Case 2:18-cr-00349-JMA Document 1 Filed 07/10/18 Page 1 of 16 PageID #: 1

FILED
,,^ IN CLERK'S OFFICE
U.S. DISTRICT COURT E.D.N.Y.
ALB:CPK:DEZ/TTF
F.#2011R01958

* UUL 10 2018
LONG ISLAND OFFICE

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X
INDICT

UNITED STATES OF AMERICA

- against -

NT

8 34 9

Cr. No.

(T.18,U.S.C., §§ 981(a)(1)(C),
982(a)(1), 982(b)(1), 1341,1343,1349,
1621(2), 1956(a)(1), 1956(h), 1957(a),
1957(b),2 and 3551
T. 21,
U.S.C.,§ 853(p); T. 28, U.S.C.,

TULLY LOVISA,
SHAUN SULLIVAN and

LORRAINE CHALAVOUTIS,

§ 2461(c))

Defendants.
X

AZRACK,J.
TOMLINSON,MJ.

THE GRAND JURY CHARGES:
INTRODUCTION

At times relevant to this Indictment, unless otherwise indicated:
I.

The Defendants and Their Shell Companies

1.

The defendants TULLY LOVISA,SHAUN SULLIVAN and

LORRAINE CHALAVOUTIS,together with others, engaged in a direct-mail operation that

sent fraudulent prize-promotion mailings to thousands of consumers across the United States
(the "Direct-Mail Operation"). The mailings induced consumers(the "Victims")to pay a
fee in exchange for a falsely promised cash prize. The defendants used a number of
different company names for the purported senders ofthe prize-promotion mailings,
including but not limited to Addleshaw Bird & Mitchell, Registered Entitlement Services,

Capital Management Group, Kingsley Harper & Hatfield, National Asset Allocation and
Registered Disbursement Division (collectively, the "Shell Companies").

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2.

The defendant TULLY LOVISA, who resided primarily in Himtington

Station, New York,ran the Direct-Mail Operation while hiding his involvement. LOVISA's

participation in the Direct-Mail Operation violated federal court orders. In 2010,the Federal
Trade Commission("FTC")brought an enforcement action against LOVISA in the United
States District Court for the Northern District of California, alleging that he sent mailings to
consumers that misled them into believing they had won large cash prizes, which they could

claim by paying a fee. In December 2010 and April 2012,the federal court ordered
LOVISA to stop his involvement with prize-promotion mailings. Despite these orders,
LOVISA ran the Direct-Mail Operation described herein from December 2010 until July
2016 or later, and concealed his involvement by using straw owners to serve as presidents of
the Shell Companies and by using aliases in emails related to the Direct-Mail Operation.
3.

The defendant SHAUN SULLIVAN,who resided in several locations

in Nassau Coimty, New York,ran the Direct-Mail Operation along with the defendant
TULLY LOVISA. Like LOVISA,SULLIVAN hid his involvement in the business by
using straw owners and aliases.
4.

The defendant LORRAINE CHALAVOUTIS, who worked primarily

in Huntington, New York, provided the Direct-Mail Operation with various important

operational services, including opening companies and bank accounts in the names ofstraw
owners and paying bills for the prize-promotion mailings. As part of her duties,
CHALAVOUTIS helped conceal the involvement ofthe defendants TULLY LOVISA and
SHAUN SULLIVAN in controlling the operation, and misled others about the nature ofthe
operation.

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II.

The Fraudulent Prize-Promotion Mailings Scheme
A.

The Fraudulent Mailings

5.

As part ofthe Direct-Mail Operation, the defendants TULLY LOVISA,

SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,together with others, caused prize-

promotion mailings to be sent to the Victims, who were often elderly and vulnerable. The
mailings misled the Victims to believe that they would receive large sums of money,ranging
from tens ofthousands to several million dollars, if they paid a relatively small fee. This
was false; the Victims did not receive large sums of money. The object and purpose ofthe
scheme was to obtain money from the Victims by means ofthese false and fraudulent
statements and material concealments offacts in the mailings.

6.

The mailings were made to appear as ifthey came from the Shell

Companies, which the mailings represented as sophisticated businesses with employees,
offices, organizational structures and official-sounding names. In fact, the Shell Companies
had only straw owners- people whose names were listed in corporate records as the owners

and presidents for the purpose of hiding the defendants' control ofthe companies-and no
employees and organizational structures.
7.

The mailings purported to be signed by a person with an official title,

such as "Payment Agent,""Prize Director" and "Treasurer, Cash-Award Signator for the
Payments Division," or by a representative ofthe "Notification Office" or "Cash Claim
Department." In fact, none ofthese people and departments actually existed within the
Shell Companies.

8.

The mailings concealed the identities ofthe real senders and concealed

that the defendant TULLY LOVISA had been ordered by a federal court to stop his

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4

involvement with prize-promotion mailings as a result of an FTC enforcement action against
him. The defendants all knew about the FTC enforcement action against LOVISA,and also

knew of enforcement actions by the United States Postal Service to stop the prize-promotion
mailings.

9.

The mailings appeared to be personally addressed to individual

consumers who had been specially selected. In fact, the mailings were sent to thousands of
individuals whose names were on consumer lists obtained by the defendants TULLY

LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,together with others,

from other individuals and corporations that sold consumer names for money.
10.

The backs ofthe prize-promotion mailings typically contained a

"Consumer Disclosure" that was up to two to three paragraphs in length. The "Consumer
Disclosure" did not correct the false and misleading statements contained in the prizepromotion mailings.

11.

The prize-promotion mailings directed Victims to pay a "processing" or

"delivery" fee, generally $20 or $25. The mailings included pre-addressed return envelopes
for Victims to send their payment by cash, checks or money orders.
B.

Use of Mailboxes in the Eastern District ofNew York and the Netherlands

12.

As part ofthe Direct-Mail Operation, the defendants TULLY LOVISA,

SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,together with others, rented and

maintained private mailboxes in the Eastern District ofNew York to receive return mailings

sent by the Victims. Co-conspirator #1, an individual whose identity is known to the Grand
Jury, brought the return mailings to office locations in the Eastern District ofNew York. At
the direction ofLOVISA,SULLIVAN and CHALAVOUTIS,together with others, return

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mailings sent by the Victims were opened and processed, including by putting cash payments
from the Victims in a safe in LOVISA'S office.

13.

Some ofthe pre-addressed return envelopes listed addresses in the

Netherlands. At the direction ofthe defendants TULLY LOVISA and SHAUN

SULLIVAN,together with others, cash payments in return mailings sent by the Victims to

the Netherlands were placed in packages and sent by private interstate carrier to John Doe
#1, an individual whose identity is known to the Grand Jury, in East Rockaway, New York,
who then gave the packages ofcash to LOVISA and SULLIVAN.
C.

Victim Pavments and Lists

14.

The defendants TULLY LOVISA,SHAUN SULLIVAN and

LORRAINE CHALAVOUTIS,together with others, caused checks and money orders

received from the Victims to be sent to payment processors and banks, which held the
proceeds in accounts controlled by CHALAVOUTIS.
15.

As part ofthe scheme,each time the Victims sent money to the Direct-

Mail Operation, the defendants TULLY LOVISA,SHAUN SULLIVAN and LORRAINE

CHALAVOUTIS,together with others, added the Victims' names and addresses to lists.
The defendants repeatedly sent mailings to the Victims on these lists. LOVISA,
SULLIVAN and CHALAVOUTIS,through co-conspirators knovm as "list brokers," also
rented the lists to other direct mailers who sent additional mailings to the Victims. As a

result, the Victims often received repeated fraudulent mailings.

16.

From approximately December 2010 to July 2016,the defendants'

Direct-Mail Operation received more than $30 million from the Victims. The defendants
TULLY LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,together with

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others, used this money to enrich themselves and to fiirther promote the Direct-Mail
Operation. No Victim who sent a fee in response to a prize-promotion mailing from the

defendants' Direct-Mail Operation received a promised cash prize, other than a $1.00 prize
check.

D.

LOVISA's False Compliance Report
17.

On or about April 19,2012,the United States District Court for the

Northern District of California entered an order requiring the defendant TULLY LOVISA to

submit a compliance report to the FTC,sworn under penalty of perjury (the "April 19, 2012
Order"). The order required LOVISA,in the compliance report, to "identify all of[his]
businesses," "describe the activities of each business," and "identify all titles and roles in all

business activities, including any business for which he performs services whether as an

employee or otherwise and any entity in which he has any ownership interest[.]" Pursuant
to the order, on or about August 1,2013,LOVISA signed a compliance report under penalty
of peijury. The compliance report was materially false because it concealed LOVISA's
participation in the Direct-Mail Operation.
III.

The Fraudulent House Sale Scheme

18.

The April 19,2012 Order also required the defendant TULLY LOVISA

to sell a house that he owned,located on Dream Catcher Avenue in Las Vegas, Nevada(the
"Dream Catcher home"), and to turn over the proceeds ofthe home sale to the FTC.

19.

In or about July 2012,the defendant TULLY LOVISA put the Dream

Catcher home on the market for sale. Unbeknownst to the FTC,LOVISA directed John Doe

#2, an individual whose identity is known to the Grand Jury, to submit an offer to purchase
the Dream Catcher home for $155,500, which was well below market value. To convince

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the FTC to approve the sale, LOVISA directed John Doe #3, an individual whose identity is
known to the Grand Jury, to make a separate offer for slightly less than $155,500. To deter
other potential buyers from submitting offers, LOVISA manipulated the real estate listing for
the Dream Catcher home so that it appeared the property was not actively on the market.
LOVISA misled the FTC into believing that the two bids from potential buyers who were

secretly acting at his direction were the only offers he could obtain. Based upon the offers
LOVISA had fraudulently procured,the FTC approved the sale ofthe Dream Catcher home
to John Doe #2. LOVISA supplied the money to John Doe #2 to purchase the Dream

Catcher home. Shortly before closing, in September 2012,the purchase rights were

assigned to a Panamanian company that LOVISA secretly controlled. The proceeds ofthe
sale were given to the FTC.
20.

This scheme to defraud the FTC enabled the defendant TULLY

LOVISA to maintain control ofthe Dream Catcher home despite the federal court order.

The object and purpose ofthe scheme was to defraud the FTC and thereby obtain money by
later selling the Dream Catcher home to a third-party buyer for an amount significantly
higher than $155,500.
21.

The scheme continued until April 2015, when the defendant TULLY

LOVISA arranged to sell the Dream Catcher home to third parties for $540,000. LOVISA
caused the net proceeds ofthe sale, over $501,000, to be sent by interstate wire from Nevada
to New York.

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COUNT ONE

(Conspiracy to Commit Mail Fraud)

22.

The allegations contained in paragraphs one through 17 are realleged

and incorporated as if fully set forth in this paragraph.
23.

In or about and between December 2010 and July 2016, both dates

being approximate and inclusive, within the Eastern District of New York and elsewhere, the
defendants TULLY LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,

together with others, did knowingly and intentionally conspire to devise a scheme and
artifice to defraud the Victims, and to obtain money and property from the Victims by means

of materially false and fraudulent pretenses, representations and promises, and for the

purpose ofexecuting such scheme and artifice, to place and cause to be placed one or more
matters and things in a post office and authorized depository for mail matter, to be sent and
delivered by the United States Postal Service, and to deposit and cause to be deposited one or

more matters and things to be sent and delivered by private and commercial interstate carrier,
and to take and receive therefrom one or more such matters and things, contrary to Title 18,
United States Code, Section 1341.

(Title 18, United States Code, Sections 1349 and 3551 et seq.)
COUNTS TWO THROUGH SEVEN

(Mail Fraud)

24.

The allegations contained in paragraphs one through 17 are realleged

and incorporated as if fully set forth in this paragraph.
25.

In or about and between December 2010 and July 2016, both dates

being approximate and inclusive, within the Eastern District of New York and elsewhere, the
defendants TULLY LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,

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together with others, did knowingly and intentionally devise a scheme and artifice to defraud,

and to obtain money and property by means of materially false and fraudulent pretenses,
representations and promises, and for the purpose of executing such scheme and artifice, did
place and cause to be placed one or more matters and things in a post office and authorized
depository for mail matter, to be sent and delivered by the United States Postal Service, and
did deposit and cause to be deposited one or more matters and things to be sent and delivered

by private and commercial interstate carrier, and did take and receive therefrom such matters
and things, as identified below.
Count

Approximate Date

Description

TWO

July 13,2013

Package containing cash payments from Victims, sent
from the Netherlands by private interstate carrier to
East Rockaway, New York

THREE

August 8,2013

Package containing cash payments from Victims, sent
from the Netherlands by private interstate carrier to
East Rockaway, New York

FOUR

November 2013

Addleshaw, Bird & Mitchell prize-promotion mailing
sent by United States mail to victim L.J. in Brooklyn,
New York

Check sent by United States mail from victim B.J. in
Peoria, Arizona, to Kew Gardens,New York,in
FIVE

November 2014

response to prize-promotion mailing from Addleshaw,
Bird & Mitchell

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10

SIX

February 2016

Anderson, Surges & Smith prize-promotion mailing
sent by United States mail to victim S.H. in
Riverhead, New York

SEVEN

June 2016

Check sent by United States mail from victim N.T. in
Ocala, Florida, to Laurelton, New York, in response
to prize-promotion mailing from Certified
Distribution Specialists

(Title 18, United States Code, Sections 1341,2 and 3551 et seq.)
COUNT EIGHT

(Conspiracy to Commit Money Laundering)
26.

The allegations contained in paragraphs one through 17 are realleged

and incorporated as if fully set forth in this paragraph.
27.

In or about and between December 2010 and July 2016, both dates

being approximate and inclusive, within the Eastem District of New York and elsewhere, the
defendants TULLY LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,

together with others, did knowingly and intentionally conspire to conduct financial
transactions affecting interstate and foreign commerce, including deposits, transfers and
withdrawals offunds and monetary instruments, which in fact involved the proceeds of

specified unlawful activity, to wit: mail fraud, in violation of Title 18, United States Code,
Section 1341, knowing that the property involved in the financial transactions represented

the proceeds ofsome form of unlawful activity (a)that was ofa value greater than $10,000,
contrary to Title 18, United States Code, Section 1957, and(b)knowing that the transactions
were designed in whole and in part to conceal and disguise the nature, location, source.

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ownership and control of the proceeds of specified unlawful activity, contrary to Title 18,
United States Code, Section 1956(a)(l)(B)(i).

(Title 18, United States Code, Sections 1956(h), 1956(a)(1), 1957(b)and 3551
et seqT
COUNT NINE

(Money Laundering)

28.

The allegations contained in paragraphs one through 17 are realleged

and incorporated as iffully set forth in this paragraph.
29.

In or about and between July 2013 and July 2016, both dates being

approximate and inclusive, within the Eastern District of New York and elsewhere,the
defendants TULLY LOVISA,SHAUN SULLIVAN and LORRAINE CHALAVOUTIS,

together with others, did knowingly and intentionally engage in monetary transactions, to
wit: transfers offunds,in and affecting interstate and foreign commerce,in criminally

derived property that was ofa value greater than $10,000 and that was derived from specified
unlawful activity, to wit: mail fraud,in violation of Title 18, United States Code, Section
1341, knowing that the property involved in such monetary transactions represented the
proceeds ofsome form of unlawful activity.

(Title 18, United States Code, Sections 1957(a), 1957(b),2 and 3551 et seq.I
COUNTTEN

(Perjury)

30.

The allegations contained in paragraphs one through 17 are realleged

and incorporated as iffully set forth in this paragraph.
31.

On or about August 1, 2013, within the Eastern District of New York

and elsewhere,the defendant TULLY LOVISA did knowingly, intentionally and willfully

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12

subscribe as true, in a declaration under penalty of perjury as permitted under Title 28,
United States Code, Section 1746,to wit: the compliance report required by the April 19,
2012 Order, one or more material matters that he did not believe to be true, to wit: in the

section ofthe report where he was required to disclose all of his ownership interests and
business activities, LOVISA declared that he owned only a "construction company," and

LOVISA declared that "since April 19,2012,1 have not had any ownership interest in nor

have I performed services as an employee or otherwise with respect to any other business or
business activity," when in fact, as LOVISA then and there well knew and believed,
LOVISA had an ownership interest in, and performed services as an employee and otherwise

with respect to, another business, to wit: the Direct-Mail Operation.
(Title 18, United States Code, Sections 1621(2) and 3551 et seq.")
COUNT ELEVEN

(Wire Fraud - Fraudulent House Sale Scheme)

32.

The allegations contained in paragraphs two and 18 through 21 are

realleged and incorporated as if fiilly set forth in this paragraph.
33.

In or about and between April 2012 and April 2015, both dates being

approximate and inclusive, within the Eastern District ofNew York and elsewhere,the
defendant TULLY LOVISA,together with others, devised and intended to devise a scheme
and artifice to defi*aud the Federal Trade Commission related to the sale ofthe Dream

Catcher home,and to obtain money and property by means of materially false and fi*audulent

pretenses, representations and promises, and, on or about April 28, 2015,for the purpose of
executing such scheme and artifice, did transmit and cause to be transmitted, by means of

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13

wire communication in interstate commerce, one or more writings, signs, signals, pictures

and sounds,to wit: a transfer of approximately $501,904.73 from Nevada to New York.
(Title 18, United States Code, Sections 1343,2 and 3551 et seq.")
COUNT TWELVE

(Money Laundering - Fraudulent House Sale Scheme)

34.

The allegations contained in paragraphs two and 18 through 21 are

realleged and incorporated as if fully set forth in this paragraph.
35.

In or about and between May 2016 and February 2018, both dates

being approximate and inclusive, within the Eastem District of New York,the defendant
TULLY LOVISA,together with others, did knowingly and intentionally engage in one or
more monetary transactions in and affecting interstate commerce,to wit: deposits,
withdrawals and transfers offunds and monetary instruments, in criminally derived property

that was of a value greater than $10,000 and that was derived from specified unlawful
activity, to wit: the crime alleged in Count Eleven ofthis Indictment, in violation of Title 18,
United States Code, Section 1343.

(Title 18, United States Code, Sections 1957(a), 1957(b),2 and 3551 et seq.)
CRIMINAL FORFEITURE ALLEGATION
AS TO COUNTS ONE THROUGH SEVEN AND ELEVEN

36.

The United States hereby gives notice to the defendants that, upon their

conviction of any ofthe offenses charged in Counts One through Seven and Eleven,the

government will seek forfeiture in accordance with Title 18, United States Code, Section
981(a)(1)(C) and Title 28, United States Code, Section 2461(c), which require any person
convicted ofsuch offenses to forfeit any property, real or personal, constituting, or derived

from,proceeds obtained directly or indirectly as a result ofsuch offenses.

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14

37.

If any ofthe above-described forfeitable property, as a result of any act

or omission ofthe defendants:

(a)

cannot be located upon the exercise of due diligence;

(b)

has been transferred or sold to, or deposited with, a third party;

(c)

has been placed beyond the jurisdiction ofthe court;

(d)

has been substantially diminished in value; or

(e)

has been commingled with other property which cannot be

divided without difficulty;
it is the intent ofthe United States, pursuant to Title 21, United States Code, Section 853(p),

to seek forfeiture of any other property ofthe defendants up to the value ofthe forfeitable
property described in this forfeiture allegation.
(Title 18, United States Code, Section 981(a)(1)(C); Title 21, United States

Code, Section 853(p); Title 28, United States Code, Section 2461(c))
CRIMINAL FORFEITURE ALLEGATION
AS TO COUNTS EIGHT. NINE AND TWELVE

38.

The United States hereby gives notice to the defendants that, upon their

conviction of any ofthe offenses charged in Counts Eight, Nine and Twelve,the government
will seek forfeiture in accordance with Title 18, United States Code, Section 982(a)(1),

which requires any person convicted of such offenses to forfeit any property, real or
personal, involved in such offenses, or any property traceable to such property.
39.

If any ofthe above-described forfeitable property, as a result ofany act

or omission ofthe defendants:

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15

(a)

cannot be located upon the exercise of due diligence;

(b)

has been transferred or sold to. or deposited with, a third party;

(c)

has been placed beyond the jurisdiction ofthe court;

(d)

has been substantially diminished in value: or

(e)

has been commingled with other propert}' which cannot be

divided without difficulty;

it is the intent of the United States, pursuant to Title 21. United States Code. Section 853(p),

as incorporated by Title 18, United States Code. Section 982(b)(1). to seek forfeiture of any
other property of the defendants up to the value of the forfeitable property described in this
forfeiture allegation.

(Title 18, United States Code. Sections 982(a)(1)and 982(b)(1); Title 21, United
States Code. Section 853(p))
A TRUE BILL

FOREPERSON

RICHARD P. DONOGHl

UNITED STATES ATTO^tNEY
EASTERN DISTRICT OF NEW YORK

GUSTAV W.EYLEPf
ACTING DIRECTOR

CONSUMER PROTECTION BRANCH

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F. «201IR019S8

FORM DBD-34

No.

JUN. 85

UNITED STATES DISTRICT COURT
EASTERN District of NEW YORK
CRIMINAL DIVISION

THE UNITED STATES OF AMERICA
v^.

TULLY LOVISA,SHAUN SULLIVAN
and LORRAINE CHALAVGUTIS,
Defendants.

INDICTMENT
(T. 18, U.S.C.,§§ 981(a)(1)(C), 982(a)(1), 982(b)(1), 1341, 1343,
1349, 1956(h), 1957(a), 1957(b),2 and 3551 et seq.; T. 21, U.S.C., §
853(p); T. 28, U.S.C.,§ 2461(c)).)
A true bill.

Foreperi

Filed in open court this
of

day,
A.D.20

Clerk

Bail, $
Charles P. Kelly, Assistant US,Attorney(631) 715-7866