A Kansas City-area man pleaded guilty Thursday to helping lead a massive telemarketing scheme that Minnesota federal prosecutors have called the nation's largest elder fraud conspiracy, with victims spanning the country.
Russell "Rusty" Rahm, 52, of Olathe, Kan., admitted to his role in a scheme involving 60 co-conspirators from across the United States and Canada that bilked about 183,000 victims —many of whom were elderly or otherwise vulnerable — out of $335 million.
The case, first charged in 2020, grew out of a 2016 Minnesota Attorney General's Office lawsuit against a Fridley man whose magazine subscription company was later ordered by a judge to pay $20 million.
Rahm — who also owns a medical device company and at one point raced speedboats during his leisure time — entered his guilty plea to one count of conspiracy to commit mail fraud before U.S. District Judge John Tunheim via videoconference from his suburban Kansas City home.
According to Rahm's guilty plea, the conspiracy lasted roughly two decades, dating back to 2000 and continuing until February 2020. Rahm managed two magazine subscription companies in Shawnee, Kan., another suburb of Kansas City. Rahm admitted that those, and other companies linked to the conspiracy, used fraudulent sales scripts and pitches to defraud victims into paying for expensive, at times duplicative, subscriptions through a "series of lies or misrepresentations."
Co-conspirators traded "lead lists" of potential victims to contact, Rahm said, and callers were instructed to falsely tell victims that they were calling about an existing magazine subscription that was set to auto-renew.
In reality, the companies had no relationship to the victim and were instead defrauding them into buying an unwanted additional magazine subscription package. Prosecutors have said that some of the victims were billed by as many as 10 phony companies at once and would incur up to $1,000 in monthly credit card charges,
Rahm helped manage sales leads and billing in exchange for a percentage of the total revenue taken from victims. He also tried to insulate himself from the conspiracy by relying on call centers based in Florida. Rahm said he tried to hide the fraud scheme by setting up virtual offices for his companies.