PODCAST SCRIPT – SEPTEMBER 20, 2018

“EPA OIG Investigates a Consumer Fraud Case”

Jeff:	I’m Jeffrey Lagda with the U.S. Environmental Protection Agency’s Office of Inspector General.  Alan Huntsinger, who is a special agent in the OIG’s Office of Investigations, is here to discuss a type of crime with which our listeners may not be familiar—specifically, the fraudulent misrepresentation of a product.
Jeff:	How’s it going, Alan? 
Alan:	Very well, thank you.
Jeff:	Why don’t we start off by you telling me a little bit about yourself. How long have you been a special agent?
Alan:	 I’ve been in law enforcement for over 32 years. Of that, 19 have been as a special agent with the federal government—13 of which have been here at the OIG’s office. Prior to my federal service, I was a police officer in metro Atlanta for approximately 13 years.  
Jeff:	Wow…so you definitely have put in quite a bit of time in law enforcement. Okay, can you describe in a few words the type of criminal activity you’re going to highlight?
Alan:	Yes, I’d like to talk about a consumer fraud case, which is probably something you don’t normally associate with EPA.   
Jeff:	Why was the OIG involved in this particular case?
Alan:	Our investigation was initiated upon receipt of information alleging that a company—which was identified as FBK Products—was defrauding customers by making false claims during sales calls. FBK was identified as a wholesale chemical company specializing in septic tank treatment products. The company marketed its products through direct sales methods, such as telemarketing and over the internet. One of the sales pitches utilized in the sales calls centered around an EPA warning associated with septic tanks. At several points during their sales presentation, the sales reps would also assert some other types of relationship between the product and EPA.
Jeff:	But none of it was true. There was no EPA warning or a relationship between EPA and the product, is that correct?
Alan:	That’s correct.
Jeff:	And how exactly did the sales reps make these false claims?
Alan:	Well, they’d start by claiming that EPA had issued a warning regarding how new methods used in the manufacture of toilet paper were causing people’s septic tanks to explode or turn the systems’ drain lines into concrete. The sales reps would then claim that their product had been developed in conjunction with EPA or through funding from EPA to solve this problem.  As the sales pitch continued, the representative would go on to make additional associations with the EPA such as that their company was the only EPA licensed distributor of the product and that because of this association, they could offer an EPA voucher in the sum of $315 to help off-set the cost of the product. 
Jeff: 	So FBK reps were essentially offering EPA coupons for their products?
Alan: 	Yes – a fake one.  In reality, the price quoted, after the application of this voucher, was actually the same price that the product was being sold for online. Those making a purchase were then contacted every 12 to 15 months and pitched a “new and improved” version of the product that had been developed to resolve new issues allegedly identified by the EPA.  It was all made up because while the label for the packaging may have changed, the formula for the product never changed.
Jeff:	In terms of dollars, what did the fraud committed by FBK Products amount to?
Alan: 	Well, that was difficult to determine because FBK sold thousands of units of its product each year and not every sales representative utilized the scripts with false claims. But based on the evidence we collected, we were comfortable in estimating the loss to consumers to be at least $1 million for the sales period that we examined.
Jeff: 	Was a specific group or population vulnerable to this type of scheme?
Alan:	Absolutely. This company specifically targeted the elderly and the mentally infirm. In one of the sales scripts, after introducing himself and the purpose of the call, the first question the sales rep asked the potential customer was if he or she was a senior citizen. During our investigation, we found one instance in which an individual in his 80’s was sold 15 buckets, or a 75-year supply, of a septic tank product treatment over a 36-month period. In addition, we identified numerous incidents involving multiple sales to people with severe cases of Alzheimer's or other types of dementia, or who resided in nursing homes or whose homes were on a sewer system and not a septic tank. We found other instances where multiple representatives made sales of the same product to the same individual on the exact same date. When a sales representative encountered one of these individuals they placed them on a list, which they referred to as an “idiot list.”
Jeff:	What? Did you just say “idiot list”?  
Alan:	Yep…they called it an “idiot list” because past interactions had shown that the clients listed could easily be manipulated or pressured into making additional purchases. So when quick sales were needed to meet a sales quota, the sales representative would take out their idiot list and started calling these people to boost the sales numbers for that day. While executing search warrants at the company, we actually recovered some of these lists.  
Jeff:	What was the outcome of your investigation?
Alan: 	Through the U.S. Attorney’s Office for the Southern District of Florida, 12 individuals and the corporate entity were charged with various fraud-related offenses. Five of the sales representatives either pled guilty or were convicted at trial for the offense of wire fraud. One sales representative pled guilty to making a false statement. Three senior managers and two of the company’s owners as well as the corporate entity, each pled guilty to conspiracy to commit wire fraud. And the third owner pled guilty to one count of a misprision of a felony, which basically means that he knew a felony had been committed and he failed to report it, and he took active steps to conceal it.  Restitution for the victims identified in the investigation was also part of the sentences handed out in the criminal cases.   
Jeff:	Given the wide scope of this criminal activity, was there any other action against FBK?
Alan:	Following the criminal proceedings, we forwarded the results of our investigation to the state authorities for administrative action. Based on our investigation, the state revoked the telemarketing licenses for of convicted parties, including the company. which subsequently led to the company ceasing all operations.
Jeff:	Just curious, did your investigation turn up any other legal issues previously associated with FBK Products?
Alan:	Yes. Telemarketers within Florida are licensed and regulated by the state’s Department of Agriculture, Division of Consumer Services or DCS. During past compliance inspections, DCS had fined the company for using unlicensed telemarketers, unapproved sales scripts and operating from unpermitted locations. In addition, we found the company had paid $65,000 in fines to Missouri and Pennsylvania authorities for violating the "Do Not Call" lists for those states. 
Jeff:	I see…so there were other problems before this particular scam. Would you say that this type of consumer fraud perpetrated by FBK is common?
Alan: 	I would say that it’s a fairly common offense. The EPA Office of Inspector General usually has at least one open investigation where a commercial product is being falsely associated with the EPA or one of the agency’s programs. Most of these cases are resolved by the EPA simply issuing a cease-and-desist letter to the company. However, we’ve been very successful in criminally prosecuting some of the more egregious cases, such as FBK.
Jeff:	Thankfully, this consumer scam we’ve been talking about is now in the past, Alan. But you’re saying that there are plenty of others out there. What can we learn from the FBK case?
Alan:	Consumers should be wary of any calls and messages claiming to be from or affiliated with a government agency in which the caller is promoting a product or service involving a payment. Do not give anyone your money or your personal information. Call the government agency referenced directly and ask questions, or ask a trusted family member, caretaker or friend to help you. Investigators need to be aware that fraudsters often use these type of scare tactics, using the names and programs of known government agencies, to take advantage of vulnerable individuals.
Jeff:	If someone was to have information about potential criminal activity related to the EPA, how would he or she get a hold of you?
Alan:	They can contact the OIG hotline, which accepts complaints and tips from anyone. The hotline can be reached toll-free at 888-546-8740, or by email at oig-UNDERSCORE-hotline@epa-DOT-gov. 
Jeff:	That’s very helpful, Alan. You know it’s been great having you talk with me today!
Alan:	It’s been a pleasure.  Thank you.
Jeff:	To learn more about the OIG’s Office of Investigations and other Office of Inspector General work, please visit our website at www-DOT-epa-DOT-gov-FORWARD SLASH-oig and be sure to follow us on Twitter at EPAOIG.