RUXTON MAN SENTENCED TO 97 MONTHS IN MONEY LAUNDERING AND TELEMARKETING FRAUD CASE

Baltimore, Maryland - Thomas M. DiBiagio, United States Attorney for the District of Maryland, announced that Joel Katz, 63, of Ruxton, Maryland was sentenced today by Judge Andre M. Davis to serve a 97 month sentence for money-laundering, and concurrent 60 month sentences for conspiracy, mail and wire fraud charges. In addition, Judge Davis sentenced the defendant to a concurrent 37 month sentence for bankruptcy fraud and a concurrent 19 month sentence for Katz's conviction of being a felon in possession of a gun. A co-defendant Judith Lugo, 33 , of Yonkers, New York was also sentenced to serve a 51 month sentence of imprisonment on conspiracy, mail and wire fraud charges.

Katz and Lugo were convicted in June 2002 after a four week trial of defrauding over 16,000 consumers, stealing in excess of $1.6 million in a nationwide telemarketing scheme that operated from July 1999 through March 2000. In addition, Katz was convicted of money laundering in connection with his use of a portion of the fraud proceeds. Katz was also convicted of bankruptcy fraud arising from filing a personal bankruptcy petition in U.S. Bankruptcy Court in June 2000. Finally, when executing a search warrant at the defendant's home at 6 Ruxton Green Court, the agents seized a shot gun. The defendant was convicted of possessing this weapon illegally.

The evidence at trial showed that Katz ran a telemarketing business which promised consumers a VISA credit card for a fee which varied from $49.95 to $149.00. In fact, no consumer received a credit card from Katz' business. In the course of sentencing proceedings, the court commented that the Katz operated a "blatant, shameless, bodacious scheme to defraud." Judge Davis further stated that the scheme to defraud was "remarkable for its simplicity, the relentlessness with which it was pursued, and the utter disregard for the rights of anyone who might be victimized." According to the evidence presented at trial, Katz operated a telemarketing room located in Timonium, Maryland, and used other telemarketing rooms in Texas, Nevada, and Florida to market his credit card program using the names The Money Club, The Tele-Money Club, Cash Card Club, Smart Savers Club, Cash Card Express, and National Consumer Benefits Club. Consumers were contacted by a computer dialer which played a recording stating, "This is the VISA card processing center. We've been trying to get your pre-approved VISA card out to you. Please press one now to be connected to an agent." When the consumer pressed "1," the computer then connected the consumer to a telemarketing agent who read a script written by Katz promising a credit card and other benefits. The consumer had to agree to an automatic debit of his or her checking account.

This scheme enabled Katz to defraud over 16,000 consumers nationwide. The evidence at trial showed that Katz laundered proceeds of his telemarketing scheme through a bank account in the name of his long-time girl friend Martha Tuxford and used the funds to pay for his house at 6 Ruxton Green Court and a Bentley automobile, both of which were titled in Ms. Tuxford's name. The trial court ordered as part of the judgment that defendant Katz forfeit his interest in $53,375 in cash, his home at on 6 Ruxton Green Court, a bank account, and a Bentley automobile.

At sentencing, the trial court granted the government's motion for an upward departure in the defendant's criminal history category to reflect the defendant's three prior felony convictions and several civil cease and desist orders. The judge characterized Katz as "a one-man fraud machine."

Katz was also ordered to pay a $10,000 fine. Katz and Lugo were both ordered to make restitution to victims named in the indictment during the three year period of supervised release that each must serve after the conclusion of their prison sentences. In the same case, co-defendants Shawn Hatfield and Jeffrey Augen have pled guilty and are awaiting sentencing. Three additional defendants are pending trial in May 2003; these are Mark Cohn and Four Star Financial Services, LLC, of San Francisco, CA, and Daniel Connor of Milstead, CN.

This case was investigated by the Federal Bureau of Investigation and the United States Postal Inspectors. It was prosecuted by Assistant United States Attorneys Joyce K. McDonald and Robert R. Harding.