Denver man sentenced to five years in prison for role in $300 million nationwide telemarketing fraud scheme

Date: Nov. 14, 2024

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MINNEAPOLIS - A Denver man has been sentenced to 60 months in prison, followed by 2 years of supervised release for orchestrating a $300 million nationwide telemarketing fraud scheme and committing tax evasion, announced U.S. Attorney Andrew M. Luger. He was also ordered to pay $19,051,667 in restitution to the victims of his fraud scheme and $1,490,011 in restitution to the IRS on his tax evasion case.

According to court documents, for more than a decade, Henry Aragon of Golden, Colorado, devised and participated in a large, nationwide telemarketing fraud scheme involving magazine subscription sales. Aragon and his co-defendants perpetuated a conspiracy to defraud over 150,000 consumer-victims across the country, many of whom were older or otherwise susceptible to fraud. The scheme was carried out by a network of dozens of fraudulent magazine sales companies located across the United States and in Canada. The companies operated telemarketing call centers from which their employees made calls using deceptive sales scripts designed to defraud victim consumers by inducing them-through a series of lies and misrepresentations-into making large or repeat payments to the companies.

Aragon and his co-conspirators pressured consumer-victims into making payments related to purported magazine subscriptions. Many of the defendants used a fraudulent "renewal" script in which the telemarketers falsely claimed to be calling from the consumer-victim's existing magazine subscription company about an existing magazine subscription package. The telemarketers often claimed-falsely-to be calling with an offer to reduce the monthly cost of an existing subscription. In reality, the company had no existing relationship with the magazines, and they were actually fraudulently signing the consumer-victims up for expensive and entirely new magazine subscriptions.

The result was that a single consumer went from having one magazine subscription to, at times, more than a dozen, all with different fraudulent magazine companies, each "sold" under the auspices of "reducing" the consumer's monthly rate. Over the course of the scheme, Aragon and his companies defrauded thousands of victims and collected over $19 million from victims.

On July 5, 2022, Aragon pleaded guilty to conspiracy to commit mail and wire fraud, and tax evasion. He was sentenced on Nov. 7, 2024, by John R. Tunheim in U.S. District Court.

Aragon also evaded paying taxes on the money he and his fraudulent telemarketing company made. "By evading his tax liability, Aragon unfairly shifted the tax burden to honest American taxpayers to fund vital services such as education and infrastructure," said Tom Demeo, Acting Special Agent in Charge, IRS Criminal Investigation (IRS-CI), Denver Field Office. "IRS-CI special agents identified more than $2 billion in tax fraud last fiscal year, and we will remain committed to holding tax cheats accountable."

The case was the result of an investigation conducted by the IRS-CI, U.S. Postal Inspection Service, and the FBI, with assistance from the Treasury Inspector General for Tax Administration (TIGTA) and the Minnesota Attorney General's Office.

The case was handled by Assistant U.S. Attorneys Harry M. Jacobs, Joseph H. Thompson, Matthew S. Ebert, Melinda A. Williams, and Garrett S. Fields.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.