Fraud Charged in $3.6-Million Mail Operation
A Los Angeles businessman believed by U.S. Postal Service inspectors to be running one of the largest phony gift certificate operations in California surrendered to federal authorities in Los Angeles on Tuesday.
Jason Abraham, 40, was arraigned on one count of mail fraud before U.S. Magistrate James McMahon and released on a $20,000 bond.
“In my 14 years of experience, Abraham’s gift certificate operation appears to be the largest I’ve investigated in terms of money and victims,” Postal Inspector Tom Dugan said in an interview.
Assistant U.S. Atty. Enrique Romero said that several companies operated by Abraham collected an estimated $3.6 million from victims between October, 1984, and February, 1985. The companies, operating under the parent firm, Shallon International Inc. of Los Angeles, sent about 200,000 post cards a week for several months, all outside California, he said.
The cards promised that the recipients had won one of several prizes, including gems, televisions, refrigerators, radios or motorboats. They said customers would get certificates for redeeming their prizes if they paid a $124 c.o.d. charge for shipping and handling, according to an affidavit filed by Postal Inspector Charles Raymond in federal court.
If the customers did not reply soon, a letter was sent warning that the fee would increase to $248 and failing to pay “could have a serious detrimental effect on your credit rating.”
Abraham’s attorney, Cornell Price, argued that the government’s action based on three complaints was premature because “he hasn’t sent out the packages yet.”
“The evidence in this case is extremely weak,” Price told the court.
On Jan. 25, postal inspectors arrested John Anthony Keeling, an Abraham employee, while he was picking up mail at a post office in Panorama City. Keeling was also arraigned Tuesday on one count of mail fraud and released.
Magistrate McMahon set a hearing for Feb. 5 on the government’s request to shut down Abraham’s various companies while he is free on bond.
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