A shady outfit billed phone customers for more than $70 million in unauthorized charges and then transferred much of the revenue to a "purported nonprofit," the Federal Trade Commission alleged in a lawsuit announced today.

"Hundreds of consumers complained that charges from $9.95 to $24.95 per month appeared out of the blue on their phone bills without their authorization," the FTC said. "The FTC alleged that defendants told phone companies and third-party 'billing aggregators' that the consumers had authorized the charges by filling out forms on the Internet. Since January 2008, according to the complaint, the defendants have billed consumers for more than $70 million."

It's a family-run affair. The nonprofit and the companies that allegedly orchestrated the charges are run by "Steven Sann, his wife Terry, son Nathan, and accountant Robert Braach" of Montana, an Associated Press report notes. The lawsuit in US District Court in Montana (PDF) was filed against those four people as well as nine Nevada-based companies with names like American eVoice, Emerica Media, Foneright, and Voice Mail Professionals.

The complaint says cramming charges showed up on landline phone bills as "voice mail services, electronic fax services, or other noncall-related services." The charges were passed on to customers of Verizon, AT&T, and Frontier through the aforementioned billing aggregators, which had business relationships with the phone providers.

Good luck getting a refund

"The charges billed on behalf of Defendants usually appear on one of the last pages of a consumer’s multi-page telephone bill," the FTC lawsuit said. Even when consumers noticed the charges and complained, the defendants allegedly dragged their feet in issuing refunds.

"Defendants will often issue credits for more than three months of charges only when the [phone carriers] require them to, or when consumers are persistent in their demands or complain to the Better Business Bureau or state or federal regulators," the FTC wrote. "In many cases, it can take several months and repeated inquiries before the consumer gets a full refund."

Out of the $70 million worth of charges, the defendants allegedly collected $26 million in net revenue from the billing aggregators "after subtracting returns, fees for excessive credits and refunds, service fees, and other expenses."

An unspecified amount of the revenue was transferred to Bibliologic, the "purported nonprofit," which is controlled by Steven Sann, the FTC said. "The purported nonprofit organization has no right to the funds and must disgorge them to the FTC," the commission said.

Bibliologic was incorporated in 2009 and has been funded by the "ill-gotten assets derived from the unlawful acts and practices alleged in this Complaint," the FTC said. The money was allegedly never used for charity. "Bibliologic retains funds solely for the benefit of Defendants Steven V. Sann and Robert M. Braach and, at their direction, has distributed funds to, among others, Defendant Emerica Media and lawyers retained by Sann to represent him in personal matters unrelated to any charitable purpose," the lawsuit states.

The FTC asked the court to halt the cramming operation and freeze its assets. The defendants are charged with violating the Federal Trade Commission act by "unfairly billing consumers for services they did not authorize; and deceptively representing that consumers were obligated to pay for the services."

Although the FTC just announced the lawsuit today, it was filed on January 8. There is both a civil and criminal proceeding. On January 18, the Sanns asked for an "order staying all civil proceedings in this matter pending the resolution of the active, parallel criminal matter against Steven Sann and the corporate Defendants in this case."

The FTC has filed numerous complaints against phone bill crammers targeting wireless customers, while the Federal Communications Commission pushes rule changes to crack down on this type of unauthorized charge. For more on cramming, see: "$422,000 to stream a movie? The continued "success" of phone cramming."