For those of you who feel you have been ripped off by Assail Inc/American credit solutions: Read This!
Federal authorities raid local companies
Assail part of credit card scheme probe
By JENNIFER WEAVER AND RACHEL OLSEN
The Spectrum
Nick Adams/The Spectrum
A federal agent wearing a U.S. Secret Service shirt escorts employees of Assail Inc. To the building entrance at right as the St. George business undergoes a raid as part of a federal investigation Wednesday morning.
A company that has its headquarters in St. George is allegedly behind what could be one of the largest credit card schemes in the United States to be investigated by the U.S. Secret Service.
Assail Inc.in St. George, owned by Kyle Kimoto, and Infinium Inc. And its affiliates Allied Teleservices and Market-Reps.com, owned by Brian Schofield in Cedar City, were raided Wednesday after the culmination of a three-year investigation of credit card fraud.
Dan Reinberg, who represents Kimoto and works at the Chicago firm Foley and Lardner, said he has seen no official charges, and no arrests have been made in connection with the alleged fraud.
"We were able to track $29 million, but there was the potential of bilking U.S. Citizens for $73 million, " said Mike Fithen, special agent for the U.S. Secret Service office in Salt Lake City.
Fithen said the Secret Service had known about suspected fraudulent practices for about a year and a half, although Cedar City police began investigating fraudulent practices three years ago when Kimoto and Schofield were business partners.
"We believe the network ran from these two telemarketing companies, but we believe there are subsidiaries in Florida and Waco, Texas, that fraudulently conducted business that extends across the United States, into Canada and worldwide, " Fithen said.
The alleged principal business of the companies was the phone, mail and wire solicitations of people possessing poor or no credit with the opportunity to improve their rating with a Mastercard or Visa for a fee of $175 — cards which Fithen said these companies never had authorization to market.
After acquiring bank account information and the required fee from customers, a merchandise card, not a credit card, was sent accompanied by a catalog. Sales associates would render follow-up calls and try to up-sell merchandise and other services, including long-distance and cellular phone service, Fithen said.
Reinberg said the Secret Service is mistaken in the allegations because Kimoto's company, Assail, Inc., never marketed credit cards, only pay-issue-go cards, which it sold as packages for another company.
However, Fithen said the Secret Service believes Assail, Inc., and Infinium, Inc., to be the companies to have perpetrated the fraud.
Reinberg countered that the U.S. Secret Service was hasty in making its allegations, he believes Assail will be cleared of wrongdoing. He said Assail historically has been cooperative with the federal government, and the company will work with the government in this investigation.
"The government unfortunately chose an extreme form of going about (their investigation), " Reinberg said.
Suspicions were raised when Cedar City Police Chief Bob Allinson said the police department started receiving complaints and turned its initial investigation over to the Utah Division of Consumer Protection and the Federal Bureau of Investigation.
"It's been different agencies coming together from this point, " Allinson said. "Initially, (city involvement) was pretty heavy, but lately it hasn't been that heavy."
Allinson said the police department was on the scene only to provide manpower assistance to federal authorities and make sure the search warrant was executed smoothly. It did not participate in any searches.
Craig Harding, spokesman for the St. George Police Department, said his department was also only on the scene at 1071 East 100 South to assist.
Investigating agencies included the Secret Service, U.S. Division of Consumer Protection from the Department of Commerce, Internal Revenue Service and Federal Trade Commission, Fithen said.
Thirteen Cedar City police officers from the force of 31 assisted the federal agencies with their search warrant at the two locations; 1552 W. 200 North and 1579 N. Main St.
Market-Reps.com employee Lydia Mackun said she was stunned by officers wearing bullet-proof vests forcefully entering the business on 200 North in Cedar City, shouting, "Step away from the computers, " and "Hang up the phone."
"The next thing I knew, we were all being herded into another room and handed questionnaires to fill out, wanting all kinds of information, " Mackun said.
Mackun remembered answering questions about bank account information, hourly wage, length of employment and anticipated wages owed by the company.
"We were then taken in groups of four into another room where we were interviewed by a Secret Service agent, " Mackun said. "They searched through our personal stuff and basically told us the company's accounts were frozen and not to expect a paycheck or a job tomorrow."
City officials estimate that if the telemarketing companies in Cedar City close, a minimum of 75 and as many as 200 people will be unemployed.
St. George offices are also closed for the time being, and the court-appointed receiver for Assail, Inc., will determine when the hundreds of employees in St. George can begin work again, Reinberg said.
Kimoto said he and Schofield are no longer associated. According to the business filings with the Nevada Secretary of Commerce from March 1, Kimoto and Schofield were listed as officers in Assail, Inc. Then, when Assail, Inc., filed again on Feb. 13, Kimoto was the only officer listed.
What appeared to be the catalyst for separation involved a settlement agreement dated Jan. 11, with the U.S. Division of Consumer Protection from the Department of Commerce. The statement revealed that $18,500 was ordered to be refunded to complainants from 15 states and the District of Columbia from Assail, Inc. Owned by both men and Credit Marketing Services, owned by Schofield.
Kurt Carr of Woodway, Texas, was one of the complainants who received a full refund from the settlement agreement that stipulated the business as a credit service organization would cease unless first registered and bonded.
Carr said he received a solicitation in the mail from Credit Marketing Services that led him to believe that for $180 he would receive a Visa card.
"I really hesitated, but I did it anyway and sent in my money, " Carr said. "I gave them my checking account information and credit information, and they approved me for their line of credit, that I was under the impression it was a Visa."
Carr said after about three weeks, he received a package with a revolving account from the company to use for purchasing merchandise out of an accompanying catalog.
"I made a phone call to them and told them what I got wasn't what I was expecting, " Carr said. "They told me I needed to get permission from the company to send everything back in order to get my money back."
Carr said getting approval to return the unwanted items was impossible.
"They told me I misunderstood the transaction and my not understanding didn't merit a refund, " he said.
Carr called the Texas Consumer Protection Agency in April of and that agency took his complaint. Months later, he was notified that an investigation was pending, and he was asked if he would testify.
"I received a full refund months later, " Carr said. "Would you believe, I still receive solicitations from those people? I just throw them all away now."
Despite numerous attempts Wednesday, The Spectrum and Daily News were unable to contact Schofield for comment.
Reporter Greg Marano contributed to this story.
About The Company
Assail was incorporated in Nevada in February 1999 as a non-profit organization. Nevada records indicate the company headquarters are at 1071 E. 100 South in St. George.
Brian Schofield was listed as an Assail officer on March 1.
Kyle Kimoto, Brian Schofield, Credit Marketing Services and Assail Inc. Were named as defendants in a lawsuit brought by the Utah Division of Consumer Protection in December. The lawsuit, filed on behalf of 38 complainants in 15 states and the District of Columbia, alleged 114 counts of deceptive act or practice of supplier and 86 counts of prohibited practice of a credit service organization.in January the lawsuit was settled for $18,500. As part of the agreement, Kimoto and Schofield agreed to cease conducting businesses as credit service organizations. Before conducting such business again, Kimoto and Schofield were ordered to first be duly registered and bonded.
Infinium was issued a business license in Cedar City in January.
Assail was issued a business license in the city of St. George in February.
In St. George resident Kyle Kimoto was listed as the president, vice president, secretary and treasurer of Assail as of February.
Allied Tele Services was issued a business license in Cedar City in February.
Assail, Infinium, Allied and Market-Reps.com were all raided Wednesday by the Secret Service.
Assail is the 10th largest employer in Washington County. The company employs between 200 and 299 people, according to the Department of Workforce Services.
Originally published Thursday, January 16
Joe
Ames, Iowa
U.S.A.
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