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The Internet and Multi-Million $$ Sales Schemes
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The explosion of
Internet
marketing is uprooting traditional retailers as well as increasing consumers’ risk of falling prey to negative option marketing schemes. In particular, “risk free” trial offers that automatically convert to paid plans are rampant on the Internet. Numerous complaints to the Federal Trade Commission ("FTC") about unauthorized credit card charges recently resulted in a formal FTC investigation of interrelated companies, the appointment of a Federal Receiver, and the engagement of Brandlin & Associates to provide expert accounting analyses.
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Storming the Virtual Store
With the assistance of local law enforcement, Brandlin & Associates and the Federal Receiver quickly took control of the defendants' multiple operating locations, including:
- Physical custody of books and records, computers, bank accounts and incriminating evidence;
- Freezing millions of dollars in operating accounts; and
- Recovering significant cash on hand, including $500,000 in a safety deposit box.
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Uncovering the Scam
Our forensic accounting investigation revealed a quasi “boiler room operation” to defraud consumers by presenting a “risk free” skincare trial offer wherein consumers provided credit card information to cover shipping and handling fees. However, unbeknownst to the consumers, their credit cards were subsequently and routinely charged for unwanted products. The fraud included a highly sophisticated scheme involving:
- 30+ merchant credit accounts;
- 100+ aliases;
- Credit card chargeback procedures;
- 30+shell companies;
- 60+ bank accounts; and
- Procedures to move monies from the defendants’ operations to personal bank accounts.
In all, our forensic investigation identified over $20 million dollars in profits, with the defendants’ entities eluding payment of associated taxes.
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“The financial and corporate web created by these defendants was incredibly complex. It could not have been unraveled without the relentless efforts of Brandlin & Associates.”
Charlene Koonce
Partner &
Federal Receiver
Scheef & Stone, L.L.P.
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Brandlin & Associates is a proud sponsor of the
2016 7th Annual SAMA Conference
June 1 - 3, 2016
The Lodge at Torrey Pines, La Jolla
Jeff Brandlin will be a panelist on
The Anatomy of a Successful Workout
Martin Cauz will be a panelist on
Turnaround
We hope to see you there!
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Brandlin & Associates is an exclusive provider of financial workouts and restructurings, forensic accounting, financial due diligence and litigation support for senior lenders, mezzanine funds, private equity groups, attorneys and middle market companies. We pride ourselves on offering superior technical expertise, years of practical experience and unparalleled service to decipher financial and operational performance metrics. As a result, our clients are able to make informed decisions in a timely manner.
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Brandlin & Associates
Los Angeles 310.789.1777 |
New York 646.475.8507
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