Man indicted for attempted fraud of ADA members
December 10, 2012
Boston—No ADA members were harmed by a fraudulent fax scheme thanks to swift action taken when reports of the scam first surfaced in January.
Now the man responsible for unlawfully issuing thousands of allegedly fraudulent invoices seeking payment for ADA and other association membership dues has been indicted on seven counts of wire fraud and eight counts of mail fraud.
The U.S. Attorney's Office in Boston Oct. 3 announced that Darren Stokes of Stoughton, Mass., faces up to five years in prison to be followed by three years of supervised release and a $250,000 fine on each count. “It is alleged that Stokes induced hundreds of businesses to send checks to mailing addresses that he controlled,” said the U.S. Attorney's Office in a statement.
In a civil case the ADA brought against Mr. Stokes, the U.S. District Court awarded a judgment of $507,150—the entirety of the damages requested—to the ADA. The judgment reflects the amount of money Mr. Stokes could have received from ADA members had his plan worked. In entering the judgment, the court noted that the damages were justified in light of “the egregious fraudulent scheme” that Mr. Stokes attempted to perpetrate. It's unlikely the judgment will be collected at this time, but the ADA has recorded the judgment in case circumstances should change in the future.
Shortly after the new year, several ADA members raised questions about invoices they received by fax asking for payment of ADA membership dues. On Jan. 3, the ADA began issuing email alerts to inform members, state and local dental societies, recognized specialty organizations and others in the dental community that the ADA does not collect dues by fax, and to not respond or send payment to the post office box listed on the invoice.
The Association's legal team immediately took measures to seize any mail directed to the P.O. box listed on the faxes. Within 48 hours of learning about the attempted fraud of members, the ADA filed an action in the Boston federal court and received a temporary restraining order requiring that mail sent to the box be held by the U.S. Postal Service. Twelve days later, the temporary restraining order became a preliminary injunction. Based on current information, it's estimated that about 300 ADA members across the nation received the invoices, though it remains unknown how Mr. Stokes obtained their names and fax numbers.
“This was a crisis averted,” said Dr. Kathleen O'Loughlin, ADA executive director. “Our thanks go out to the many members who received the fraudulent faxes and alerted the ADA. Thanks to email communications, we were able to inform dental societies and organizations about the faxes almost immediately. Because of the quick action of all concerned, we are pleased to say that none of our members were defrauded.”
ADA dues invoices for tripartite members are sent by the constituent dental societies, and members are encouraged to remain vigilant about any renewal communications they receive via fax or email.
Mr. Stokes' scheme went beyond the ADA. He allegedly billed members of the National Association of Manufacturers, the Automotive Parts Remanufacturers Association, the American Trucking Association, the Associated General Contractors of America and the National Hospital Association for dues payments and directory listings. The U.S. Attorney's Office said that Mr. Stokes cashed over $150,000 in checks obtained through his fraudulent schemes.