State Obtains Judgment Against Internet Scam Operator

Attorney General Spitzer today announced a consent judgment against a Long Island-based web site operator and his associates who ran a string of fraudulent internet operations.

Following the filing of a lawsuit by Spitzer's office in September 2005, Jeffrey Augugliaro of Malverne was ordered to immediately pay over $200,000 to consumers who were victimized by a mortgage payment scam he perpetrated through his business, Brixdale, Inc. The judgement entered in State Supreme Court in Mineola required him to pay additional restitution of over $700,000 to affected Brixdale consumers and to make a payment of $100,000 to a charitable organization designated by the court, with the advice of the Attorney General, that serves the stated objectives of a purported charity through which Agugliaro conducted a separate fraudulent solicitation scam.

The Court has designated that the $100,000 be distributed to the American Cancer Society, whose mission is consistent with the purported purposes of the organizations, namely cancer prevention, treatment and service. In addition, evidence suggested numerous consumers who donated money to the defendants' fake charity thought they were donating to the American Cancer Socirty.

The judgment also requires Augugliaro to shut down all his businesses and websites, permanently bars him from operating any further internet operations, and unless a $100,000 performance bond is posted, bars him from operating any type of consumer business in New York state.

Using the website, brixdale.com, Augugliaro promised consumers that by allowing him to take control of the electronic transfers of their monthly mortgage payments, consumers could not only pay off an entire 30-year mortgage in full, but could also easily make a quarter of a million dollars, all in a matter of months. Nationwide, about 3,000 consumers signed up.

The lawsuit alleged that the Brixdale scam was an illegal pyramid scheme, whereby consumers were encouraged to recruit others to sign up. Those new members, in turn, had to recruit new members to perpetuate the scheme. Consumers were lured into making "extra" mortgage payments, but rather than making the mortgage payments as promised, Augugliaro siphoned off some of the funds himself and to pay commissions to others. As a result, hundreds of thousands of consumers' dollars were drained from the Brixdale account.

In another scam, Augugliaro set up a business named People Helping People and a purported charitable organization named the American Cancer Aid Foundation, and solicited donations for cancer prevention research on the internet. Donors were promised two free airline tickets worth up to $1,600 that they could use to fly anywhere in the world. The lawsuit charged that none of the money solicited was ever donated to charity, but was misappropriated by Augugliaro and his associates. Furthermore, there were no free airline tickets, and consumers received nothing for their donation. The "free" airline ticket scam was also promoted through other businesses run by Augugliaro, and was offered on his websites, massmarketingprogram.com and jamco.com

Augugliaro recruited individuals to work for him in promoting his airline ticket scams by falsely promising that they could earn as much as $30,000 per month working at home by recruiting others. At one point, he had as many as five thousand "directors" worldwide who promoted his scams. These directors set up their own websites to promote the "free" airline tickets, placed advertisements on the internet, and in some cases sold fake tickets on e-Bay. The lawsuit alleged that thousands of consumers were defrauded, including cancer victims.

The case was handled by Assistant Attorney General Victoria L. Safran, and Investigators Angel Rivera and Paul Matthews under the supervision of Juan Merchan, Assistant Attorney General-In-Charge of the Nassau Regional Office.

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