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Post date: April 14 2003

Work-at-home Companies Sued For Fraud

Attorney General Spitzer today sued two Central New York companies alleged to have duped dozens of people into participating in phony work-at-home schemes.

"Work-at-home schemes are attractive to many people in all walks of life, including homemakers, senior citizens and persons with disabilities," Spitzer said. "It is imperative that consumers investigate a company before making any commitments. In many cases, these appeals involve substantial up-front costs and little or no return."

The companies named in the Attorney General's lawsuit claimed in classified newspaper ads that individuals could earn thousands of dollars per week for simple services such as envelope stuffing or filling out insurance forms. However, the work was to be provided only after the consumer paid an up-front fee.

After fronting the fee, consumers discovered that the work-at-home opportunity was nothing more than a scam. Of the more than 70 consumers who complained to the Attorney General's office, most received nothing at all for their money. Others received worthless information unrelated to the claims in the newspaper advertisement. None of the consumers were able to earn the level of income that was advertised.

Cited in the lawsuits for fraud, false advertising, and deceptive business practices are:

  • Magnum Marketing and Promotions, operated by Syracuse-based Castellini and Associates and its president, Robert Bruno Castellini, and its vice president and general manager, Elena M. Schilling. They allegedly placed classified advertisements in pennysavers and weekly community newspapers that falsely promised individuals could earn between $500 and $3,000 weekly for stuffing envelopes at home. Individuals who responded to the ads were directed to pre-pay a $40 enrollment fee. Instead of receiving envelopes, however, these individuals simply received instructions to place classified ads aimed at recruiting additional participants in the supposed work-at-home program.

  • National Marketing Network and its owner Frank D. Russo, Jr. of Rome. This firm placed advertisements in the classified sections of newspapers across the nation falsely promising that individuals could earn up to $2,000 per week filling out insurance forms. In fact, consumers who contacted a toll-free phone number soon learned that, for an up-front fee of $38 - $50, they would be working in a "federal tracer program" and would be compensated for locating persons due tax refunds or mortgage insurance premium refunds. After paying, however, these individuals were simply given contact information for the U.S. Department of Housing and Urban Development (HUD). Those who requested lists of refund recipients from HUD soon discovered that the people on those lists were not entitled to refunds.

The lawsuits seek a court order halting the scams, restitution for all injured consumers, civil penalties and court costs.

Spitzer noted that his office receives hundreds of inquiries every year about work-at-home schemes. He offered the following tips to individuals considering such offers:

  • Check with the Better Business Bureau in your area and the area in which the company is located.

  • Ask questions, including: what specific tasks you'll have to perform; whether you will be paid by salary or commission; and who will pay you. Also, ask about the total cost to you, including supplies and equipment.

  • Be wary of overstated claims of product effectiveness, exaggerated claims of potential earnings and any demands that you pay for something before instructions or products are given to you.

  • Be wary of personal testimonials that never actually identify the person so that you can't investigate further.

  • Contact the Attorney General's consumer help line at (800) 771-7755 if you believe you've been victimized by a work-at-home scheme.

The cases are being handled by Assistant Attorney General Robert Vawter of the Consumer Frauds and Protection Bureau.