Scott Faraguna may not have had many morals, but he had the skills to close bogus deals worth thousands of dollars with a phone call.
He was a closer.
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Last year the 40-year-old Faraguna, pictured here, participated in a Fort Lauderdale boiler scam called the Timeshare Mega Media and Marketing Group. It was run by two convicted criminals -- Pasquale Pappalardo and Joseph Crapella -- and had ties to the mob, according to the feds. The company's telemarketers tricked millions of dollars out of victims across the country by claiming to have sold their timeshares when it hadn't, federal prosecutors allege. Click here to read more about the continuing investigation.
In just five months of working in the boiler room, Faraguna singlehandedly scammed $295,297 out of those he called on the phone. It was a high-paying job -- he was paid 40 to 50 percent commissions, depending on whether the customers signed the contracts, and numerous bonuses. This past January, the federal government charged Faraguna with conspiracy to commit mail and wire fraud. He is currently free after posting a $100,000 bond and, as part of his cooperation with prosecutors, he signed a declaration in which he detailed his work in the boiler room. The document, provided below in abridged fashion, describes a den of thieves and provides one of the best glimpses into a telemarketing scam you'll see.
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My name is Scott Faraguna and I am a United States citizen. In January 2010, I began working as a telemarketer for a company called Timeshare Mega Media and Marketing Group, Inc. ("TMMMG"). During the time I worked at TMMMG, it was located at 2652 E. Oakland Park Blvd., Fort Lauderdale, Florida. The business was located in a strip mall, however the name of the business was not posted anywhere outside the business. I worked at TMMMG for about four months as a "closer." When I walked in the first day, Joey approached me, asked me a few questions, and told me he would pay me 40 or 50 percent of my sales as commission. He told me to come back the next day to start work. I typically worked open to close four or five days a week. Those hours were usually 11 a.m. to 10 p.m. When dealing with consumers, I referred to myself as "Allen Rider." It was common for telemarketers to use different names as aliases. The people above me who worked in customer service knew my alias. these people included Joey, Eric Thompson, Joey's mom Pat, and any of the girls that answered complaints on the phone.
TMMMG operated out of a single, relatively large room that contained several telemarketing stations and desks along the outside. Because the business was in one room, I was able to observe other people while they were working, and I could also overhear between other telemarkers and their customers. TMMMG's business, as I understood it at first, was to call people who wanted to sell their timeshares, and TMMMG would market them. I was initially told that Joey would do seminars and such to sell the timeshares. Quickly, though, I realized that the actual business was to get as much money as we could from the customers we called. This is what Joey told us to do, and he said that he would "take care of the rest." I got lead lists directly from the person we called Patty Boy. These lead lists came from a variety of sources, including Timeshare By Owner, Timeshare Market Pro, and other timeshare resale companies. This information included location, size of timeshare, the weeks they had, and their asking price. The lead sheets also sometimes included credit card information.
In making calls to consumers, I could tell a consumer whatever I wanted in order to make a sale. I never offered to sell timeshare advertising; rather I always told consumers that their timeshare was sold or would be sold within a few days. I told them the fees we were charging them were for document processing fees or other charges that are related to the sale. ... I told consumers that the fee would be refunded to them within 30 days from the closing of the sale. Within a few hours of starting work at TMMMG, I picked this up from sitting in the room and overhearing the other telemarketers on their calls with customers. The script was to pitch the advertising and marketing of timeshares. It would be hard to get $2000 from people just to advertise their timeshare for sale. Sometimes Joey would get paranoid and run around the room and put scripts upon the walls, but they would get ripped down. He would also have a meeting once a month to say that there were chargebacks, so people must be doing something wrong, but nothing changed about how we actually worked, and Joey kept taking the money we were making from the sales. I thought it was a joke, because he definitely knew what we were telling consumers.
In addition to commissions, closers were also paid cash bonuses known as "spiffs." For every sale a closer made, the closer would earn a $100 cash spiff once the credit card charge was confirmed. The spiffs would be paid out at the end of the night. Occasionally, management would also offer what were known as "Lucky spiffs." A Lucky spiff was a larger cash bonus paid to a closer who made a sale at a particular price point or was the first closer of the shift to make a deal. I would often try to "size up" a consumer to see how much a consumer might be willing to pay. If the consumer owned a more expensive timeshare, we might be able to get more money out of the consumer. I once made a sale of about $10,000, which was split between two of the consumer's credit cards. We could charge a consumer whatever we wanted, but always tried to keep it over $1999, because Joey didn't want to see sales less than that.
Most consumers' credit cards likely were charged before they ever saw a contract. Customers would call me back on my phone at the office and complain about the lack of information they received after their credit cards were charged. They would also call back and complain because the contract they received was for timeshare resale advertising, and we never told them anything about marketing in our telemarketing calls. We told them their timeshare was sold. The key at this point to get the consumer to sign and return the contract. If a consumer did a chargeback, TMMG would put up a fight.
When complaint calls came in, I would usually pretend that I wasn't Allen, and then I would tell the consumers that someone would look into their concerns, or that I would refer them to customer service. Generally, I just wanted to get off the phone. I would sometimes pay another telemarketer to handle these calls for me. Sometimes, if the consumer was especially forceful or threatened to complain to the Better Business Bureau or the Attorney General, I would actually pass them along to customer service and tell customer service to cancel the deal and I would take the hit. Generally, I would try to string a customer along for as long as possible, so that the deal would stick. I learned from Joey that it would be harder for the customer to get their money back from his or her credit card company after 60 days, so I would try to string the customer along past that. I would blow off a consumer's calls after 60 days, because after that point, it no longer mattered.
Louis Duany was the owner of TMMMG "on paper," and he signed my paychecks. Pasquale Pappalardo, whom I knew as "Posh," was not involved in the day-to-day operations like some of the others, but I was aware that he had an interest in the business. He acted like a tough guy and would come in and walk out with checks from Joey.
I left TMMMG in May 2010. For several weeks, we were not getting paid. When I left, I was still owed about $13,000 in earnings. We were told the merchant account was frozen and that there were too many chargebacks. But Joey would tell us that they had seven merchant accounts, or some other story to keep us coming back to work the next day. At the end of my time there, were weren't even getting spiff money.
I am aware of several telemarkets at TMMMG who would work from cell phones while at the office and away. Some telemarketers took leads home with them. When I left TMMMG, I took sheets containing information for the people I sold to. When telemarketers were no longer being paid by Joey, some of them called consumer whose names they had from sales records, and told them to send money by Western Union. This was a way to get paid without going through Joey.
I declare, under penalty of perjury, that the foregoing statement is true and correct.
Signed: Steve Faraguna
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