Kenneth H. Taves, the man who admitted to illegally using the credit card information of about 900,000 people to sign them up for adult Websites, was sentenced yesterday to 11 years and three months in prison. Taves was also ordered to pay restitution for the estimated $37.5 million which prosecutors believed he received from the scam.
The FTC originally charged that Kenneth and Teresa Taves, Dennis Rappaport, and their businesses – the only way to J.K. Publications, MJD Service Corp., Herbal Care, and Discreet Bill, Inc. – had even charged people that didn't own computers. Two more co-defendants – Gary Mittman and Adult Banc, Inc. – settled separately in the case in June 1999, agreeing to a ban on making false customer purchase agreement representations and to maintain adequate consumer complaint staff.
The FTC further estimated that over 90 percent of the defendants' $49 million annual sales had been, in truth, unauthorized credit and debit charges. The trial court sided with the FTC argument based on the evidence.
Taves had begun by running an adult Website on a $19.95 a month subscription basis, but assistant U.S. attorney Brent Whittlesey said in January 2001 that Taves turned to crime when the site didn’t take off.
The federal government seized some $8 million of Taves' stolen money in November 1999, and Whittlesey said the government at that time figured to recover as much as $30 million in what he called the largest fraud case involving a single individual.
Though $12.8 million has been found, an additional $8.1 million is still believed to be in banks in Vanuatu, an island in the South Pacific. The rest of the money has not been recovered.
Taves pleaded guilty to the fraud charges in 2001, but sentencing was delayed as authorities tried to determine the full amount lost in the case. The judgment at that time banned Taves from owning, controlling, holding managerial rank or officership, or any consultancy for any business handling credit or debit accounts for 10 years.
AVNOnline.com was unable to reach representatives of Taves for comment.
Philo Levin contributed to this report.
