$300 million magazine scam bilked senior citizens out of $1,000 a month, feds say
A Kansas businessman and dozens of others are charged in what authorities are calling a $300-million magazine subscription scam targeting senior citizens.
Russell “Rusty” Rahm, the CEO of Subscription Ink Co. and Millennium Marketing in the Kansas City area, is among 60 defendants in the widespread investigation into an alleged predatory scheme to bilk older Americans — some of whom paid over $1,000 in monthly subscriptions, according to federal authorities. Overall, the defendants are accused of stealing from more than 150,000 people.
The U.S. Attorney for Minnesota, FBI and U.S. Postal Service announced the indictments Wednesday.
“This case represents the largest elder fraud scheme in the nation. More than 150,000 elderly and vulnerable victims across the United States have been identified in what is essentially a criminal class action,” U.S. Attorney Erica H. MacDonald said in a news release. “Unfortunately, we live in a world where fraudsters are willing to take advantage of seniors, who are often trusting and polite.”
Rahm did not immediately respond to an email from McClatchy News to Subscription Ink Co. seeking comment Wednesday.
According to court documents, Rahm’s companies in Shawnee stood at the top of the scheme, providing “an array of services to companies involved in fraudulent telemarketing sales.” This included sales leads, managing orders, billing, and collecting fees from defrauded customers in exchange for a cut of the money, authorities say.
The companies operated in 14 states across the U.S., including Kansas, Missouri, Florida, Georgia, Mississippi, California, North Carolina, Illinois, Iowa, Minnesota, Colorado, Arizona, New Mexico and Arkansas.
In the conspiracy, the defendants and the companies they owned are accused of purchasing and selling lists of magazine subscribers among themselves. Then telemarketers devised “lies and misrepresentations” to sign up unsuspecting consumers for more subscriptions, according to court documents.
For example, a 65-year-old Maryland woman identified as Phyllis S. told investigators she signed up for a magazine subscription a few years ago. Afterward, telemarketers began calling her every day claiming she owed money for an existing subscription, authorities say, and she provided her credit card information in hopes the charges would end.
By 2017, she was receiving 20 magazines at a cost of $400 to $1,000 a month. In one month, she was charged a combined $1,500 by 17 magazines in eight states, authorities say.
“The thieving greed of fraudsters who target senior citizens knows no bounds,” FBI Minneapolis Special Agent in Charge Michael Paul said in the news release. “Using a tactic like telemarketing magazine sales, these deceitful scam artists bilk hard earned money from their aging victims – leaving so many financially devastated in their retirement years and without recourse for recovery.”
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