FBI Media Release
Special Agent in Charge Manuel E. Mora
660 Mesa Hills Drive    El Paso, TX 79912 
To: All print and broadcast media
Contact:  Special Agent Andrea Simmons, 915.832.5373

 

March 8, 2007

El Paso Businessmen Indicted in Wisconsin

Four El Paso businessmen were indicted today in the Eastern District of Wisconsin in a wire-fraud scheme, according to El Paso FBI Special Agent in Charge Manuel E. Mora. A Federal Grand Jury returned a 25-count indictment charging International Outsourcing Services (IOS), a privately-held corporation, and 11 individuals with carrying out a scheme to defraud manufacturers that use coupons to market their products to consumers.

The indictment alleges that as a result of the scheme, the defendants caused over $250 million in loss to manufacturers. According to the indictment, IOS is the nation's largest coupon clearinghouse for grocery store retailers' and manufacturers' coupons.

The indictment alleges that the following 11 individuals participated with IOS in carrying out the fraud scheme:

  1. Thomas Chris Balsiger, age 53, of El Paso, Texas, is partial owner of IOS and serves as its President and Chief Operating Officer.
  2. Steven A. Furr, age 46, of El Paso, Texas, is an IOS Executive Vice President and board member.
  3. Ovidio H. Enriquez, age 63, is an IOS plant manager who works out of El Paso, Texas, and Juarez, Mexico.
  4. James C. Currey, age 57, of El Paso, Texas, handles information technology for IOS and serves on IOS's advisory board.
  5. Bruce A. Furr, age 70, of Bloomington, Indiana, is partial owner of IOS and serves as its Chief Executive Officer.
  6. Lance A. Furr, age 45, of Bloomington, Indiana, was an IOS executive Vice President and board member. Until 2004, Lance Furr had also served as IOS's Chief Financial Officer.
  7. William L. Babler, age 49, of Bloomington, Indiana, has been IOS's Chief Financial Officer since 2004.
  8. David J. Howard, age 45, is an IOS plant manager who works out of Del Rio, Texas, and Muzquiz, Mexico.
  9. Howard R. McKay, age 62, of Memphis, Tennessee, is an IOS consultant, sales manager and member of IOS's advisory board.
  10. Daxesh V. Patel, age 40, of Somerset, New Jersey, was the President of Riya Coupon Services, LLC.
  11. Dharatkumar K. Patel, age 52, of Boonton, New Jersey, was the Vice President of Riya.

The indictment alleges that between 1997 and 2006, IOS, nine of its executives and
employees, and two individuals associated with Riya Coupon services, a coupon brokerage based in New Jersey, participated in a scheme to submit fraudulent coupons to manufacturers for payment. The indictment alleges that the fraudulent coupons submitted by the defendants included:

  • Coupons that had never been legitimately redeemed in connection with the purchase of a product;
  • Coupons that IOS falsely invoiced to manufacturers as having been redeemed at its large retail clients when, in fact, those coupons had been submitted to IOS by smaller stores that were far more likely to have their coupons rejected due to fraud concerns;
  • Coupons that IOS invoiced through their large retail chain stores from geographic areas far from where the coupons were distributed (out of area), or coupons invoiced through large retail clients that did not carry the product associated with the coupon.

The indictment further alleges that IOS and various defendants took a series of actions to conceal the scheme from not only product manufacturers but also the innocent retail clients whose accounts were used by IOS to launder the fraudulent coupons.

U.S. Attorney Steven M. Biskupic of the Eastern District of Wisconsin explained that this indictment was the product of a long-term investigation by his office, the FBI and others. He said that during an earlier phase of the investigation, 17 individuals had been charged and convicted in the Eastern District of Wisconsin, 10 in the Northern District of Ohio, and three in the Southern District of Mississippi for taking part in a coupon fraud scheme related to a broker, Abdel Rahim Jebara, and an IOS sales manager, Robert MacDonald.

The indictment unsealed today alleges that after the FBI executed search warrants at IOS facilities and arrested Robert MacDonald in February 2003, IOS reduced the volume of small-store coupons being invoiced through larger stores as part of its fraud scheme. According to the indictment, this caused IOS to suffer financial problems which, in turn, caused IOS, its executives and others to make false entries in the company's accounting records, to provide false financial information to banks and auditors; and to fraudulently shift "charge backs" (money owed as a result of denied coupons) from non-paying stores to unrelated, legitimate retailers that were shipping coupons to IOS.

The indictment also alleges that IOS and its executives took steps to keep IOS employees and others with knowledge of the scheme from cooperating with law enforcement and to retaliate against those who provided information to federal authorities.

If convicted, individual defendants would face (per count): up to 20 years' imprisonment, up to $250,000 in fines, up to three years of supervised release, and a restitution order covering the amount of established loss.
The public is cautioned that an indictment is merely the formal method of returning charges against an individual and does not constitute inference of guilt. An individual is presumed innocent until such time, if ever, that the government establishes his or her guilt beyond a reasonable doubt.

Anyone who may wish to provide additional information pertaining to this investigation should contact the El Paso FBI office at 915-832-5000.