Two Long Island men who used embattled Vancouver payment processor PacNet in their massive mail fraud scheme were sentenced to jail Aug. 2 in New York.
In the Eastern District Court, Judge Joan Azrack ordered Sean Novis, 53, to serve seven-and-a-half years behind bars and Gary Denkberg, 59, to five-and-a-half years.
Between January 2003 and September 2016, Novis and Denkberg mailed millions of phoney prize notices and stole more than $92.7 million from more than 700,000 victims.
A federal jury convicted them in May 2022 of conspiracy to commit mail fraud, mail fraud, wire fraud, fraudulent use of fictitious names and aiding and abetting other mail fraud schemes.
Also on Aug. 2, Azrack ordered Novis to forfeit $60.5 million and Denkberg $19 million.
The July 19 sentencing submission to the court from the Department of Justice described the men as “recalcitrant individuals who show no remorse, refuse to acknowledge the trial result and the jury’s role in determining guilt, and insofar as they see nothing wrong with their fraudulent prize-notice scheme, show little or no rehabilitative potential.”
Instead, the three prosecutors said the men claim to be victims of politically motivated prosecution, but ignore that Novis learned the business from his father who was jailed for a similar crime.
Novis and Denkberg paid brokers for mailing lists of potential victims and contracted third-party payment processors and copywriters to help create fraudulent prize notices.
One of the payment processors was PacNet, which warned the men that that elderly people were vulnerable to their scheme.
“In March 2008, Rosanne Day at PacNet emailed the defendants to warn them about the high volumes of checks from individuals who were ‘nearly always elderly.’ She wrote that 40 people had sent more than 50 cheques each in a recent two-month period, and four others sent more than 150 cheques each,” said the Department of Justice court filing. “Day warned the defendants of the ‘regulatory risk’ accompanying the practice of taking money from these vulnerable persons. Denkberg included Novis on his response to Day, acknowledging the problem and claiming to take it seriously. In the eight years that followed, the defendants did nothing to address the issue.”
In September 2016, the U.S. Treasury’s Office of Foreign Assets Control designated PacNet a significant transnational criminal organization. The designation was lifted in October 2017, but Day and PacNet’s legal problems were only beginning. In June 2019, the District of Nevada charged Day and three others for mail and wire fraud and money laundering.
The sentencing submission also said that the two men were subject to at least three government actions against their scheme before 2016 — two by the U.S. Postal Service and one jointly by Australian and Irish authorities in 2007.
“One of the PacNet principals informed the defendants of the government crackdowns on sweepstakes ‘scams’ and how the defendants’ activities imperilled PacNet’s operations, to the point where that person feared the Irish police would ‘arrive with a set of handcuffs and a black van marked for my personal use’ because of what Novis and Denkberg were doing,” said the sentencing memorandum.
Azrack ordered Novis to surrender to an institution designated by the U.S. Bureau of Prisons on Oct. 16. Denkberg is scheduled to begin his sentence on Oct. 27.
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