Coupon Fraud Indicted: Web sites that swap cents-off are put on notice.

The U.S. government has indicted couponer Geoff Hasler for a scheme that bilked mostly elderly consumers out of an estimated $1 million between 1995 and 1997.

The April indictment, filed in U.S. District Court in Arizona, charges that Hasler’s company, America’s Choice Coupons, signed “affiliates” to sell coupon books used to order manufacturers’ coupons for redemption at retail. Affiliates paid $1,995 or $5,475 for a starter package with 50 coupon books and instructions on how to sell them to fundraising groups, nonprofits, and the public. The indictment charges Hasler with 20 counts of mail fraud and misrepresentation of his company, its relationship to packaged goods makers, and the affiliates’ potential to make money.

Hasler signed as many as 500 affiliates. He could get as much as 100 years of jail time and a $5 million fine (five years and $250,000 for each mail fraud count). A court date wasn’t set at press time.

Affiliates bought coupon books for $4 and were told they could be resold for $10. Each book had 120 order blanks to request up to $10 in manufacturers’ coupons (with a limit of 35). Orders mailed to America’s Choice offices in Scottsdale, AZ, were filled by Can-Am Direct Marketing, Eden Prairie, MN.

After the indictment, the Coupon Information Center, Alexandria, VA, sent “educational messages” to 150 Web sites that appeared to be engaged in similar coupon schemes. The message warned recipients that transference of a coupon automatically voids it, and directs them to cents-off.com for information about the indictment.

Response has ranged “from the obscene to nice notes thanking us and saying they won’t do it anymore,” says Coupon Information Center operations manager Bud Miller. “There’s no coupon police that will get involved with casual transfer of coupons between friends, but massive operations are a definite problem.”

Marketers and consumers lose an estimated $500 million annually to coupon fraud, reports Coupon Information Corp., the nonprofit association that runs the Coupon Information Center and represents 22 packaged goods manufacturer members.

In May, the Coupon Information Center received nearly $1.5 million in restitution from convicted coupon frauds. The Center, which works with the U.S. Postal Inspection Service to find and prosecute coupon scammers, redistributes restitution windfalls among its members, who usually don’t have trouble documenting their financial losses.

“There’s a very wide, deep, long paper trail in these cases,” says Miller, who called the Hasler case “one of the best indictments I’ve read in a long time.” The Center has helped prosecute 300-plus cases involving more than 1,000 individuals and organizations, and has yet to lose a case, Miller says.