A Missouri telephone executive believed to have aided the Gambino crime family in what the federal government calls the largest consumer fraud in American history was arrested July 27 by the FBI at his Belton, Kansas home.
Cass County Telephone Company chief executive Kenneth Matzdorff is accused of running USP&C, an Overland Park-based outfit said to be used by the Gambino family for putting false charges on telephone bills; and, of running LEC LLC, a 99 percent owner of Cass County Telephone and suspected of laundering money from an Internet porn operation.
Authorities estimated the total amount stolen in the scams to be in excess of $1 billion.
Matzdorff's attorney, R. Stan Mortenson, told Kansas City media the charges were without basis and his client would "pursue an appropriate defense."
Matzdorff is the former regional chief of CenturyTel, a Monroe, Louisiana company whose Missouri operations were the second largest in the state, running about 500,000 lines. Earlier in the year, CenturyTel probed Matzdorff when a federal grand jury indicted reputed Gambino Family members and USP&C, but the company said at the time he had been cleared in their view.
"Before these most recent developments, we did not believe there was cause to take action," CenturyTel general counsel Stacey Goff said in a July 28 statement. "Given these developments, we have concluded that it is in both CenturyTel's and Ken's best interests to suspend his employment pending resolution of this matter."
Indeed, Matzdorff was not named in that earlier federal indictment, which alleged that Gambino family cramming schemes – putting unauthorized charges on victims' telephone bills – plus using shell companies to push phone sex, psychic hotlines, dating services, and Internet porn, brought the mob organization over $400 million.
The indictment charged that the schemes were accomplished via two sets of materials, one used to solicit and the other sent to local telephone carriers; and, that USP&C put the unauthorized charges on phone bills while the Overland Data Center received and processed the suspect 800-number calls for free samples, with other companies used to divert complaints. USP&C was accused of collecting the cramming payments and Internet charges and turning most of those to the Gambino operations.
Matzendorff denied knowing any relationship between USP&C and Overland Data, but the complaint on which he has been arrested says he knew the companies were created to hide the organized crime involvements. That complaint – filed July 22 and unsealed July 27 – charged USP&C was controlled by Gambino family members and that Matzendorff knew the company was used for an end-run around telephone regulations on adult entertainment billing.
