DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced Thursday that the Denver District Court has ordered a magazine telemarketing company and its owner to pay $6 million to resolve allegations that they participated in a scam.
World Wide Readers Service and its owner, Michael Brian Patterson, allegedly collected fraudulent contracts for magazine subscriptions using telemarketers. Suthers filed a lawsuit in October 2011 against more than 20 telemarketing companies owned and controlled by Patterson and members of his extended family.
"World Wide Readers collected more than $1 million from consumers based on fraudulently procured 'contracts' for magazine subscriptions," Suthers said. "If World Wide Readers is still collecting on any of these 'contracts,' they must cease collection immediately. The company may no longer engage in magazine telemarketing or purchase magazine 'contracts' without first providing copies of their telemarketing scripts, which must comply with the law, to our office."
Under the terms of the judgment, Patterson and World Wide Readers Service must pay $5 million in civil penalties and more than $1 million in consumer restitution.
Members of Patterson's family that agreed to court orders to bar them from magazine telemarketing in Colorado include Henry Aragon, Raymond W. Makatura, Robert Makatura, Lucille Makatura, Lucille Aragon and Dorothy Gonzales. Patterson's family members must pay close to $1 million in additional restitution, penalties and costs.
The scam started with phone calls to consumers by telemarketers employed by Henry Aragon. The telemarketers pretended to have affiliations with magazines the consumers already received and convinced consumers they were calling to lower their monthly payments. The telemarketers then recorded a verification from the consumers that World Wide Readers would later claim was an oral contract in which the consumer agreed to pay up to $1,200 for magazines. Aragon sold the verifications to World Wide Readers, which started to aggressively collect on the accounts.
The defendants involved in the original lawsuit include World Wide Readers Service Inc., Rocky Mountain Readers Service Inc, Magazine/One LLC., Promo Readers Service Inc, Readers Choice Service Inc., All City Circulations Inc., Magazine Connection LLC, Magazine Club LLC, Readers Source LLC, Consumers of America, Haragon Holdings LLC, Haragon Holdings Inc., Family Publications Inc, Increase Publications LLC, I.N.C. & Associates, N R And Assoc. Inc., Neighborhood Readers and Associates, National Readers and Associates, First Premier Subscriber Services Inc, Crown Marketing Inc., Class Media INC, H.J.H. Limited Liability Company and Consumer Network of America LLC.