Ten Kansas City-area companies and their owners ran a fraudulent sweepstakes operation that took in more than $110 million since 2013, according to a lawsuit filed this week in federal court in Kansas City, Missouri.
The suit, filed jointly by the Federal Trade Commission and the state of Missouri, charges that the companies sent out mailers to consumers in the United States and abroad falsely representing that they had won, or were likely to win, cash prizes of as much as $2 million. In return, the consumers were required to pay fees ranging from $9 to $139.99.
The lawsuit alleges that consumers who paid the fees – sometimes several times over before they realized the operation was a sham – did not receive any of the promised cash prizes. Many of the victims of the alleged schemes were elderly, according to the suit.
Named were two individuals, Kevin R. Brandes and William J. Graham, said to be owners and officers of the sweepstakes companies; and 10 corporate defendants, including Next-Gen Inc., Westport Enterprises Inc. and Opportunities Unlimited Publications Inc. Most of the companies listed their principal place of business at 1401 Armour Road in North Kansas City or 21 NE Skyline Drive in Lee’s Summit.
Brandes and Graham did not immediately return calls seeking comment.
The lawsuit alleges the defendants sent out three different types of mailers:
- Notices such as “Congratulations, You Have Just Won $1,230,946.”
- Fliers claiming the recipient could win a cash prize by answering a simple arithmetic question and paying a registration fee. The fliers, however, didn’t disclose that there were multiple rounds to the “game of skill” and recipients would have to pay additional fees to advance to the next round.
- Mailers that appeared to be notices that the recipient had won $1 million or more but turned out to be solicitations for newsletter subscriptions.
The mailers were made to look authentic by using stock certificates or signatures with titles like “Senior Director of Payments.”
In a statement, Missouri Attorney General Josh Hawley described the operation as “one of the largest direct mail schemes in the country.” He said the defendants had targeted elderly victims for years.
The other corporate defendants named in the complaint are Opportunities Management Co.; Summit Management Team LLC; Contest America Publishers Inc.; Reveal Publications LLC; AOSR Corp.; Lighthouse FLA Enterprises LLC; and Gamer Designs LLC. Many of the defendants did business under a variety of different names.
Dan Margolies is a senior reporter and editor for KCUR. You can reach him on Twitter @DanMargolies.