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Senior Executive& a former Sales Manager of Epsilon Data Management LLC (Epsilon) guilty of Selling Data on Millions of U.S. Consumers to Perpetrators of Mail Fraud Schemes

The jury determined that the defendants were aware of the fraudulent nature of their actions, as they provided data to clients engaged in fraudulent activities.

Epsilon Data Management LLC (Epsilon), a major player in the marketing industry worldwide. According to their website they indicated “Epsilon solutions are built to solve your biggest challenges-To market effectively, brands need a clear view of their customers. Only Epsilon has the industry’s most accurate, stable and scalable identity that’s anchored in first-party data—not third-party cookies or device IDs that break down over time. And with award-winning, best-in-class digital media, messaging and loyalty solutions, brands deliver personalized messages at scale that grow real customer relationships. See why we’re the only partner that can drive your marketing’s success.”

Today, the Justice Department made an announcement regarding the conviction of a former senior executive and a former sales manager of Epsilon Data Management LLC (Epsilon) on federal criminal charges connected to mass-mailing fraud schemes aimed at millions of U.S. consumers.

According to the Justice Department’s press release, during the two-week trial, it was revealed that the defendants played a crucial role in a fraudulent scheme involving the sale of targeted consumer lists to individuals perpetrating fraud. This scheme spanned over a decade and involved sending deceptive mail to consumers.

The defendants, who were employed at data broker Epsilon, utilized transactional data from marketing clients to identify potential buyers through computer algorithms and a database of 100 million U.S. households. The jury determined that the defendants were aware of the fraudulent nature of their actions, as they provided data to clients engaged in fraudulent activities.

Evidence presented during the trial demonstrated that the defendants leveraged Epsilon's algorithms to identify consumers likely to fall victim to fraud, and their business unit collaborated with numerous clients who sent scam letters promising prizes or misleading astrological mailings guaranteeing wealth.

“This case serves as a warning that the Justice Department Consumer Branch and its law enforcement partners will hold corporate executives accountable for fraudulent use of consumer data,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will investigate and prosecute individuals who use sophisticated technology to defraud consumers.”

During the course of the operation, the individuals involved in the conspiracy unlawfully distributed the personal information of numerous American consumers to fraudsters, fully aware that these criminals were preying on elderly and vulnerable individuals. The trial revealed that the defendants supplied close to 100 lists to a single fraudster, in addition to having multiple other fraudster clients who utilized deceptive letters in their schemes.

Testimonies from elderly victims and their family members highlighted the false promises of cash rewards made in these scam letters. It was evident that each victim had been deliberately targeted by members of the conspiracy.

Furthermore, several current and former employees of Epsilon provided testimonies, as well as three individuals who had previously admitted guilt to participating in mail fraud schemes: a list broker and two clients of Epsilon.

“Defrauding elderly and vulnerable consumers will not be tolerated in the State of Colorado,” said U.S. Attorney Cole Finegan for the District of Colorado. “This case is an example of the responsibility both executives and companies hold when it comes to gathering and selling personal data, and I hope other companies take note of the serious outcomes of this case.”

“The U.S. Postal Inspection Service (USPIS) sees the conviction of these individuals as a significant victory in our ongoing efforts to protect older adults from fraud and exploitation,” said Inspector in Charge Eric Shen of USPIS’ Criminal Investigations Group. “These criminals preyed on some of the most vulnerable members of our community, and today's verdict sends a clear message that such predatory behavior will not be tolerated. We will continue to work tirelessly to ensure justice is served and to prevent these crimes from happening in the future.”

During the trial, it was revealed that Robert Reger and David Lytle, former employees of Epsilon, were involved in a conspiracy to defraud victims by selling consumer data to fraudsters. Reger managed sales teams within the Direct to Consumer Unit from 2005 to 2017, eventually becoming senior vice president of the unit. Lytle served as a business development manager from 2012 to 2018, focusing on recruiting clients for the unit. Both were found guilty of conspiracy to commit mail or wire fraud.

Reger and Lytle have been found guilty by the jury on seven counts of mail fraud. During the trial, evidence revealed that the two individuals sold consumer lists to fraudsters, resulting in victims sending checks in response to letters promising substantial cash prizes. Additionally, Reger was found guilty of six counts of wire fraud, while Lytle was found guilty of 12 counts of wire fraud. These charges were related to the electronic transmission of names, addresses, and other emails that facilitated the fraudulent scheme.

A sentencing hearing has been scheduled for September 30th. Both Reger and Lytle could face a maximum penalty of 20 years in prison for each count.

In 2018, Steven Fritz Kessler, a former Vice President of Epsilon, pleaded guilty to conspiracy to commit mail fraud for his involvement in the fraudulent scheme. Epsilon specifically admitted that the (Direct to Consumer) DTC Unit had sold consumer lists to various fraudulent schemes involving mass-mailing.

These schemes would send deceptive "sweepstakes" and "astrology" offers to consumers, falsely claiming that each recipient had won a significant prize or personalized psychic service. However, the truth was that these solicitations were actually mass-produced mailings, and those who paid a fee received nothing valuable in return. The consumer lists sold by the (Direct to Consumer) DTC Unit to the fraudsters revealed that the schemes primarily targeted vulnerable individuals, particularly the elderly.

Epsilon, the defendants' former employer, resolved its criminal liability through a deferred prosecution agreement in 2021. As part of this agreement, Epsilon paid $150 million in penalties and victim compensation. Through the victim compensation effort, over $122 million has been returned to more than 200,000 victims of fraud schemes in which Epsilon provided data.

The matter was investigated by the Transnational Elder Fraud Strike Force of USPIS.

The case was prosecuted by Senior Trial Attorney Alistair Reader and Assistant Director Rachael Doud from the Civil Division’s Consumer Protection Branch, as well as Assistant U.S. Attorney Rebecca Weber for the District of Colorado. Senior Trial Attorney Ehren Reynolds and former Assistant U.S. Attorney Hetal Doshi for the District of Colorado provided assistance in the case, along with exceptional support staff from the Civil Division’s Consumer Protection Branch and the U.S. Attorney’s Office for the District of Colorado.



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