The Federal Trade Commission has outlined the key players and their roles in an alleged subscription renewal fraud operation based in Southern Oregon that made millions of dollars off the backs of unwitting newspaper subscribers across the country.
In court documents filed May 15, the federal agency outlined its clearest explanations yet of 10 individuals' roles in companies based primarily out of White City that worked together in a "common enterprise" to renew marked-up newspaper subscriptions using mailers that resembled genuine subscription-renewal notices. The FTC's lawsuit against the companies, filed April 27, 2016, names 94 businesses and more than a dozen individuals for deceptive business practices for their various roles in the complex scheme.
The most recent document makes new allegations of deceptive behavior, such as the use of workers to fill out subscription cards so they'd appear to be from individuals, and hiring "mail drops" tasked with sending orders from out of the area to avoid a White City postmark.
The five named at the heart of the White City operation include Jeffrey Hoyal, Dennis Simpson, Lydia Pugsley, Noel Parducci and Laura Lovrien, who the FTC says have been involved in the scheme for the "greater part of two decades." The FTC seeks depositions from them to better understand their roles, court documents say.
Hoyal has received a "significant portion of the profit" in the alleged scheme, with at least $15 million paid to his company Hoyal & Associates through other companies named in the suit, such as HCG and Maximillian, which printed and sent mailers in the operation, the FTC claims.
Hoyal has denied involvement beyond that he worked as a consultant for agencies involved, and has said that he's not on any list of officers for companies in the suit.
The FTC argues, however, that Hoyal has "maintained control over key aspects of the deceptive newspaper subscription operation," adding that the parent trust which owns major companies named in the lawsuit — such as Orbital Publishing Group and Liberty Publishers Service — is "believed to be run by Hoyal's relative."
Simpson allegedly developed the "form and substance" of the mailers that the FTC claims are deceptive. The federal agency says Simpson has received a "significant portion" of the estimated $15 million in profits, paid to his company Reality Kats through companies behind mailers in the scheme such as HCG and Maximillian.
The document alleges Simpson and Hoyal made "significant" funds transfers individually and through their respective companies.
More recently, Simpson allegedly used databases to determine who received mailers, the publications listed on the mailers and prices charged for their subscription renewal service.
Pugsley allegedly served various roles with companies named in the suit, ranging from handling customer complaints to arranging the printing of mailers, the FTC lawsuit says.
She allegedly compiled the names, addresses and publication names from Simpson's database and used them to arrange deceptive mailers and proposed changes to the mailers' text and design, the FTC suit states.
Pugsley was an officer of companies at the center of the operation, according to the FTC. When Orbital Publishing Group dissolved, Pugsley organized the transfer of that company's assets to Liberty Publishers Service.
Web domains involved in the operation's database management and email communications were registered in Pugsley's name, court documents state.
Parducci allegedly used the mail companies involved in the scheme, Maximillian and HCG, to set bonus payments for employees in the operation, paid by companies with which she was an officer, including Henry Cricket Group, HCG and Maximillian.
Parducci also allegedly provided guidance and services to others involved in the scheme, including Lydia Pugsley, and relative newcomers involved in the operation such as Shannon Bacon and Colleen Kaylor.
Lovrien has been involved in the operation since at least 2009, and has been president of Orbital Publishing Group and Liberty Publishers Service at Hoyal's invitation, the FTC claims.
In the scheme, Lovrien has also been paid by Parducci's company Maximillian to perform work for Pugsley's company Associated Publishers Network.
Lovrien received and processed orders, responded to complaints, processed refunds and communicated with the Better Business Bureau and state law enforcement agencies in the operation.
As an officer of companies named in the FTC suit as well as a separate suit filed in 2015 in the New York Supreme Court, the New York Attorney General's office has sent more than 50 letters regarding operations tied to Orbital, United Publishers Exchange and others named in the suit, the FTC says.
The other five that the FTC seeks depositions from include Hoyal's wife, Lori Hoyal, who kept books for Hoyal's business Hoyal & Associates; Colleen Kaylor and Shannon Bacon, involved in call center operations, and who allegedly hired workers to fill out newspapers' subscription cards and "mail drop" workers so the correspondence wouldn't be postmarked from White City; Linda Babb, a past employee and the mother of Pugsley and Lovrien; and William Strickler, who allegedly submitted New York Times renewals the publication didn't authorize through his company Winocerous.
The FTC has set numerous deadlines in the case culminating in a five-week trial currently set for July 10, 2018 at the U.S. District Court in Medford.
According to a document filed in November by U.S. Magistrate Judge Mark D. Clarke, the federal agency plans to complete its fact-finding by October 2017, hear expert rebuttals by mid-November, close experts' testimony by January and hold its pretrial conference the first week of July.
The pending New York suit, filed in 2015, next shows a court appearance set for Sept. 27.
— Reach reporter Nick Morgan at 541-776-4471 or firstname.lastname@example.org. Follow him on Twitter at @MTCrimeBeat.