Fraud claims probed in Vegas

Grace Leong

Wednesday, June 26, 2002 | 11:10 a.m.

The Nevada Attorney General's office said it seized $1.8 million in assets and property in a raid Tuesday of C.P. Direct Inc., an Arizona-based Internet distributor of nutritional supplements that is the target of federal and state fraud investigations.

A search warrant was executed Tuesday at a Las Vegas accountant's office, an Internet website hosting operation in Las Vegas and at a Las Vegas credit card processing office by the state attorney general's office and the Money Laundering and Asset Removal Task Force of the U.S. Customs office.

Three bank accounts were frozen and two properties were seized Tuesday in conjunction with the raid.

Nevada and federal investigators acted after they received numerous consumer complaints alleging fraudulent business practices in the sale of so-called nutritional supplements that were guaranteed to increase the size of customers' penises, breasts and their height. Another product was said to improve golfing skills. Some consumers claimed the products did not work.

"The company had bank accounts in Las Vegas and was processing the Internet orders through a web server in Las Vegas," said Deputy Attorney General Francis Arenas.

Separately, a court-appointed receiver of the Arizona Attorney General's office filed a lawsuit in Las Vegas on June 17 to protect that state's interests in $60 million in assets it seized in an earlier search.

Lawrence Warfield, who was appointed receiver by the Arizona Superior Court on May 22, sued C.P. Direct -- which does business from a call center and warehouse in Scottsdale, Ariz. -- and two Nevada-incorporated affiliates MAC Investments Inc. and Opulent Property Investments Inc. in Clark County District Court.

The defendants include C.P. President Michael Consoli, his mother Geraldine, his nephew Vincent Passafiume, his niece Stephanie Passafiume and business partner Michael Kwadecius.

Scott Fleming, Warfield's attorney, said the Arizona Attorney General's Office, which received a seizure warrant on May 22 from the Arizona Superior Court to seize all of the defendants' assets, wants the court to appoint Las Vegas bankruptcy trustee Tom Grimmett as ancillary receiver to assist in seizing the Nevada portion of the assets.

Assets in Arizona and Nevada allegedly include 36 bank accounts, 19 parcels of real estate, jewelry and 11 luxury vehicles: eight Mercedes Benzes, a 2002 Cadillac, a 1998 Lamborghini and a 1991 Rolls Royce. Five bank accounts, a 12,000 square-foot residence in Summerlin and a house in Las Vegas, and an unknown number of vehicles are believed to be maintained in Nevada, the Arizona lawsuit said.

Fleming cited concerns that the defendants, which before Tuesday's raid had immediate access to their Nevada assets, would attempt to transfer cash or borrow against the properties and transfer loan proceeds to other individuals or entities.

The Consolis and Passafiume, who were accused by the Arizona Attorney General's office of violating the Arizona Consumer Fraud Act when they operated a fraudulent discount buying club that sold computers and other electronic devices and allegedly made unauthorized charges to customers' credit cards, were prohibited by a Maricopa County Superior Court judge in 1999 from conducting retail sales in Arizona.

In Warfield's lawsuit, the defendants were accused of engaging in a criminal enterprise involving the advertisement, solicitation and sale of so-called nutritional supplements including Longitude. The pill purportedly "guarantees to induce gross physical alterations of the human body, in a matter of a few months, including permanent enlargement of male penis length and girth by multiple inches."

Warfield said Longitude pills were marketed for the past two years in men's magazines and on the defendants' websites "www.longitudecapsules.com," "www.longitudeaffiliates.com"and "www.cpnutritionsl.com," to some 500,000 consumers worldwide including American military bases abroad.

He said the websites are now closed.

The defendants, which paid only $2.50 a bottle for Longitude pills made by an independent vendor in Arizona, allegedly marketed one-month bottles of Longitude at $59.95 each plus shipping and handling for the first month, then $39.95 thereafter.

C.P Direct, which also marketed Full & Firm, a pill that supposedly enlarges female bust size and Long Jack, a pill that supposedly improves golfing skills, allegedly failed to honor offers of a 30-day free trial and a money-back guarantee.

Warfield said C.P. employees were also instructed to use delaying tactics to prevent customers from obtaining refunds. "While the sales order line was manned 19 hours a day, the consumer complaint lines were intentionally understaffed with only two operators working 8 hours a day."

The defendants could not be reached for comment on Warfield's allegations.