A Merrick man was one of three charged in federal court on Wednesday in connection with a scheme to defraud seniors out of millions in fees to collect non-existent cash prizes.
According to U.S. Attorney Richard Donoghue, Shaun Sullivan, 37, of Merrick, Tully Lovisa, 55, of Huntington Station, and Lorraine Chalavoutis, 61, of Greenlawn, were arraigned on Wednesday on multiple charges of mail fraud, perjury and money laundering.
The three made close to $30 million off of their victims, according to an indictment unsealed on Wednesday.
“The defendants perpetrated a cruel hoax on their victims, many of them elderly and vulnerable, by sending promotional mailings that falsely claimed that they would receive tens of thousands of dollars in prize money if they paid a fee,” Donoghue said.
U.S. Attorney General Jeff Sessions said that the arrests were part of a nationwide elder fraud sweep undertaken by the Justice Department.
“When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the department’s disposal,” Sessions said. “Criminal prosecutions to punish offenders, civil injunctions to shut the schemes down and asset forfeiture to take back ill-gotten gains.”
According the indictment on Wednesday, Lovisa was sued in 2010 by the Federal Trade Commission for deceptive prize-promotion mailings, and a California federal district court enjoined him twice from any involvement in such mailings. However, Lovisa schemed with Sullivan and Chalavoutis to set up a number of prize-promotion companies, using straw owners and aliases, according to the indictment.
Elderly victims would receive the mailings promising them cash prizes, signed by a person with official titles like “payment agent” or “prize director,” or a representative of the “cash claim department,” according to the indictment, while none of the people or departments actually existed within the shell companies.
The mailings were made to look like they were addressed to specially selected people. However, they were sent to thousands, whose names the defendants got from consumer lists. Victims were then encouraged to send a “processing” or “delivery” fee — usually $20 or $25 — to receive their cash prize, according to the indictment.
The cash payments from victims were packaged and sent by private carriers to an unnamed individual in East Rockaway, who then transferred the money to Lovisa and Sullivan.
Chalavoutis helped conceal Lovisa and Sullivan, who controlled the operation, by opening the companies and bank accounts, the indictment said.
If convicted, the defendants face up to 20 years in prison, as well as a maximum fine on each charge of $250,000, or twice the gross gain or gross loss from the offense.
“Protecting the elderly from brazen predators like the defendants is a priority of this office and the Department of Justice,” Donoghue said.