Anatomy of a scam

Anatomy of a scam

The invoice, in a white business envelope with a window on the front, looks legitimate. The first indication something is not quite right it is the postage mark indicating it is pre-sorted bulk mail – unusual for an invoice. The document itself, purporting to be from US-Telecom, looks like a standard invoice with your firm’s name and address, a reference number and a notation that you owe $425 for a Telecom Maintenance Agreement with the terms listed as “Net 30 Days.”

All very proper and above board, right? Wrong! These phony invoices are part of a mass-mailing, multi-state fraud being worked by convicted California con man David William Bell. Although law enforcement agencies around the nation are starting to get wise to this scam, thousands of these things are presumably being delivered each week. We got one at The Examiner last week and decided to check it out.

What Bell is hoping is that some recipients of these phony invoices will pass it on to the bookkeeping department, who will send him a check. Since most companies don’t have a team of investigators on the payroll, that probably happens more often than people would care to admit. In Los Angeles alone, the Better Business Bureau received 462 complaints on the US-Telecom invoice scam in 2011.

Bell ignored most of the complaints but weakly asserted that what they mailed were not invoices but a solicitation for new business. Nowhere on the solicitation does UST disclose that the invoice is actually a solicitation.

Title 39, United States Code, Section 3001, makes it illegal to mail a solicitation in the form of an invoice, bill or statement of account due unless it conspicuously bears a notice on its face that it is, in fact, merely a solicitation. This disclaimer must be in very large (at least 30-point) type and must be in boldface capital letters in a color that contrasts prominently with the background against which it appears.

Stacia Crane, public information representative for the Los Angeles division of the U. S. Postal Inspection Service, would not confirm that an official investigation of Bell was underway but said her agency was aware of his actions. Crane referred The Examiner to a USPA notice that said, “A solicitation whose appearance does not conform to the requirements of Title 39, United States Code, Section 3001, constitutes prima facie evidence of violation of the federal False Representation Statute.”

Another problem with a mass-mailing fraud scheme occurs when you lose control of who gets the scam invoices. New York Assistant Attorney General Judith Malkin became aware of the scam when one of the phony invoices showed up in the AG’s office in Syracuse where she works. Malkin quickly took action to prevent any state agencies from sending payments in response and issues a strongly worded cease and desist letter to Bell demanding an accounting of any funds he had received from New York entities.

In an interview this week, Malkin told The Examiner Bell had not responded to her letter but indicated he is in trouble elsewhere. The North Dakota Attorney General’s Office filed a cease and desist order against U.S. Telecom and its principal, David Bell, for “engaging in unlawful acts or practices” by mailing businesses solicitations that could “reasonably be interpreted” as a bill or invoice.

Malkin also alerted us to the efforts of Kenneth White, a partner a Los Angeles law firm that received one of the phony invoices. White, a former federal prosecutor, launched his own investigation. He quickly learned that Bell is a convicted felon who an 11-count complaint accused of grand theft by embezzlement or $227,226.99 from the estate of William S. Bell and Sharon Rae Bell, of check endorsement forgery, and of fraudulently using credit cards to get cash advances and balance transfers. In May 2004, David Bell entered a no contest plea to embezzlement in exchange for two years in state prison and restitution.

If the name US-Telecom sounds vaguely familiar, that is because there are two legitimate entities with almost identical names. US Telecom is the nation’s premier trade association representing service providers and suppliers for the telecom industry – not to be confused with U.S. Telecom, located in the heart of New York City’s Financial District where they specialize in designing and implementing robust data and voice networks. Neither have anything to do with David Bell.

There is a link, however, since two federal trademark actions from the 1990s saw the holders of trademarks for legitimate telecommunications companies successfully sue David Bell for using confusingly similar business names.

In 1995, a company called Tie/Communications sued David Bell and Branden Bell, asserting that they were doing business as “Tie Communications” and “Inter-State Communications.” The court entered judgment against David Bell and Branden Bell, ordering them not to use the Tie Communications name or any other name with “tie” in it, and imposing more than $166,000 in fines, sanctions and costs, which was never paid.

In 1999, Alltel Corporation sued “David Bell” for using the name “All Tell Communications.” The docket shows that David Bell defaulted, and the court ordered David Bell to cease using the Alltell mark or any mark confusingly similar.

Information uncovered in those cases also alleged prior felony convictions including bad check convictions in 1993 and 2002 and a conviction for diverting money accepted for contracting work in 2001.

That is a brief snapshot of the man behind the US-Telecom phony invoice scam. If you receive one of these illegal frauds, don’t send him money. Contact the Better Business Bureau in Southeast Texas www.southeasttexas.bbb.org or call (409) 835-5348.

 

James Shannon can be reached at (409) 832-1400, ext. 249, or by e-mail at james [at] beaumontbusinessjournal [dot] com.

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