Five years ago, a multimillion-dollar newspaper and magazine subscription scam rolled across the nation, hurting readers in every state.
It baffled me. I couldn’t understand why state and federal authorities allowed it to continue.
Subscribers received subscription renewal cards in the mail that looked real. They’d send money in, but sometimes they never received the periodical. Or if they did get it, they usually paid a price that was at least double the actual price. The scammers kept the difference.
This was an Oregon-based operation that lasted at least two decades.
But what especially baffled The Watchdog when I started to investigate in 2014 was this: Who was behind it?
The president of the lead company was Laura Lovrien. But that didn’t make sense. Records showed she lived in a 1,700-square-foot manufactured home. Her husband ran a construction business out of their house. Yet her scam was hauling in millions of dollars.
Six months into my probe, I got a notice from Lovrien’s company that my Texas Monthly subscription was due. I recognized her letterhead, of course. She wanted $50 for two years. Only problem is I had paid $25 for three years directly to the magazine a few months before.
I also learned who her partner was — or so I thought. It was her big sister, Lydia Pugsley. I nicknamed them “the twisted sisters.” In Texas alone, they targeted every large newspaper in the state, including The Dallas Morning News, and magazines such as Texas Parks & Wildlife.
By 2016, Oregon regulators revealed the identity of the true Mr. Big hiding behind the twisted sisters. He was Jeff Hoyal, an Oregon winery owner.
Only problem about that — I called him, and he denied it.
“I had nothing to do with it,” he told me.
Now, three years later, a federal judge’s ruling in Oregon shows that Hoyal didn’t tell me the truth.
He was co-owner of the many different business entities involved in this. He also had a partner — a California man whose name somehow never managed to come up before — Dennis Simpson.
The twisted sisters, although listed on corporation papers as heads of some of the companies used, were merely front women for the two guys.
Laura Lovrien was paid $10,000 a month for her work running the scam, court records show. Records don’t show how much her sister was paid.
Meanwhile, records show, the two guys hiding behind them made millions.
Millions of dollarsThe business is closed. The ruling in the lawsuit brought by the Federal Trade Commission is a tough one: The former owners must repay $9 million in restitution.
Simpson designed and approved the mailings, testimony showed. Hoyal handled the administrative chores with help from the twisted sisters. Their operation included a call center.
U.S. Magistrate Judge Mark D. Clarke wrote in his ruling that each man received approximately $15 million for magazine and newspaper sales from 2011 to 2016.
Hoyal admitted his role in court, while Simpson continued to deny involvement.
The court found that hundreds of cease-and-desist letters the companies received from lawyers working for affected periodicals were routinely ignored. Similarly, warnings by various regulators also were ignored.
Hoyal said the warnings came in such large numbers that they were “like holiday cards,” according to testimony.
All involved are banned forever from the direct mail business. Aside from the four I already named, others involved include Lori Hoyal (Jeff’s wife), Linda Babb, Noel Parducci, William Strickler, Shannon Bacon and Colleen Kaylor.
The judge described the underlings as “smart, likable, hardworking and loyal to a fault” to the business.
Hoyal and Simpson didn’t share profits with their workers.
Of those workers, the judge added, “They seem to the court to be good people who created their own reality.”
How they did itWhen they did send money in for renewals — as they were supposed to — the scammers recruited helpers to pull subscription cards out of magazines and fill in the consumer information for hundreds of orders.
The judge explained, “They were careful to use different handwriting, different ink colors, and to mail the bundles from different locations around the country so the publication would not realize that all the cards came from one third-party agent, instead of from individual customers.”
In a memorable line, the judge added, “This amount of effort shows a level of awareness and intent to circumvent the proper procedures that is undeniable.”
Watchdog tip: What did I learn from this case? In our household we get several dozen magazines and newspapers each month. I learned to always make sure I pay the periodical directly and not a third-party agent. Sometimes I must double-check the address on the return envelope in a quick web search to make sure it leads to the periodical.