Eight held in $13 million McDonald's games scam
There was only one problem: The games were rigged.
Acting on an informer's tip, the FBI yesterday arrested eight people in an elaborate scheme to allegedly plant big-money game cards in the hands of fake winners, who claimed the prizes and then split the proceeds with their recruiters.
Authorities alleged that the conspirators raked in about $13 million in fraudulent games dating to 1995, including fast-food versions of "Monopoly" and "Who Wants to Be a Millionaire."
All eight people arrested yesterday are charged with conspiracy to commit mail fraud, carrying a maximum penalty of five years in prison and a $250,000 fine under federal law. More arrests are possible as the investigation continues, FBI officials said.
At the center of the scam, officials said, was a Georgia man who worked for the Los Angeles-based marketing company that has run McDonald's restaurants' many promotional contests around the world in recent years.
Known as "Uncle Jerry" to family and friends whom he allegedly brought into the con, 58-year-old Jerome Jacobson is accused of confiscating the most-valuable game cards — offering such prizes as $1 million or a Dodge Viper — and passing them along to associates before the cards could be distributed randomly at McDonald's restaurants, authorities said.
No one at McDonald's was implicated in the scheme, and the Oak Brook, Ill.-based company cooperated fully in the FBI's yearlong investigation, officials said.
In fact, McDonald's agreed at the FBI's request to go ahead with the latest incarnation of its Monopoly giveaway this summer even after investigators suspected that Jacobson's ring had rigged the game to claim two more $1 million prizes. As customers played millions of game cards with no real chance of winning the biggest prizes, the FBI was conducting court-approved wiretaps on the alleged conspirators in the past six weeks to gather evidence.
McDonald's spokesman Walt Riker said that attracting the fast-food company's 23 million daily customers to a game the company knew was rigged was not a step McDonald's took lightly.
"But our No. 1 goal was to get the bad guys, which meant fully cooperating with the FBI ... and working together with them to put the trap in place," Riker said. "I think the customers will realize that we did the right thing.
"We were scammed, along with our customers."
McDonald's said that "to right this wrong" perpetrated on its customers, the company will begin another promotion — a $10 million "instant giveaway" to run from Aug. 30 through Sept. 3.
"McDonald's is committed to giving our customers a chance to win every dollar that has been stolen by this criminal ring," company Chairman Jack Greenberg said.
"This initial $10 million is the first important step toward fulfilling this commitment."
Acting FBI Director Thomas Pickard said in announcing the eight arrests that federal agents first received a tip about a year ago from an informer who had information about a conspiracy surrounding the McDonald's games and gave a rough sketch of how it worked.
The informer had "won" a 1996 Dodge Viper as part of the scheme.
The FBI initially was skeptical about the tip, and it was months before investigators began to penetrate the workings of the crime ring, according to an FBI official who worked on the case but asked not to be identified.
The FBI began looking for links among the people who had claimed McDonald's biggest prizes in the past few years, and the search eventually led to Jacobson in Georgia, the person in charge of security for Los Angeles-based Simon Marketing.
McDonald's immediately fired Simon — which handled virtually all of the restaurant chain's promotions in recent years, from game giveaways to Happy Meals and the wildly popular Teenie Beanie Babies — from its promotional accounts, saying that the company did not have adequate management oversight.
"They betrayed us and our customers," Riker said.
Officials at Simon declined to comment.
According to an affidavit filed in federal court in Florida as part of the investigation, Simon's Jacobson was one of a handful of people — along with representatives from an Atlanta printer and an unidentified accounting firm — who jointly controlled the high-value game pieces once they were printed.
In the latest version of the Monopoly game this summer, customers received game cards off soda cups, French-fry cartons or advertising supplements. There was supposed to be one "instant" $1 million prize and a second million-dollar prize for whoever collected both the Boardwalk and Park Place game cards.
Many customers won smaller prizes, but authorities said the most-valuable game pieces never made it to restaurants. Instead, they alleged, Jacobson "embezzled" them and used friends and associates to, in turn, recruit relatives to claim the cash and prizes.
The conspirators allegedly split the proceeds. While FBI officials would not break down the financial split, the affidavit notes that "Uncle Jerry" would require a cash "deposit" to release a winning game card, and he would receive the first $50,000 installment from McDonald's on a $1 million ticket.
Some conspirators allegedly mortgaged their homes to come up with the money to purchase the winning pieces, the affidavit said.
Authorities said the suspects were careful to create fake addresses and cover stories to avoid suspicion.
A South Carolina man who was arrested, for instance, established a fraudulent residence in Tennessee before claiming his $1 million prize because there had already been a winner in his area and a second prize might stir questions, the affidavit alleges.
And a Rhode Island man, videotaped this month by what he thought was a McDonald's video crew doing a promotion, gladly told the story of how he supposedly peeled the winning ticket from a People magazine advertisement. The video crew, in fact, was an FBI undercover team that had linked him to the scheme.
In addition to Jacobson, the FBI arrested Linda Baker, 49, of Westminster, S.C.; Noah "Dwight" Baker, 49, of Westminster; Andrew Glomb, 58, of Fort Lauderdale, Fla.; Michael Hoover, 56, of Westerly, R.I.; Ronald Hughey, 56, of Anderson, S.C.; and Brenda Phenis, 50, of Fair Play, S.C.
The eighth person — John Davis, 44, of Granbury, a Fort Worth, Texas, suburb — contacted McDonald's three weeks ago to claim the latest $1 million prize, authorities said. The FBI had already identified the Texas man as the ring's latest "winner."
Information from the Chicago Tribune and The Associated Press is included in this report.