Three Indicted In Nationwide Phone-Sales Scam

ST. PAUL, Minn. - For 18 months, the phone rang regularly at a couple's home, and the voice on the other end of the line always had good news.

The couple, Don and Nancy Oestreich of nearby Mound, were told they had a chance to win valuable prizes. But the voice on the line always had something to sell.

First they were offered vitamins. The cost was an incredible $999. But they were supposed to win a vacation cruise, too. The vitamins arrived; the cruise ship didn't.

Later, more offers came over the phone - and a few cheap prizes eventually arrived on their doorstep. The couple spent at least $15,000 on various products from December 1989 until June 1991, all the while expecting to win something big.

Yesterday, Hennepin County authorities filed felony swindling charges against three Nevada men who operated seven companies that allegedly took in $30 million from an estimated 30,000 U.S. victims, including the Oestreiches.

The three men are David Lionel Wetherill, 38, of Henderson, Nev., owner of six telemarketing companies in Georgia, Texas, Nevada and California; John Woods, 57, Las Vegas, Nev., the general manager for the companies, and James Alpert, 45, Henderson, Nev., the customer-service manager.

They are being held in a Clovis, N.M., jail, where a grand jury in April indicted them on 25 counts of fraud and racketeering. The Federal Trade Commission (FTC) also has filed a lawsuit that placed the companies under a court-appointed receiver.

Investigators say Wetherill, Woods and Alpert used a common telemarketing tactic: Customers were called, told they were guaranteed to win one of several prizes and asked to purchase products. The company also mailed certificates to potential customers with the same offer.

Customers were told the winners would be chosen by computer. Court papers, however, allege that awards were chosen by company employees and almost always turned out to be cheap items worth a fraction of what customers handed over to the company.

But this operation, which used such names United Health Products, Healthways and K&M Marketing, was larger and more sophisticated than many similar schemes, authorities say. It moved frequently during the three years it operated and used different companies to target the same customers. The Mound couple, for example, made 17 payments to four companies owned by the same person.

Tom Syta, an attorney with the FTC in Los Angeles, described how the scheme generally worked:

"If somebody dealt with United Health Products and decided not to get into any more promotions with the company, 90 days later they would get a call from somebody else who would say, `I'm from K&M marketing. I know you have had some problems with United Health. We have taken over United Health, and we are going to send you out an award. And by the way, we are running our own promotion and would you like to get involved in ours?' "

Syta said consumers didn't know they were dealing with the same operators who had taken their money previously. Syta said the operators registered inactive companies with the Better Business Bureau, which guaranteed nobody would complain about them.

"When United Health Products had worn out its welcome," Syta said, "they would shift to the other company name and say, `We're with the Better Business Bureau and if you check, there are no complaints against us.' "

The investigation that led to the Hennepin County charges began in New Mexico. James Skinner, an investigator for the district attorney in Clovis, said the Mound couple's name showed up in company reports as major award winners. Skinner asked Mound police to find out if it was true.

Police found it wasn't.