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FBI arrests 8 in fraud scheme targeting McDonald's game

Ashcroft
Attorney General Ashcroft announces the arrests at a news conference on Tuesday.  


WASHINGTON (CNN) -- The FBI on Tuesday arrested eight people allegedly involved in a scheme to defraud the McDonald's Corp. of some $13 million by rigging several of the fast food company's promotional games since as early as 1995.

The scheme -- involving friends and close-knit family members, including a husband and wife -- was initially reported by a citizen who "came forward and roughly described a conspiracy" that was confirmed by further investigation, said acting FBI Director Thomas Pickard.

Attorney General John Ashcroft said the eight suspects are charged with fixing the outcome of the contests -- including the recent "Pick Your Prize Monopoly" game -- by controlling the distribution of the high prize values.

More arrests are expected, the officials said.

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Ashcroft identified the ringleader of the scam as Jerome P. Jacobson, 58, known as "Uncle Jerry," a security official with Simon Marketing -- the Georgia-based company that McDonald's hired to run the Monopoly game.

"The complaint alleges that Jacobson provided the winning game pieces to his friends and associates who acted as recruiters," Ashcroft said. "These recruiters then solicited others who falsely and fraudulently represented that they were the legitimate winners of the McDonald's games."

Simon Marketing handles virtually all of McDonald's major promotions, including its "Happy Meal" menus. Jacobson was a security officer with the firm and had been responsible for placing the winning high prize pieces into circulation since at least 1995.

Prosecutors alleged that for $1 million pieces, he would charge $50,000 in cash from the "winner," often money he demanded in advance before giving over the piece. The recruiters also got a cut.

On lower prizes, such as luxury vehicles, the recruiters would sell the winning game pieces to other family members or friends.

Greenberg
McDonald's CEO Jack Greenberg  

According to court documents, Simon Marketing's policy called for constant supervision of the high-level game pieces from printing to distribution by at least two and sometimes three people.

McDonald's Chairman and CEO Jack Greenberg announced the fast food chain had terminated its relationship with Simon Marketing "effective immediately."

It said it will impanel an independent task force to review all future promotions and ensure their integrity.

Simon Marketing would only confirm it ran the Monopoly game, and had no further comment.

Ashcroft said that after the false winners received their checks, they shared part of the money with the recruiters, who in turn gave part of the winnings to Jacobson.

"Many of the winners were of the same family or were closely related," Pickard said. "All appeared to be connected in some fashion even though a variety of tricks were used to conceal their relationships and their locations."

The acting FBI chief said substantial record reviews further corroborated the connections between the suspects and the schemes, allowing the FBI and the U.S. attorney's office to receive court-ordered authority to conduct wiretaps on the alleged conspirators.

Jacobson made his first court appearance in Atlanta on Tuesday, handcuffed and dressed in white slacks and a green sports shirt.

U.S. Magistrate Gerrylin Brill set bond at $1 million, rejecting pleas to reduce it from Jacobson's court-appointed public defender, Suzanne Hashinmi. Brill pointed out that Jacobson is accused of being "the mastermind" in the scheme.

Under the $1 million bond, Jacobson must make a cash payment of $100,000 to be freed pending further court action.

"I'm not really concerned whether he represents a danger to the community, but there is a valid concern about his appearance," said Brill, seeking assurance that Jacobson would appear at future court dates. "Given his financial affidavit, the $100,000 is reasonable."

The suspects are charged with conspiracy to commit mail fraud. Each count is punishable by a maximum five years in prison and $250,000 fine.

McDonald's said it was "delighted" with the arrests and announced a new $10 million instant cash giveaway, beginning on August 30 and lasting for five days, to make up for the fraudulent games.

"We are committed to giving our customers a chance to win every dollar that has been stolen by this criminal ring," Greenberg said. "This initial $10 million giveaway is the first important step toward fulfilling this commitment."

During the five-day period, McDonald's will give away five $1 million prizes and 50 $100,000 prizes at randomly selected restaurants.

Greenberg said that when the FBI concludes the investigation -- which it is expected to do within the next two months -- and determines the total amount stolen, McDonald's will announce plans to give customers an opportunity to win any additional dollars taken.

McDonald's spokesman Walt Riker said the company "was victimized by a longtime supplier in a sophisticated inside game of fraud and deception ... Protecting our customers' interest has been our goal since the investigation began."

The FBI's Pickard praised McDonald's role in the investigation, saying the corporation and Greenberg were "model corporate citizens."

A senior FBI official, speaking on condition of anonymity, would not say whether charges are likely against Simon Marketing.

The FBI said the investigation involved 15 of its local field offices across the country.

The scam involved games such as "Who Wants to Be A Millionaire?" -- named after a popular ABC television show -- which ran from April 19 to May 17.

The "Pick Your Prize Monopoly" game, in which players matched game stamps based on the Hasbro Co. board game, ran from July 11 to August 9 this year. It was the 10th year the fast food chain has offered the promotion.

In addition to Jacobson, those arrested included a married couple -- Noah and Linda Baker, both 49, of Westminster, South Carolina -- and:

-- John F. Davis, 44, of Granbury, Texas.

-- Andrew M. Glomb, 58, of Fort Lauderdale, Florida.

-- Michael L. Hoover, 56, of Westerly, Rhode Island.

-- Ronald E. Hughey, 56, of Anderson, South Carolina.

-- Brenda S. Phenis, 50, of Fair Play, South Carolina.

CNN Corespondents Kelli Arena in Washington and Art Harris in Atlanta contributed to this report.



Greta@LAW





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