The operator behind an envelope-stuffing scam that ran an outpost in Rockland County must pay $1.2 million in a settlement approved by a federal judge.
Java Enterprises LLC maintained a “virtual office” in the Regus Business Center, 400 Rella Blvd. in Montebello, and was part of a network of mail drops operated by David S. Brookman of Mendham, New Jersey.
U.S. District Court Judge Edgardo Ramos in Manhattan on April 20 approved a $1.2 million settlement by the Federal Trade Commission and Brookman for engaging in deceptive business practices.
The FTC said Brookman conned thousands of people and took in more than $7 million in a nationwide work-at-home scheme that lured people with the prospect of earning $5,000 a week for stuffing and mailing “special advertising letters.”
Java Enterprises, for example, mailed fliers to potential victims presenting itself as a marketing firm that needed to supplement its own staff.
“We are presently in the midst of hiring home workers for our busy season, and when we say busy, we do mean BUSY,” a Java flier declared. “We desperately need at least 250 home workers each week to stuff and mail out our special advertising letters. We have so much work on hand that we’re paying home workers $10 for each letter stuffed and returned to us as per instructions.”
The targets had to pay from $99 to $399 up-front to get in on the deal.
In fact, the FTC said, the victims were not paid for each letter they stuffed and mailed. Instead, they were paid for each new at-home worker they recruited. And the up-front fee was not a one-time charge. The envelope stuffers had to keep paying to receive weekly mailing materials.
In another scheme, people were recruited to assemble and mail “Get Credit Now booklets, purportedly for $20 per booklet mailed.
Only 10 percent of the stuffers and assemblers received payments, the FTC said, and their total earnings averaged $19.50.
The agency said dissatisfied victims who tried to get refunds typically did not get their money back.
Brookman ran the scam under various company names as far back as 2009. He was able to operate for years, the FTC said, by periodically rebranding “to escape negative publicity associated with prior brands.”
Some of the prior names were David Gates Inc., Gordon James Enterprises, Maxwell Gates Enterprises, Maxwell Scott Enterprises and Warner Daniel Enterprises.
In 2015, the FTC sued Brookman in federal court in Manhattan. Besides Java, the lawsuit named Capital Enterprises Inc., Carson Lord Enterprises, Mason Grace Enterprises LLC and Preston Lord Enterprises of New York LLC, all owned, operated and controlled by Brookman.
The court halted the schemes and froze the assets.
The new court order requires Brookman to pay the FTC $41,200 from a bank account in the name of MG Enterprises & Industries, plus $3,000. If he does so, $975,706 from the $1.2 million judgment will be suspended.
He must also comply with several conditions, such as disclosing corporate information, reporting new businesses or employment and filing compliance reports for 20 years.