A scheme to sell marked-up newspaper subscriptions across the country with mailers that looked like genuine renewal notices from publishers cost consumers tens of millions of dollars over five years, the Federal Trade Commission claims in a lawsuit.
The roughly dozen individuals, many of them from the Rogue Valley, and 94 companies at the center of the lawsuit filed in U.S. District Court in Medford in March are believed to have sold 40,855 subscriptions purportedly from 79 newspapers around the country between 2010 and 2015, leading to millions of dollars’ worth of sales through deceptive practices.
By the FTC’s latest estimate, customers paid the Southern Oregon-based subscription-company $20.57 million from the mailers, according to court documents filed by the FTC. Through database records the FTC obtained from co-defendants Laura Lovrien and Dennis Simpson, the agency found the common enterprise received $22.24 million in payments, made $1.45 million in refunds, and that customers issued stop-payment orders amounting to $214,832, according to court documents filed in March.
Noel Parducci, a co-defendant in the FTC suit not represented by a lawyer, called the $20.5 million figure “ridiculously inflated” because of “erroneous assumptions,” according to email correspondence dated April 12 that was filed in court records by lawyers representing another defendant, Jeffrey Hoyal.
Hoyal is believed to have received among the largest shares of profits in the consortium of businesses, which the FTC alleges worked in a “common enterprise” with Simpson, Lovrien and Parducci, among others, in which different individuals and their businesses performed different stages of printing, mailing and processing mailers.
The “common enterprise” allegedly sold subscriptions at inflated prices to 40,855 people across the country.
Owing to the complexity of the case, the FTC has identified 100 individual witnesses they intend to call in a five-week trial set for Oct. 29 in U.S. District Court in Medford, and named an additional 100 newspaper publishers the FTC “may” call.
Lawyers representing Hoyal have asked the FTC to narrow the publishers they intend to call, on grounds that their client “cannot meaningfully prepare” short of traveling to multiple states, according to a document filed April 2.
The FTC has listed 79 newspapers for which the enterprise sold subscriptions using mailers that looked like publisher renewal notices, including the San Diego Union-Tribune, San Antonio Express News, Cincinnati Enquirer, Denver Post, Wall Street Journal, The New York Times and Las Vegas Review Journal.
Reach Mail Tribune reporter Nick Morgan at 541-776-4471 or firstname.lastname@example.org. Follow him on Twitter at @MTCrimeBeat.