‘Frankenstein’ Coupons Worth $31 Million Result in 12-Year Sentence

Prosecutors said that a Virginia couple, with fake coupons “virtually indistinguishable” from real ones, ran one of the largest coupon fraud schemes ever discovered in the United States.

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For at least three years, Lori Ann Talens worked at her home computer mixing, matching and perfecting an art that prosecutors say became one of the largest fraud schemes of its kind ever, worth more than $31 million to its victims.

When federal agents raided her home in Virginia Beach, Va., they found evidence everywhere, prosecutors said: nearly $1 million in counterfeit coupons scattered around the house and more than 13,000 coupon designs on her computer, the material for “Frankenstein” coupons that scammed people around the country.

Ms. Talens, 41, was sentenced to 12 years in prison on Tuesday for operating what prosecutors called “one of the largest coupon fraud schemes” in U.S. history, saying it cost retailers and manufacturers more than $31 million in losses.

Ms. Talens and her husband, Pacifico Talens, 43, pleaded guilty to mail fraud in April. Mr. Talens was sentenced last month to seven years and three months for his role in the operation.

The lawyers who represented the Talens in court did not immediately respond to requests for comment on Thursday.

From April 2017 to May 2020, Ms. Talens used the moniker “MasterChef” to design, create and produce a variety of counterfeit coupons in her home, prosecutors said. The fakes, they said, were extremely believable.

“These counterfeit coupons were virtually indistinguishable from authentic coupons and were often created with inflated values, far in excess of what an authentic coupon would offer, in order to receive items from retail for free or for a greatly reduced price,” Joseph L. Kosky, an assistant U.S. attorney, wrote in court documents.

Ms. Talens then used social media sites and messaging apps such as Facebook and Telegram to find groups of coupon enthusiasts and sell them counterfeits, Raj Parekh, the acting U.S. attorney for the Eastern District of Virginia, said on Tuesday.

Using the U.S. Postal Service, and other commercial parcel delivery services, Ms. Talens shipped the coupons throughout the country, according to court documents. Prosecutors said that she accepted payment for the coupons using online payment methods that included Bitcoin and PayPal.

Mr. Talens profited from the operation and helped by shipping packages of coupons “and performing other administrative tasks at the direction of his wife,” according to prosecutors.

But it was one of the fraud victims, described in court records as a “coupon enthusiast,” who began to unravel the scheme. The enthusiast reported the couple to the Coupon Information Center, a nonprofit that works against fraud.

The group bought coupons from the Talens, confirmed they were counterfeit, and contacted the U.S. Postal Inspection Service for further investigating.

After executing a search warrant at the couple’s home, federal agents seized nearly $1 million worth of counterfeit coupons. On Ms. Talens’s computer, they found images of more than 13,000 “separate and distinct counterfeit coupon designs,” court documents said. Investigators described the coupons as “Frankenstein counterfeits” in that they had images, text and bar codes from various manufacturers.

“Despite Hollywood’s recent portrayal of coupon fraud as a comedy or simply ‘bending the rules,’ it is a serious matter,” the center’s executive director, Bud Miller, said in a statement. He said the sentencing of Ms. Talens showed “coupon counterfeiting is generally a felony level offense, the penalties of which may include years in prison, total loss of assets, lifelong restitution orders, and reduced job opportunities. The perpetrator’s families often suffer as well.”

Mr. Parekh, the U.S. attorney, said that the scheme “harmed consumers, retailers and manufacturers nationwide, and the economy at large.”

In addition to mail fraud, Ms. Talens also pleaded guilty to wire fraud and health care fraud that stemmed from a separate scheme that involved defrauding Medicaid and the Supplemental Nutrition Assistance Program from November 2015 to February 2020.

“Coupon fraud is not a harmless crime,” Brian Dugan, special agent in charge of the F.B.I.’s Norfolk Field Office, said in a statement. He described the couple’s operation as “an audacious fraud scheme that stole more than $31 million directly from retailers and manufacturers.”

Before sentencing before U.S. District Judge Roderick C. Young, Ms. Talens apologized in a letter filed with the court.

“I am deeply ashamed and embarrassed by the way I have acted,” she wrote. “I realize I have served as a terrible moral example on how to act responsibly for my three children. I will regret that the rest of my life.”

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