Attorney General Eliot Spitzer said today that refund checks have been mailed to 125 New Yorkers who were victimized by an illegal phone card promotion. The refunds, which average $360 per person, are the result of a court order secured by the Attorney General against California-based Destiny Telecomm International Inc.
"This office overcame numerous obstacles to obtain this money for New Yorkers," said Spitzer, "from locating the funds, to obtaining court permission to bring the money back to New York, to tracking down the companyís President who fled from California to another state."
Destiny officials were found guilty last year of marketing pre-paid calling cards through an illegal pyramid program. Under the program individuals were charged up to $700 for the opportunity to recruit others to sell the phone cards, with the promise of hefty profits. Many of those who purchased the phone cards found they were inoperable. In some cases Destiny improperly charged individualís credit cards several times for the same purchase.
The Attorney Generalís office was able to secure restitution by seizing more than $100,000 in assets that Destiny held in California banks. People who profited from the pyramid program did not receive restitution because participating in or operating a pyramid scheme is illegal in the State of New York.
In addition to securing restitution, the state also obtained record penalties of more than $3.7 million. New York is one of the only states in the country that successfully provided restitution to consumers who lost money to Destiny.
"This case should serve as an example of our determination to aggressively investigate and prosecute any violations of New Yorkís pyramid statute," Spitzer said.
The case was handled by Assistant Attorney General Joel Michael Schwarz of the Internet Bureau along with the assistance of Prem Mohabir, an Associate Accountant with the Investor Protection and Securities Bureau.