Authorities say Jennifer Shah and Stuart Smith allegedly profited by generating lists of victims for targeting and then directing co-conspirators to defraud them.
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Acting US Attorney for the Southern District of New York Audrey Strauss, Homeland Security Investigations New York Field Office Special Agent in Charge Peter Fitzhugh, and NYPD Commissioner Dermot Shea announced the unsealing of an indictment charging both with conspiracy to commit wire fraud and conspiracy to commit money laundering.
Shah and Smith were arrested Tuesday and appeared virtually in Salt Lake City federal court before United States Magistrate Judge Dustin Pead.
"Jennifer Shah, who portrays herself as a wealthy and successful businessperson on reality television, and Stuart Smith, who is portrayed as Shah's first assistant, allegedly generated and sold lead lists of innocent individuals for other members of their scheme to repeatedly scam," Strauss said. "In actual reality and as alleged, the so-called business opportunities pushed on the victims by Shah, Smith, and their co-conspirators were just fraudulent schemes, motivated by greed, to steal victims' money. Now, these defendants face time in prison for their alleged crimes."
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According to the indictment, from 2012 until March 2021, Shah, Smith and alleged co-conspirators carried out a wide-ranging telemarketing scheme that defrauded hundreds of victims throughout the United States, many of whom were over age 55, by selling those victims so-called "business services" in connection with the victims' purported online businesses.
They allegedly engaged in a widespread, coordinated effort to traffic in lists of potential victims, or "leads," many of whom had previously made an initial investment to create an online business with other participants in the scheme.
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Leads were initially generated by sales floors operating in, among other places, Arizona, Nevada, and Utah. The owners and operators of those sales floors operated in coordination with several telemarketing sales floors in the New York and New Jersey area, including in Manhattan, and provided lead lists and assistance in fighting victim refund requests to other participants operating those floors.
Shah and Smith, among other things, allegedly generated and sold leads to other participants for use by their telemarketing sales floors with the knowledge that the individuals they had identified as "leads" would be defrauded by the other participants.
They both received as profit a share of the fraudulent revenue per the terms of their agreement with those participants, authorities said, and they often controlled each aspect of the frauds.
To perpetrate the scheme, authorities say those involved sold alleged services purporting to make the management of victims' businesses more efficient or profitable, including tax preparation or website design services, notwithstanding that many victims were elderly and did not own a computer.
At the outset, certain participants employed by a purported fulfillment company sent a victim electronic or paper pamphlets or provided so-called "coaching sessions" regarding these purported online businesses, but at no point did the defendants intend that the victims would actually earn any of the promised return on their intended investment, nor did the victims actually earn any such returns.
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Shah and Smith allegedly incorporated their business entities using third parties' names and instructed other participants to do the same, used and directed others to use encrypted messaging applications to communicate with other participants, instructed others to send their shares of fraud proceeds to offshore bank accounts, and made numerous cash withdrawals structured to avoid currency transaction reporting requirements.
They each face a maximum sentence of 30 years in prison on the wire fraud charge, and a maximum of 20 years each on the money laundering charge.
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Anyone who believes they may be a victim of the scheme is urged to contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney's Office for the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov.
You may also report it to Detective Christopher Bastos at 917-480-7167 or christopher.bastos@nypd.org.