Priority Box

U.S. Senator Olympia J. Snowe (R-Maine), Ranking Member of the Senate Committee on Small Business and Entrepreneurship, today sent a letter to John E. Potter, the Postmaster General of the United States, urging him to consider the impact on small businesses of reducing the United States Postal Service’s (USPS) delivery week from six days to five. Snowe cited the potential negative consequences such an action could have on America’s roughly 27.2 million small businesses.

“America’s small businesses depend on reliable and consistent service from the USPS, and they could suffer significant setbacks by a shortened mail delivery week, such as lost sales, order backlogs, and job cuts,” said Senator Snowe. “While I understand the Postmaster General’s desire to reduce costs, it is imperative that his actions not have a detrimental effect on consumer spending or the small businesses that make up the backbone of our economy.”

Postmaster General Potter announced the possibility of shortening the USPS’s delivery week in late January, citing his agency’s potential $6 billion deficit this fiscal year and the difficult economic climate. The United States Postal Service, which is the nation’s second-largest employer, is the only mailing service that delivers to every address in the country.

Acting Assistant Attorney General Rita M. Glavin of the Department of Justice’s Criminal Division and United States Attorney David E. O’Meilia for the Northern District of Oklahoma today announced the unsealing of a twenty-four (24) count indictment, returned by a federal grand jury in Tulsa, Oklahoma on January 15, 2009, charging five individuals with various crimes arising from their alleged scheme to defraud investors that reaped defendants in excess of $41 million through manipulating the publicly traded stocks of three companies. Two companies based in Tulsa, Oklahoma at the time of the alleged scheme were among those whose stock was manipulated: Deep Rock Oil & Gas, Inc. and Global Beverage Solutions, Inc., formerly known as Pacific Peak Investments. The third company, National Storm Management Group, Inc., has its principal place of business in Glen Ellyn, Illinois.

G. David Gordon, 47, a Tulsa attorney, and Richard Clark, 61, also of Tulsa, were arrested today and are will make their initial appearances this afternoon in the U.S. District Court for the Northern District of Oklahoma. Louisville, Ky., attorney James Reskin, 50, was also arrested today and is being scheduled to make his initial appearance in the U.S. District Court for the Western District of Kentucky. Dean Sheptycki, 41, a resident of the Bahamas, was arrested this morning by Bahamian authorities and currently awaits extradition to the United States. The indictment also charges Dallas-area resident Joshua Wayne Lankford, 35. Lankford’s current location is unknown, and law enforcement officials are seeking him as a fugitive.

In a related action, the Securities and Exchange Commission today filed a civil enforcement action in the Northern District of Oklahoma against Gordon, Lankford, and Sheptycki. That civil case number is 09-CV-061.

The grand jury indictment alleges that between April 2004 and December 2006, the defendants devised and engaged in a scheme to defraud investors known as a “pump and dump” in which they manipulated three publicly traded “A penny stocks,” that is, common stocks that trade for less than $5 per share in the over-the-counter market, rather than on national exchanges.  According to the indictment, the defendants executed the scheme by obtaining a majority of the free trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.

As charged, the defendants hid and “parked” their shares with various nominees, such as friends, relatives, or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. These blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees took significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.

The indictment charges all five defendants with one count of conspiracy to commit securities fraud, wire fraud, and money laundering, nine counts of wire fraud, five counts of securities fraud, and six counts of money laundering in connection with the manipulation of three penny stocks. Gordon is also charged with one count of making a false statement in a matter within the jurisdiction of the Securities and Exchange Commission regarding the scheme to defraud. Additionally, the indictment charges Gordon with one count of wire fraud in connection with a fourth penny stock, that of New Jersey-based International Power Group, Ltd., and one count of obstruction of justice of an investigation into that alleged wire fraud violation.

According to the indictment, the defendants profited over $41 million from the overall scheme, and therefore, the indictment also seeks criminal forfeiture of $41.4 million from all five defendants in connection with the three penny stocks. Additionally, the indictment seeks criminal forfeiture of $2.74 million from Gordon in connection with the wire fraud involving the fourth penny stock.

A Grand Jury indictment is one method of charging defendants with alleged violations of federal law, and all defendants are presumed innocent unless and until the charges are proved beyond a reasonable doubt in a court of law.

If convicted, the conspiracy and false statement charges each carry a maximum sentence of 5 years in prison and a $250,000 fine. Each charge of wire fraud, as well as the obstruction of justice count, carries a maximum sentence of 20 years in prison and a $250,000 fine. The maximum sentence for each securities fraud count is 20 years in prison and a $5,000,000 fine, and the maximum sentence for each money laundering count is 10 years in prison and a $250,000 fine.

On July 22, 2008, Mark Byron Lindberg, age 40, of the Dallas, Texas area, pled guilty to a conspiracy alleging the same wire and securities fraud scheme and agreed to a $6,229,354 forfeiture money judgment for his participation in the scheme that bilked investors across the nation out of millions of dollars. Lindberg admitted that he and other unnamed co-conspirators attempted to illegally manipulate the stock price of various companies through a number of means including: acquiring a substantial amount of free trading shares of stock in the companies that were concealed in various brokerage accounts; creating and distributing to the public false and misleading promotional materials; and engaging in coordinated trading of stock in order to manipulate the price of the stocks being traded, including selling their stock while at the same time encouraging the public to buy.

U.S. Attorney O’Meilia stated: A Investors engaged in the purchase or sale of publicly traded stocks rely upon the integrity of securities markets to ensure that they receive a fair price and opportunity for potential profit, based upon accurate information and the free operation of principles of supply-and-demand. Congress and regulatory agencies have established a comprehensive and complex system of oversight and regulation to attempt to insure the fairness and integrity of these markets. ‘Pump and dump’ schemes hurt more than the immediate victims who bought the stock and lost their money B such fraudulent activities undermine investor confidence in the markets.”

Fort Worth Division United States Postal Inspector-in-Charge Randall C. Till said:  “The public has a right to believe that representations made to them, whether through U.S. Mail, fax or email, are true and accurate. Since the Mail Fraud statute was enacted by Congress in 1872, U.S. Postal Inspectors have been investigating alleged criminals just like the five defendants announced today who are charged with using the U.S. Mail and other communications means to perpetrate frauds against American consumers.”

The case is being prosecuted by Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section, Assistant United States Attorney Catherine Depew for the Northern District of Oklahoma, and Special Assistant United States Attorney Kevin Muhlendorf, who is detailed to the U.S. Attorney’s Office from the Securities and Exchange Commission. The case is being investigated by the F.B.I., the I.R.S. Criminal Investigation Division, and the U.S. Postal Inspection Service.

The USPS is going to begin checking mailings for compliance using their current MERLIN program.  MERLIN program, an acronym for Mail Evaluation Readability Lookup INstrument, is a tool that is used by the U.S. Postal Service to assist with the acceptance of business mail.

MERLIN will read the addresses of mail pieces and check them against USPS Change of Address Database to determine if the mailing is compliant.  When a mailing is found to be Non-Compliant the USPS can (an likely will) levy fines against the mailer.

Mailers (that would be us) will require their clients to fill out a Form 6014 (Certification of Move Update Compliance) and/or submit their mail list through NCOA and fill out a PAF (Processing Acknowledgement Form).  It will be required of all mailers to be able to present to the USPS proof that the mailing is Move Update Compliant.

Tax season is like Christmas for identity thieves. They know sensitive information abounds and they are on the prowl looking to take full advantage of this special time of year. No matter how you prepare and file your taxes, it is important to be cautious and aware when handling your most personal information. Here are a few tips we have put together on how to survive tax season with your identity in tact.

Secure your incoming mail.
You will be receiving W-2 forms and other documents with sensitive information in your mailbox. If you do not already have a locking mailbox, now would be a good time to invest in one. If that is not an option for you at this time, regularly check your mailbox for these forms and contact the IRS for assistance at (800) 829-1040 if you believe your forms should have already arrived.

Secure your computer.
If you are preparing or filing your taxes via your personal computer, you need to make sure that your PC is protected with updated firewall and secure software systems that contain anti-virus and anti-spyware programs. In addition, if you are storing important tax-related documents on your hard drive, you should protect your computer with strong passwords change them often.

Use caution online.
If you are preparing or filing your taxes online, make sure every website you use is encrypted to protect personal information when transmitted. You can tell that a website is secure because the URL will begin with “https://” instead of “http://”.

Secure your outgoing mail.
If you are filing via the mail, make sure you send your completed tax return from a locked mailbox (i.e. the blue USPS drop-boxes) or the post office. Do not put your outgoing tax return in your home mailbox and put the flag up—this just alerts identity thieves that there is an outgoing check in your mailbox. Remember, even locking mailboxes like the Mail Boss do not provide security for outgoing mail (no USPS approved residential locking mailboxes do).

Use a paper shredder.

Once you’ve filed your tax return by mail or online, you should shred any backup documents with personal or sensitive information that you cannot store securely. Be sure to use a cross-cut paper shredder!

Charities that use premiums to fundraise have again taken it on the chin from the United States Postal Service. Nonprofit parcels and Nonflat Machinables (NFM) will again bear the brunt of postal rate increases, with percentage increases ranging from almost 10 percent to 50 percent, according to analysis from the Direct Marketing Association (DMA).

The United States Postal Service (USPS) Board of Governors released new postage increases that are set to take effect May 11. The new rates will be reviewed by the Postal Regulatory Commission (PRC) to ensure they are within the provisions of the Postal Act of 2006, namely checking that they are within the price cap for each class of mail.

The cap, based on the most recent 12-month average of the Consumer Price Index-Urban (CPI-U), was about 3.8 percent. Each class of mail can see price increases as high as an average of 3.8 percent, but can vary within each class. If the PRC were to find that the new prices were not set correctly, the Postal Services would adjust them.

The hardest hit postal classes hit will be Standard parcels and Nonflat Machinables (NFM), according to Tony Conway, executive director of the Alliance for Nonprofit Mailers (ANM), a Washington, D.C.-based coalition. He expects average percentage increases in those two categories to reach the upper teens, calling it a sign that the cost of the Postal Service processing and handling such mail remains high. “Clearly it’s a price signal that they’re obviously not trying to incent more of that volume in their system,” Conway said.

Some nonprofits were faced with massive double-digit postage increases when the NFM category was introduced in two years ago, prompting some organizations to modify the size and shape of their mailings drastically.

Nonprofit Standard flats appear to have a slightly smaller increase than nonprofit letters, Conway said, suggesting that the USPS is sensitive to the loss of volume in flats and wants to keep it growing. Last year, flats saw a reduction, he said.

“Overall, it wasn’t at least on the face of it a real aggressive type price change with big swings,” Conway said, and USPS was likely sensitive to the current economic conditions.

The USPS could have cited extraordinary circumstances and asked the independent Postal Regulatory Commission for larger increases, but officials felt that would only result in a greater decline in mail volume. The Postal Service has been cutting costs, reducing work hours, and has asked Congress to ease requirements for advance funds for retiree benefits and to allow mail to be delivered five days a week instead of six.

When the Postal Service first created the NFM category, it suggested it as an interim move while migrating the product line into the parcel category, Conway said. “Clearly, pricing is heading in that direction,” he added.

The Postal Service projects volume to be down 12 billion to 15 billion pieces for the year, which could mean a significantly higher loss than last year’s $2.8 billion. Conway said even that figure may well be optimistic.

PerSage, Inc., market innovator and leading provider of automated, wireless PO mailbox notification services, reported a surge in demand for its popular POPickup^™ service that sends automated email and/or text message alerts directly to PO box renters when they have First Class Mail^® or packages. The company attributes the increased interest in part to the recent market entry by United Parcel Service^® that has raised general awareness of mail notification services among the nation’s 10,000 mail receiving stores.

“We were quite pleased to see TV and online advertising touting the new UPS^® package delivery notification service at The UPS Stores^® and Mail Boxes Etc.^® stores,” said Gordon Watson, PerSage Chairman and CEO. “UPS’s entry invigorates and further validates this exciting market space which we’ve been actively serving since 2007.”

While the UPS notification service is for packages only, POPickup notifies mailbox renters not only about packages, but also that First Class Mail has been delivered. In addition, POPickup is the only service that sends mailbox renters a choice of three types of notices chosen from a menu of 15 standard messages.

This flexibility is important to store owners who save time by not having to respond to customer inquires about mail deliveries, as well as mailbox renters who save time and fuel by avoiding trips to an empty mailbox. Many mailbox renters are business people who receive payments and orders through the US Postal Service^®, FedEx^®, UPS, and other carriers. The ratio of First Class letters to packages received is about 100 to one in the typical postal and business services store.

“It’s ironic that our service has received an immediate surge in demand from store owners across the country since The UPS Stores began advertising package-only notification two weeks ago,” continued Watson. “First Class mail is of the highest interest to the customer and typically the most time sensitive. First Class letter delivery notification is not available with the UPS service.”

Postal Connections of America, a competitor of The UPS Store based in San Diego with stores in 24 states, has entered into an agreement with PerSage to equip all new stores with POPickup and is retrofitting existing franchise stores with the service. “The email or cell phone notification is a strong benefit for our customers who frequently come in to check their mailbox,” said Fred Morache, Managing Partner of Postal Connections. The company conducted a six-month in-stores test of POPickup before signing a national agreement with PerSage.

POPickup is a licensed service targeted to mail receiving stores in the U.S. and Europe. The automated, wireless service requires no special workstation or complex wiring or software to install. Other than a store employee pushing one of three buttons in the mailbox while putting up the mail, there is no added labor.

PerSage, Inc. is a privately-held technology, manufacturing, and services provider headquartered in Fountain Valley, CA. For more information, call 714.593.1529 or visit www.persage.com

POPickup is a trademark of PerSage, Inc. United Parcel Service, UPS, The UPS Store, and Mail Boxes Etc. are registered trademarks of United Parcel Service of America. First Class Mail is a registered trademark of the US Postal Service. FedEx is a registered trademark of FedEx Corp.

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