Path: igor.rutgers.edu!newsserver.jvnc.net!howland.reston.ans.net!pipex!uunet!digex.net!access1!wdunn From: wdunn@access.digex.net (Bill Dunn) Newsgroups: news.admin.misc Subject: Re: Chain letter Message-ID: Date: 30 Jan 94 01:33:56 GMT References: <1994Jan28.181528.3563@midway.uchicago.edu> Sender: wdunn@access1.digex.net Organization: Express Access Online Communications, Greenbelt, MD USA Lines: 300 NNTP-Posting-Host: access.digex.net jfu2@kimbark.uchicago.edu (Carlo Graziani) writes: >Hello, net. >Someone posted a chain mail letter (reproduced below) to soc.culture.italian >today. It is a classic pyramid scheme, of the type that is illegal if sent >by U.S. mail, thinly disguised as a "mail order buisness" opportunity. >Judging from the letter, I would guess that it was posted to 9 other >USENET groups as well, although I could find no other examples in the >groups that I read (and a couple more selected at random). >I'm not sure what to do about this. Is it illegal? Is it technically >fraud? It sure seems like an abuse of USENET. Advice welcome. >Carlo Graziani >******************** Scam follows ********************************* ..."Dave Rhodes letter" deleted Here's what my research shows... FWIW, I've found that sending a full copy to the postmaster at the offender's site results in near instantaneous action. If done soon enough the posts have occasionally been cancelled. The 10 or so that I've seen are almost certainly cluelessness in action, but they are still a nuisance. ----semi FAQ follows---- November 24, 1993 RE: Illegal use of the 'net [Minor revision: January 3, 1994] By: William G. Dunn Permission is granted to use any or all of this posting, with or without acknowledgement. If you use my name, you must include all of the posting, verbatim, including this permission and the disclaimer. DISCLAIMER: NOT PREPARED OR REVIEWED BY AN ATTORNEY Several questionable schemes, such as MAKE.MONEY.FAST, have recently made their way onto the 'net. A common approach is the pyramid (or Ponzi) scheme, such as a chain letter. In these schemes, typically, the originators and early participants are paid from the cash flow of those they recruit to participate in the scheme. The last ones recruited find there is no one left to recruit, or pay, and the cash flow stops. Ponzi made millions on a $150 investment in the 6 months between Dec 1919 and May 1920 before his scheme broke down. It was simplicity itself: give him money, in 90 days he would give you your money back + 50%, plus 10% to the recruiter. In 1923 the Supreme Court determined that this was fraud (Cunningham v Brown 44 SCt 424) -- and since then such pyramid schemes have been known colloquially as Ponzi schemes. But these are not the only, or even the most common, types of fraud. Basically any type of scheme offering financial or other rewards (eg. green cards, residence visas, marriages, land, work-at-home, clean-up- your-credit, etc.) have the potential for fraud. As the representations of profitability and/or effort required become more and more inaccurate they cross the line into material misrepresentation -- and the scheme begins to look and smell like fraud. I've concluded that "use of the 'net" "to defraud" probably violates several United States Federal criminal statutes, including the "mail fraud" statute 18 USC 1341. In addition to these (and probably other -- one attorney reminded me of the possible applicability of the RICO statutes) US Federal statutes there are probably US state laws, such as the Uniform Deceptive Trade Practices Act, and maybe foreign laws that are relevant as well. (As an aside, some of the US fraud laws were modeled on a 17th C English law, 29 Charles II 1676, An Act for the Prevention of Frauds and Perjuries -- which was apparently repealed by the Law Reform Act of 1954.) [Several 'netters have said that these kinds of schemes are illegal in their countries, too: Australia, Canada, several European countries. Any more non-USers know the law in their country?] Participation, in the United States, in such "use of the 'net" could result in prosecution of all those involved in "furthering" the fraudulent scheme and in confiscation of certain of their assets. Depending on the scope and size of the scheme, widescale prosecution and/or confiscation seem highly unlikely, but I wanted to lay out my reasoning and research for others to think about and challenge. Terms: "to defraud" -- "The words 'to defraud' have the common understanding of wronging one in his or her property rights by dishonest methods or schemes, and usually signify the deprivation of something of value by trick, deceit, chicane, or over reaching." (62 AmJur2d POST OFFICE Section 140) There doesn't seem to be any specific legal definition of fraud but there seems to be a general agreement that fraud includes at least: a willful intent to deceive another so as to induce them to part with their property. "mail fraud" -- "Essentially, the offense of mail fraud consists of the use of the mails in executing, or attempting to execute, the scheme to defraud; it is not the scheme itself. . . . Persons charged with a mail fraud violation need not have sent anything through the mails themselves. It is only necessary that they cause the mails to be used." (Ibid., Sections 141, 144) "use of the 'net" -- means basically sending, receiving, transmitting any message in whatever form by radio or telephone, INCLUDING all intermediate routings. "furthering" -- Many people could be charged. For instance, all those who knowingly transmit the fraudulent scheme by reposting or mail or .... The mail and wire fraud statutes seem VERY general on this, and could conceivably be used to charge those acting as common carriers whose only involvement in the scheme is to forward the illegal scheme. While this poses the biggest threat to the 'net, it also seems, to me, to be the most far-fetched. [Anyone know what the the statutory exemption from prosecution is for common carriers and whether it is available to all who act as such, or only to a specific class of carriers or entities?] This is all standard stuff, available in most libraries, so as Scoop Nisker might have said - if you don't like these facts, go out and make some of your own! NEXT STEPS: Somebody, preferably an attorney able to balance these amateur-selected factoids against the "real" world of legal practice, could do the 'net a service by offering a cogent analysis of the application of these and other applicable laws to net use. Some questions -- 1. Who on the 'net bears responsibility for content (of mail, usenet postings, net services): originator only? originator and provider, originator, provider and all intermediaries? 2. How real are these legal risks? To whom? 3. What are the options for dealing with the offenders? Others have suggested, in rough order of activism: ignoring offenders, bozofilter/KILLFILE offenders, stuffing offenders' mailboxes, flaming offenders, posting counter propaganda (the approach of this posting), notifying sys admins at offender site (at least one contrite student recently related his experience at getting his account lifted by his admin as a result of MAKE.MONEY.FAST), notifying offender's employer, notifying the local Postal Inspector, filing a complaint with X (X == police, state district attorney, US Attorney, consumer affairs office, ???). Without exception, notifying the postmaster at the offending site has, in my experience, resulted in an IMMEDIATE (usually less than an hour, depending on the time of day) response thanking me for bringing the offending message to their attention. In most cases the messages appear to have been posted out of cluelessness, or as a joke -- responses recognizing this seem to get better reactions from the system administrators. 4. What are the other risks: political, legislative, marketing, ? Given the climate of the times, there seems to be an unusual amount of plasticity even in something as amorphous as the 'net. This whole construct could go a lot of different ways -- more anarchy and experimentation, more regulation and standardization, both at once, ???. Given the behavior of the established guardians of the public weal in the Jackson Games, Bell South, and other such situations, it does not seem unreasonable that these same folks would react in similar ways to even more public displays of questionable behavior. The immediate reaction might be prosecutorial, but the longer-term reaction would likely be restrictive legislation, registration, licensing, etc. So, what do you think? Following are excerpts from the US Code relating to mail and wire fraud. **************************** * * * 18 United States Code * * * ********************************************************************* Section 1341 Frauds and swindles. Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both. Section 1342 Fictitious name or address Whoever, for the purpose of conducting, promoting, or carrying on by means of the Postal Service, any scheme or device mentioned in section 1341 of the title or any other unlawful business, uses or assumes, or requests to be addressed by, any fictitious, false, or assumed title, name, or address or name other than his own proper name, or takes or receives from any post office or authorized depository of mail matter, any letter, postal card, package, or other mail matter addressed to any such fictitious, false, or assumed title, name, or address, or name other than his own proper name, shall be fined not more than $1,000 or imprisoned not more than five years, or both. Section 1343 Fraud by wire, radio, or television Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined not more than $1,000 or imprisoned not more than five years, or both. Section 1344 Bank fraud Whoever knowingly executes, or attempts to execute, a scheme or artifice-- (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. Section 1345 Injunctions against fraud (a)(1) If a person is-- (A) violating or about to violate this chapter [18 USC Sections 1341 et seq.] or section 287, 371 (insofar as such violation involves a conspiracy to defraud the United States or any agency thereof), or 1001 of this title; or (B) committing or about to commit a banking law violation (as defined in section 3322(d) of this title), the Attorney General may commence a civil action in any Federal court to enjoin such violation. (2) If a person is alienating or disposing of property or intends to alienate or dispose of property, obtained as a result of a banking law violation (as defined in section 3322(d) of this title) or property which is traceable to such violation, the Attorney General may commence a civil action in any Federal court-- (A) to enjoin such alienation or disposition of property; or (B) for a restraining order to-- (i) prohibit any person from withdrawing, transferring, removing, dissipating, or disposing of any such property or property of equivalent value; and, (ii) appoint a temporary receiver to administer such restraining order. (3) A permanent or temporary injunction or restraining order shall be granted without bond. (b) The court shall proceed as soon as practicable to the hearing and determination of such an action, and may, at any time before final determination, enter such a restraining order or prohibition, or take such other action, as is warranted to prevent a continuing and substantial injury to the United States or to any person or class of persons for whose protection the action is brought. A proceeding under this section is governed by the Federal Rules of Civil Procedure, except that, if an indictment has been returned against the respondent, discovery is governed by the Federal Rules of Criminal Procedure. Section 1346 Definition of "scheme or artifice to defraud" For the purposes of this chapter [18 USC Sections 1341 et. seq.], the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services. ********************************************************************* * * Re: prohibited mailings and mail fraud orders, see also--- * * 39 USC 3000 et seq., especially 3005 and 3007. * 39 CFR 111, 952 * Domestic Mail Manual, Section C (available at all post offices) * 28 Fed Proc L Ed POSTAL SERVICE Section 63:367 Mail Fraud * US Postal Service (202) 268-2000, or your friendly local Postal * Inspector ********************************************************************* -- William G. Dunn 76104.72@compuserve.com, wdunn@access.digex.net