The credit card infrastructures that organizations such as HNB use to keep their billing operations going may have crossed the line from civil forfeiture risk to criminal bank fraud, a precedent that was recently set in the Jeremy Johnson case.
Jeremy Johnson used "signers", or dummy stooges that are nothing more than people used to open up Visa/Mastercard merchant accounts, to sustain a negative option billing scheme that defrauded consumers across the country. Jeremy Johnson was eventually prosecutued and sent to prison for over 10 years.The HNB operation, much like Johnson's iWorks, utilized The United States Postal Service to ship unauthorized purchases to consumers, possibly placing HNB and its operators in violation of 940.18 U.S.C. Section 1341, also known as mail fraud.
There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts), and (2) use of the mail for the purpose of executing or attempting to execute, the scheme (or specified fraudulent acts).
The statute of limitations for mail fraud and wire fraud prosecutions is five years (18 U.S.C. § 3282), except for mail and wire fraud schemes that affect a financial institution, in which case the statute is ten years (18 U.S.C. § 3293).
The below depositions of John Monarch indicate that Monarch created tools at Direct Outbound Services that appear to have helped keep the HNB negative option program operating. While thousands of consumers complained to their banks, the BBB, and State AGs that they were defrauded, Monarch's company billed HNB heavily to respond on its behalf.
Additionally Direct Outbound Services handled HNB's customer service, fulfillment, USPS shipping, contract manufacturing, and possibly assisted in its merchant processing procurement along with affiliate marketing advertising via Monarch's affiliate marketing company, Stealth Media.
Why would thousands of consumers claim their credit cards were billed without their authorization? Did the HNB operators design separate websites that purposely obscured the terms and conditions so consumers would unwittingly enroll in a recurring billing program for something that they thought was free?
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Police later concluded there was no evidence indicating she had…
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