A Montana, United States, family and their accountant are accused of tacking US$70 million in bogus charges on to customers' phone bills nationwide, then funnelling some of that money through a religious organisation to buy land and pay for the husband's legal bills.
Steven Sann, his wife Terry, son Nathan, and accountant Robert Braach run a maze of nine companies engaged in "cramming" or adding unauthorised charges to customers' phone bill, according to a civil complaint filed this month by the Federal Trade Commission (FTC).
When customers complained or phone companies grew suspicious about one of the Sanns' companies charging phone bills, they would switch over to another company, the complaint says.
The FTC is asking a judge to issue a preliminary injunction that will force the Sanns to stop operating the companies and freeze their assets. In a court filing last Friday, Sann's attorney, Sarah Rhoades, asked US District Judge Dana Christensen for a stay in FTC civil action, saying there is a criminal investigation already under way.
Allowing the government to pursue both criminal and civil cases against Sann and his companies is improper, Rhoades said in the filing. The civil case would let the government examine company information that it is not entitled to under criminal procedure rules, she wrote.
Some of the money went to buy 94 acres in western Montana where Steven Sann runs a youth camp, the FTC alleges. Some went to pay for Sann's defence in an unrelated medical marijuana case. In those instances, the money first was deposited in the bank account of Bibliologic, a religious organisation set up by Sann and Braach.
Bibliologic Ltd was incorporated in 2009 as a charitable religious organisation without any members, according to Montana Secretary of State registration records. The organisation has no physical address.
Steven Sann recently reached a plea agreement with federal prosecutors investigating large medical marijuana operations. According to a federal affidavit, he was an investor in two medical marijuana dispensaries.
Sann struck a deal with prosecutors in September to plead guilty to conspiracy to maintain a drug-involved premises. He had been scheduled to be sentenced on Thursday, but his attorney in that case has asked for a delay because of illness.
The Sanns' nine companies are voice mail and electronic fax services that charge a customer's phone bill through an intermediary called a bill aggregator. The companies are American eVoice, Emerica Media Corp., FoneRight, Global Voice Mail, HearYou2, Network Assurance, SecuratDat, Techmax Solutions and Voice Mail Professionals.
The charge is typically US$14.95 and appears near the end of the phone bill month after month until the customer notices and challenges it.
Hundreds of complaints have been filed against the Sanns' businesses with the FTC, the Better Business Bureau and with phone companies, the FTC complaint says.
Of the US$70 million billed since 2008, the Sanns' companies have returned more than US$40 million after customer challenges, according to the FTC complaint. But data collected by the federal agency show many more don't know that they're being charged.
Last April, the Sanns' companies had 119,810 voice mail accounts open, but only 12 customers actually accessed their accounts. From March 2010 to April 2012, fewer than 1 per cent of the people purportedly with voice mail accounts through the companies actually accessed them.
"These abysmally low usage rates strongly suggest that consumers neither ordered the services nor knew they were being billed for them," the FTC complaint says.