N.J. man admits fraud in $75M telemarket scam

A Mount Laurel, N.J., man admitted in federal district court yesterday to fraud and tax-evasion charges.

Neal D. Saferstein, 36, pleaded guilty to mail fraud, wire fraud and filing false tax returns for 2002 and 2003 in connection with a telemarketing scam that the government said bilked as many as 400,000 small businesses out of as much as $75 million between 2001 and 2004.

Authorities also alleged that Saferstein had not reported $725,000 in commissions and personal expenses paid him by his company on his 2002 and 2003 tax returns.

U.S. District Judge Cynthia M. Rufe set sentencing for February.

Prosecutors said Saferstein could face up to 30 years behind bars.

Authorities said Saferstein was president and chief executive officer of a now-defunct Old City firm called GoInternet.net, Inc.

The company employed telemarketers who duped customers into receiving a welcome packet for Internet-related services without disclosing that the mailing would trigger a $29 monthly charge on their phone bills unless they called to cancel.

The packets were made to look like bulk business mail that recipients would discard, the feds said.

Saferstein prevented customers from receiving notices disclosing the cost of services, and delayed and prevented refunds to customers who had been bilked and were promised refunds.

In November 2004, the Federal Trade Commission won a civil judgment of $58 million against Saferstein and GoInternet.

Two co-defendants have been convicted in the criminal case. Billy D. Light pleaded guilty in November 2007 to conspiracy to commit perjury, and Tyrone L. Barr pleaded guilty last month to wire fraud. Both are awaiting sentencing.

Saferstein and the feds picked a jury a month ago and prosecutors were preparing for trial.

Asked why his client had changed his mind and copped a plea, Saferstein's attorney, Carl D. Poplar, said there had been "discussions" over "a whole bunch of issues," which he did not elaborate on.

Perhaps a court filing by prosecutors on Oct. 28 influenced Saferstein's decision to plead guilty. The filing sought Rufe's permission to allow prosecutors tell a jury about evidence they said was relevant to Saferstein's actual income at GoInternet.

The filing said Saferstein applied for a mortgage in November 2002 with Madison Bank and reported income that was much higher than what he had told the IRS. Prosecutors also alleged in the filing that Saferstein, who was married at the time, "regularly used corporate money to pay for sex with prostitutes," routinely used cocaine that was paid for by GoInternet funds and "channeled large sums of money" - as much as $40,000 a month - to a mistress (with whom he had a child) through GoInternet corporate funds.

The defense did not file a response to the government motion. The feds said Saferstein's limo driver and bodyguard were prepared to testify at trial to the allegations.