Six Charged in Multi-Million Dollar Elder Fraud Scheme

Six Las Vegas, Nevada area residents were charged with running a fraudulent mass-mailing scheme that tricked hundreds of thousands of consumers into paying more than $10 million in fees for falsely promised cash prizes, the Department of Justice has announced.

The unsealed indictment charges Mario Castro, 51, Jose Salud Castro, 70, Salvador Castro, 53, Miguel Castro, 55, Jose Luis Mendez, 45, and Andrea Burrow, 49, with mail fraud and conspiracy to commit mail fraud.  The indictment, secured by the Department’s Consumer Protection Branch and the U.S. Attorney’s Office for the District of Nevada, also charges Salvador Castro with making a false statement to investigators.  U.S. Postal Inspectors arrested five of the defendants last night. The sixth, Jose Salud Castro, turned himself into authorities this morning.

According to the indictment, the defendants’ prize-notification scheme led victims, many of whom were elderly and vulnerable, to believe that they could pay a small $20 or $30 fee to claim a large cash prize.  The indictment alleged that none of the victims who submitted fees ever received a large cash prize.

“The Department will pursue and prosecute those who defraud elderly or vulnerable consumers,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We have alleged that these defendants perpetrated a cruel hoax on their victims and relentlessly targeted many with repeated fraudulent mailings.”

The indictment asserts that the defendants operated the scheme from 2010 to February 2018, when postal inspectors executed multiple search warrants and the Department of Justice obtained a court order shutting down the fraudulent mail operation.  Mario Castro, Jose Salud Castro, Salvador Castro, Miguel Castro, and Jose Luis Mendez allegedly worked at the printing and mailing businesses that sent the fraudulent mail and shared the profits from the fraudulent prize notices.  The remaining defendant, Andrea Burrow, opened victim return mail, sorted cash and other payments, and entered data from the victims’ responses into a database that the scheme used to target past victims with more fraudulent mail, according to the indictment.

The defendants are alleged to have ignored multiple cease and desist orders from the United States Postal Service that prohibited their mailing companies from sending fraudulent mail.  The defendants responded by changing the names of their companies and using straw owners to hide their continuing fraud. 

Three of the defendants’ co-conspirators – Patti Kern, Edgar Del Rio, and Sean O’Connor – pleaded guilty to conspiracy to commit mail fraud earlier this year.

“It will be a priority of this office to dismantle organizations like this one that prey on the elderly and vulnerable,” said U.S. Attorney Nicholas Trutanich for the District of Nevada. “We will continue to investigate and prosecute these large-scale frauds that operate in Nevada and across the country.”

“Many people who received these solicitations in the mail thought they were winners, but they were not.  In fact, they were victims of scams exploiting the vulnerable.  For many years, the U.S. Postal Inspection Service has been at the forefront of protecting consumers from fraud.  The consequences of this type of financial fraud scheme are far reaching and damaging.  Anyone who engages in such conduct should know they will not go undetected and will be held accountable,” said Inspector in Charge Delany De Leon-Colon of U.S. Postal Inspection Service’s Criminal Investigations Group at National Headquarters. 

The mail fraud and conspiracy charges each carry a statutory maximum sentence of 20 years in prison.  The false statement charge carries a statutory maximum sentence of five years in prison.  Each charge also carries a statutory maximum fine of $250,000 or twice the gross gain or gross loss from the offense.

An indictment is an accusation by a federal grand jury and is not evidence of guilt.  The defendants should be presumed innocent unless and until proven guilty.

The U.S. Postal Inspection Service investigated the case.  The case is being prosecuted by Trial Attorneys Timothy Finley and Daniel Zytnick of the Department of Justice’s Consumer Protection Branch and Assistant U.S. Attorney Nicholas Dickinson of the District of Nevada. 

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.  In particular, this past March the Department announced the largest elder fraud enforcement action in American history, charging more than 260 defendants in a nationwide elder fraud sweep.  The Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.  Additional information on the Department of Justice’s efforts to combat elder fraud is at: https://www.justice.gov/civil/consumer-protection-branch/elder-fraud.