Toronto man fined $2M for direct mail lotto scheme

TheStar.com - GTA -

Toronto man fined $2M for direct mail lotto scheme

August 31, 2009
THE CANADIAN PRESS

A Toronto man who pleaded guilty to sending out millions of deceptive direct mail promotions has been fined $2 million – double the amount of money he made from his activities.

David Stucky, 57, pleaded guilty to offences under the Competition Act.

The Competition Bureau says Stucky ran a lottery ticket-reselling scheme under the name Canadian Lottery Buyers Association.

He has been placed on probation for 18 months and also received a suspended sentence for his involvement in a second deceptive scheme, a sweepstakes look-alike offer marketed under the name Canadian Equity Funding.

Both promotions were based out of the Toronto area, but targeted customers outside of Canada.

The bureau says Stucky must donate $100,000 to charity and is prohibited from engaging in any form of mass marketing for 10 years.

The lottery promotion, which sold group shares of Super 7 lottery tickets, gave consumers the misleading impression that they could win tens of millions of dollars.

But over 1 1/2 years, consumers actually won an average of 75 cents. Stucky mailed out approximately 3.1 million copies of the lottery promotion and received approximately $1 million in revenue, the competition bureau said in a release.

The sweepstakes look-alike offer gave recipients the false impression that they were to receive a cash prize of about $5,000 or another valuable prize on payment of a modest processing fee. But almost all the purchasers ended up winning an inexpensive piece of costume jewellery.

The lottery promotion was marketed to people in the United States, Australia and New Zealand, while the sweepstakes promotion was sent to consumers in more than 200 countries.

Enforcement agencies in Canada, the United Kingdom, the United States, Australia and New Zealand all played a role in the prosecution, carried out by the Public Prosecution Service of Canada.

Stucky was convicted under the criminal deceptive mass marketing provisions of the Competition Act.

"This case demonstrates the bureau's resolve to pursue those who try to hide behind our borders, incorrectly believing they can avoid prosecution," said Melanie Aitken, commissioner of competition.

"Parliament has recently increased the maximum penalty for offences of this kind, which we hope will act as a further deterrent to anyone contemplating such acts," she said.