Data firm execs convicted for helping fraudsters target the elderly

A former senior executive and former sales manager of Epsilon Data Management LLC (Epsilon) were convicted of selling data of millions of Americans to perpetrators of mail fraud schemes.

As announced late last week by the U.S. Department of Justice (DOJ), the two men, Robert Reger and David Lytle, were found guilty of conspiracy and multiple counts of mail and wire fraud for their roles in a scheme that provided targeted consumer lists to fraudsters over a decade.

Scheme details

Epsilon Data Management LLC is a data brokerage and marketing company specializing in collecting, analyzing, and selling consumer data to businesses for targeted marketing purposes.

It uses advanced algorithms and a comprehensive database of 100 million U.S. households to predict consumer behavior and identify potential buyers for their clients' products and services.

Robert Reger and David Lytle were found guilty of engaging in a scheme while working at Epsilon where they used transactional data from marketing clients, processed through the firm's systems, to predict new "responsive buyers."

These lists, including full names, home addresses, email addresses, age, consumer preferences, and purchase histories, were sold to fraudsters who used them to target individuals with personalized emails.

Those emails promised large prizes, wealth, and generally lures that tricked people into sending the scammers money.

The U.S. DOJ says the Epsilon executives shared this crucial information, knowing that it would be used to defraud people. In one case, they sold 100 lists to a single fraudster.

The scheme lasted for 10 years, resulting in hundreds of thousands of Americans losing large sums of money to fraudsters in what was essentially a targeted, data-driven scam.

Conviction

Though Epsilon as a company wasn't directly involved in the scheme, it resolved its criminal liability in 2021 with a deferred prosecution agreement.

The resolution required the firm to pay $150 million in penalties, of which $122 million was allocated to compensate 200,000 fraud victims.

Previously, three Epsilon employees and the firm's former Vice President pleaded guilty to participating in the scheme.

Their testimonies and those of former and current employees were instrumental in convicting Reger and Lytle, who did not plead guilty.

The two former executives each face a maximum penalty of 20 years in prison for each count of mail and wire fraud for which they were convicted, to be decided on September 30, 2024, by the U.S. District Court for the District of Colorado.