Newspaper Deliveryman Nabbed in Alleged Scheme to Defraud Times

[WSJ_law_blog]

While we have a break in the action this afternoon, let’s head off to La Crosse, Wisc., where a newspaper deliveryman is alleged to have created thousands of fake New York Times subscribers, recycled the papers, and made about $227,000 on the wily subterfuge. Paperboys beware, if you too are trying this.

Michael Holtet, a 50 year-old La Crosse man who worked as a local newspaper distributor for the Times in Wisconsin and Minnesota, was arrested in connection with the scheme and presented in Wisconsin federal court.

Here’s the criminal complaint, and here’s a press release put out by the SDNY.

Here’s how the scheme allegedly worked: As part of his deal with the Times, Holtet was responsible for picking up daily and weekend copies of the Times from its local printers in Minnesota and elsewhere and distributing those copies to retail locations and home subscribers. The Times paid Holtet approximately 55 cents per weekday paper delivered to home subscribers and approximately $1.10 per Sunday paper.

At the end of 2006, according to the complaint, the average number of daily home subscribers in La Crosse was 65 and the average number of Sunday Times subscribers was 103. However, starting around 2007, those numbers began to climb rapidly, and by the beginning of 2008, there was an average of approximately 2,781 daily subscribers and 2,818 Sunday subscribers. The complaint says that jump was due to Holtet, who, when all was said and done, had created about 8,500 fraudulent subscriptions.

The SDNY is charging Holtet with one count of wire fraud, which carries a max sentence of 20 years in prison.