response system company — best known for its advertising slogan, “Help! I’ve fallen, and I can’t get up!” — offers personal emergency response systems to consumers. Emergency response systems allow consumers to notify a response center in the case of an emergency, typically through activating a pendant or bracelet worn by the consumer.
Consumers signing up for Life Alert’s service are required to sign a 36-month monitoring service agreement and pay a monthly service monitoring fee, plus upfront programming and installation fees. Depending on the specific service they choose, consumers pay between $49.95 and $89.95 per month for 36 months of service, in addition to upfront fees and a shipping charge (typically $198.00) — for a total payment ranging from $1,996.20 to $3,436.20 over the 36-month term.
In order to protect consumers who want such services from rushing into agreements, New York state adopted a law that specifically deals with these type of contracts — General Business Law § 391-l. The law requires for consumers to be verbally told, as well be notified in their written agreement, at the time they sign the contract or purchase a service, that they have seven days after signing the agreement to cancel it. Moreover, the seven-day cancellation period does not begin to run until such disclosures are made.
Attorney General James’ investigation found that — from at least January 2014 through February 2020 — Life Alert did not make these oral and written disclosures, affecting over 16,000 New York consumers who contracted with Life Alert (some continue to utilize the service on a month-to-month basis, while others cancelled the service after their contract terminated). Further, when consumers tried to cancel their service, Life Alert refused. The company instead told consumers that they had signed a 36-month agreement and that the best it could do was either lower the consumer’s monthly payments or allow them to cancel only if the consumer agreed to keep their service for six additional months. Because Life Alert never gave the oral and written disclosures explaining the seven-day cancellation right required by New York law, consumers were, in fact, entitled to cancel their contracts immediately, upon request.
Under the terms of today’s agreement, Life Alert will send notices to all of its current New York customers who are in the first 36 months of their contracts and who have never requested cancellation, notifying them of their right to cancel their Life Alert contracts immediately, if so desired. Additionally, for those consumers who had unsuccessfully requested cancellation during the 36-month term of their contracts, Life Alert will offer refunds of the amounts they paid to the company 30 days after they made the cancellation request, up to 24 months of payments or the number of payments they actually made, whichever is less. Life Alert will also pay the state of New York $750,000 in penalties, costs, and fees for the violations of state law.
"I am appalled and horrified to learn that an Asian American man who was riding on the New York City subway was brutally beaten and injured. These hateful acts of violence have no place in New York - period.
"The misguided rhetoric which has vilified Asian Americans throughout this pandemic is highly dangerous, and now we are seeing more and more painful real-life consequences. It is sickening and I want every New Yorker who identifies as part of the Asian American community to know this: in this state we not only condemn the hateful rhetoric, but we stand with you because we are all one family, united against hate.
"I am directing the New York State Police Hate Crimes Task Force to offer their assistance in the investigation of this violent attack.""I am appalled and horrified to learn that an Asian American man who was riding on the New York City subway was brutally beaten and injured. These hateful acts of violence have no place in New York - period.
"The misguided rhetoric which has vilified Asian Americans throughout this pandemic is highly dangerous, and now we are seeing more and more painful real-life consequences. It is sickening and I want every New Yorker who identifies as part of the Asian American community to know this: in this state we not only condemn the hateful rhetoric, but we stand with you because we are all one family, united against hate.
"I am directing the New York State Police Hate Crimes Task Force to offer their assistance in the investigation of this violent attack."
