An Orange County man has pleaded guilty to federal fraud charges arising from two fraudulent schemes that swindled more than 200,000 victims out of more than $9 million.
Daryl Ray Rice, 44, of Corona Del Mar, pleaded guilty yesterday afternoon in United States District Court in Santa Ana to two counts of mail fraud and one count of structuring transactions to avoid reporting requirements.
Rice admitted working with two direct-mail marketing companies, Geneva Healthways and PDI Clinical Labs, that sent millions of solicitations to people across the United States regarding “work-at-home” opportunities. The solicitations that were sent through the United States Mail stated that recipients could earn more than $1,000 per week by stuffing and mailing envelopes from their homes. The victims, who paid enrollment fees of approximately $40 to $50, were told that they would be paid $2 “in advance” for each envelope stuffed.
Only after victims paid their sign-up fee did they learn that the $2 payment came not from Geneva or PDI, but rather from individuals that the victims had to locate and convince to pay. Further, no victims earned anywhere close to the amounts represented in the solicitations.
As Rice knew, victims were misled about both the nature of the program they were signing up for as well as the true earnings potential of the programs. As a result of the misrepresentations, more than 200,000 victims were defrauded out of more than $9 million, although some victims did obtain refunds.
Rice is scheduled to be sentenced by United States District Judge David O. Carter on July 26. The maximum penalty for the charges to which Rice pleaded guilty is 15 years in federal prison.
This case is the result of a joint investigation conducted by the United States Postal Inspection Service and IRS-Criminal Investigation.