Epsilon Data Management offers strategic consulting, marketing analytics, database, email and loyalty marketing technology, predictive modeling, proprietary data, and digital marketing services. In a nutshell, they are a direct marketing company. The Company boasts a customer base of 250 million American customers. That is about seventy-five percent of the entire country. Epsilon uses transactional data collected from marketing clients to predict new “responsive buyers” using computer algorithms. “Responsive buyers” is a fraudster’s target market! And Robert Reger and David Lytle, employees in Epsilons’ Direct to Consumer Unit, knew it.
Reger and Lytle used Epsilon’s algorithms to predict new lists of consumers most likely to respond to frauds. They then sold those lists to perpetrators of fraud schemes involving the sending of false and deceptive mail to consumers. Reger and Lytle even helped mail the scam letters promising large prizes or falsely personalized astrological mailings promising wealth. But the only wealth gained was by the fraudsters. Over $122 million was fraudulently obtained on the hopes “responsive buyers.”
On May 31, 2024, the jury found both Reger and Lytle guilty of seven counts of mail fraud. A sentencing hearing is scheduled on September 30, 2024. Reger and Lytle both face a maximum penalty of 20 years in prison for each count. Epsilon resolved its criminal liability via a deferred prosecution agreement in 2021, paying $150 million in penalties and victim compensation. That victim compensation effort has returned $122 million to more than 200,000 victims of fraud schemes for which Epsilon provided data.
Great job by the U.S. Postal Inspection Service in investigating this case.
Today’s Fraud of The Day is based on article “Ex-Epsilon Executives Found Guilty In Fraud Case” published by The Non-Profit Times on May 31, 2024.
Two now former executives of Epsilon Data Management were convicted in federal court of selling lists used to target millions of U.S. consumers, including senior citizens, for mass-mailing fraud schemes. Robert Reger, 57, of Boulder, Colorado, and David Lytle, 64, of Leawood, Kansas, were found guilty of conspiracy to commit mail and wire fraud.
In 2018, former Epsilon Vice President Steven Fritz Kessler pleaded guilty to conspiracy to commit mail fraud for his participation in the scheme. Epsilon entered into a deferred prosecution agreement in 2021, paying $150 million in penalties and victim compensation. Epsilon was ordered last year to turn over records in the case.
