They say crime doesn’t pay. But coupon counterfeiting can actually pay quite well – at least until it’s time to pay the piper.
30-year-old Beau Wattigney of New Orleans found that out in a federal courtroom Wednesday, as he was sentenced to 41 months in prison, three years of supervised release and ordered to pay $74,855 in restitution to the Coupon Information Corporation, for creating and selling more than a million dollars worth of counterfeit coupons online.
Wattigney was charged with conspiracy to commit wire fraud and conspiracy to commit trademark counterfeiting last May. He pleaded guilty in July. And six months later, his sentencing Wednesday concluded with the judge ordering him straight to prison, as Wattigney was removed from the courtroom in handcuffs to begin serving his sentence.
The sentencing was the culmination of a lengthy investigation conducted on behalf of coupon-issuing manufacturers, whose losses piled up as Wattigney’s high-value counterfeits were used at retailers across the country. Investigators with fraud consultancy company Brand Technologies uncovered Wattigney’s activities on the shadowy “dark web”, where users have been known to sell drugs, weapons and other illegal wares on hidden, encrypted websites like the notorious Silk Road marketplace.
In Wattigney’s case, his illegal wares of choice were coupons.
Using the name PurpleLotus, and also GoldenLotus, NickMode and MoxDiamond, Wattigney used custom-built software to create and sell thousands of coupons that both looked and functioned like real printable coupons from sites like Coupons.com, SmartSource, RedPlum and Hopster. “These are designed to take advantage of a flaw in the Walmart self checkout system,” PurpleLotus wrote in one Silk Road posting. “But let’s be clear, these will also work anywhere! Live cashiers are often more gullible than you think.”
PurpleLotus specialized in creating coupons for gift cards – $20 off a $25 Best Buy or Barnes & Noble gift card, for example, or even $49.99 off a $50 Visa gift card. The coupons would actually scan and be accepted at store registers, just as a real $49.99 gift card coupon would – if such a thing actually existed.
PurpleLotus also sold a selection of too-good-to-be-true grocery coupons – everything from $3.40 off a box of Band-Aids, to $11.99 off a pack of Energizer batteries. And if you didn’t see something you liked, you could buy access to the coupon generator itself – “so easy your grandma could make 10 coupons in 15 minutes!” PurpleLotus promised.
This went on for at least two and a half years, before PurpleLotus “retired” in 2014, as investigators closed in. And last year, they got their man – Wattigney, who worked as a systems support technician at ITT Technical Institute, and moonlighted as the most prolific printable coupon counterfeiter since “Coupon Guy” Lucas Henderson was arrested, convicted and sentenced back in 2013.
Wattigney was charged with selling some 2,152 coupons, for which he earned nearly $75,000. In his plea agreement, he acknowledged that he faced a maximum penalty of up to 20 years in prison and $2 million in fines and restitution, to cover the estimated face value of the coupons he let loose on the world.
Instead, to his relative good fortune, he’s merely on the hook for the money he made from selling them. That means, once the CIC disburses the nearly $75,000 among its affected members, the companies whose coupons were counterfeited will get back a fraction of the money they lost in the scheme. And those who benefited by using PurpleLotus’ fake coupons and his coupon-making software, to essentially steal more than a million dollars worth of merchandise from stores across the country, will never be found or punished.
The creator of the Silk Road, incidentally, was convicted last year for conspiracies to traffic in narcotics, money laundering, and computer hacking, among other charges, and is currently appealing a sentence of life in prison. So for Wattigney, it could have been a whole lot worse. In fact, the “deep web news” website Voactiv mocked Wattigney last year, as having “the most boring Silk Road story ever told”: “He’s not an international drug kingpin who made millions of dollars and traveled the world in Lamborghinis” like Silk Road founder Ross Ulbricht. Instead, “Wattigney sold what is perhaps one of the least illegal things exchanged on Silk Road: counterfeit coupons.”
For law enforcement and the coupon industry, such attitudes are among the frustrations of prosecuting coupon crime. Many outside the industry don’t seem to take it seriously, since they’re “only coupons”. And when a case does get prosecuted, the penalty often turns out to be little more than an order to return the money that was illicitly obtained. Wattigney’s 41-month imprisonment is not insignificant, nor are the felony convictions that will remain on his record, but the financial penalty could have been much more severe.
“While the 41-month prison sentence feels appropriate, the low amount of restitution doesn’t come anywhere near the millions of dollars that my clients lost due to the viral circulation and misuse of millions of individual counterfeit coupons at thousands of individual retail settings,” Brand Technologies president Jane Beauchamp told Coupons in the News. “Unfortunately, the significant losses incurred by the industry due to Mr. Wattigney’s ‘business model’ will end up being reflected in higher prices on the shelf, and honest consumers will end up having to pay more for their favorite brands.”
Coupon Information Corporation Executive Director Bud Miller believes the outcome sends a strong message to coupon counterfeiters and would-be counterfeiters alike. “Clearly, the risk is not worth the perceived, temporary rewards,” Miller told Coupons in the News. “Wattigney will spend more than three years in prison (equal to approximately 10% of his life thus far), has lost the ‘profits’ from the criminal organization he founded, is a convicted felon, and will face a long road ahead. We hope he uses this time constructively and hope he can turn his life around.”
“This is not a career,” PurpleLotus once wrote online. “It doesn’t go on my resume. It’s not going to land me a better job in the future… I know this won’t last forever and putting a hold on furthering my career, to me, is worth it to take this ride while I have the chance.”
That ride ended in a federal courtroom Wednesday. And Wattigney now has 41 long months to ponder his post-PurpleLotus future.
