Minnesota man pleads guilty in $11M magazine fraud scheme

A 51-year-old Fridley man who ran an $11 million telemarketing scheme that conned at least 13,000 people through phony magazine sales pleaded guilty Monday to mail fraud in a case that has grown national in scope.

Wayne R. Dahl Jr. admitted on Monday to using his Chaska-based business, Your Magazine Service Inc., to target senior citizens and other vulnerable people for nearly a decade. Dahl's plea came more than 19 months after first being indicted and four years since the Minnesota Attorney General's Office sued Dahl over his business practices.

Now working as a seasonal dump-truck driver, Dahl entered his plea via videoconference before U.S. District Judge John Tunheim, telling the judge that he oversaw some 20 to 25 employees he had supplied with "lead lists" identifying consumers with active magazine subscriptions.

Dahl's telemarketers relied on a script that contained "false and fraudulent representations" designed to trick consumers into signing up for magazine packages that billed consumers nearly $50 a month for 20 months. Dahl said Monday that he directed his employees to lie and say that they were calling to reduce the cost of an existing magazine subscription. Instead, Dahl admitted, the consumers were signed up for an additional charge. Dahl's employees also obtained credit card information by telling consumers that the company was carrying out a survey on credit card and banking usage.

During a scheme that Dahl said spanned from March 2006 through November 2015, Dahl made sure that his employees recorded only the final portion of their calls to omit earlier fraudulent statements while preserving a record of the consumer agreeing to pay for the service.

Dahl's sentencing guideline calculations call for a sentence of nearly 20 years in federal prison. He will also be ordered to pay $10.5 million in restitution and has agreed to help the U.S. Attorney's Office locate the assets under his control.

"Fraudulent and deceptive sales tactics designed to trick consumers into buying expensive magazine subscriptions was the foundation of Wayne Dahl's business model," U.S. Attorney Erica MacDonald said in a statement after Dahl entered his plea. "Bringing to justice those who target vulnerable individuals for their own financial profit is a top priority of the Department of Justice and my office."

A sentencing date has not been scheduled. Assistant U.S. Attorney Joseph Thompson on Monday suggested holding off on scheduling sentencing "in light of the complexity of the case." Neither Dahl nor his attorney, Peter Wold, objected.

The FBI and the U.S. Postal Inspection Service have been looking into the case. Earlier this month, the case grew to include charges against a Florida man who since has pleaded guilty for his role in what authorities describe as a $100 million nationwide mail fraud conspiracy.

At his plea hearing in Minnesota this month, Michael Oelrich admitted to working under a still-unnamed Kansas City businessman identified only as "Individual R" in court filings. Oelrich's plea agreement further described him conspiring with "many others, including with company owners, lead brokers, and telemarketers located across the country," including in Minnesota.

News media reports from around the country also describe a broad crackdown by federal law enforcement on the fraudulent magazine sales industry this year. During a two-day period in February, FBI agents raided multiple magazine sales businesses in southern Missouri and in Florida, seizing documents and computers associated with the companies' call centers.

Stephen Montemayor • 612-673-1755

Twitter: @smontemayor