moneyThis blog’s masthead (Does Crime Pay?) has perhaps never asked so apt a question as it does of the latest clash between reality television stars and…actual reality.  On Tuesday, March 30, 2021, the U.S. Attorney for the Southern District of New York, in coordination with Homeland Security Investigations and the New York Police Department, announced the unsealing of a Superseding Indictment that charged Jennifer Shah and Stuart Smith with conspiracy to commit wire fraud and conspiracy to commit money laundering.  The charges stem from an alleged telemarketing scheme.

Casual observers of the pop culture landscape may not have noticed this announcement that came the same day Shah and Smith were arrested near Salt Lake City, Utah, but this move by state and federal law enforcement agencies sent shockwaves through a large but very specific group: fans of the exceedingly popular reality television franchise Real Housewives.  Jen Shah is none other than a central figure on the franchise’s latest city spotlight, Real Housewives of Salt Lake City, the first season of which aired from November 2020 through February 2021.  For the first time, fans were introduced to Shah, her “first assistant” Smith, and her outlandishly lavish (even by Real Housewives standards) lifestyle.

So, does crime pay?  Maybe – in increased reality television stardom.  The unsealed indictment, which came down as the series was already filming Season 2, alleges a wide-ranging telemarketing scheme through which Shah and Smith are alleged to have defrauded hundreds of victims between 2012 and March 2021.  Shah and Smith are alleged to have carried out the scheme, which targeted Americans over the age of 55, with the help of several participants whose fraudulent activities Shah and Smith controlled.

From the outside, Shah, whose pre-television background is in marketing and advertising algorithms, ran companies that offered online services purporting to make the management of victims’ businesses more efficient, such as website design and tax preparation services.  On the inside, however, Shah was allegedly orchestrating a network of telemarketing sales floors by trafficking in lists of marketing “leads” – the victims who had sought her online business services.  Shah and Smith allegedly generated and sold lists of the “leads” they identified to telemarketing sales floors across the country and received as profit a share of the fraudulent revenue they knew the operators of those sales floors would make.

The various phases of the alleged scheme were designed to extract money from the victims at every turn.  Once alleged victims purchased online business services from Shah or another participant in the scheme, their names were put on lists and sold to sales floors peddling fraudulent services or products. For example, the victims’ names were sold to a sales floor that would sell the victims “coaching” on how to use the services they thought they had purchased from Shah.  Shah also allegedly used “fulfillment” firms, operated by other participants, in the scheme.  These firms would provide documents and records to the victims purporting to demonstrate the validity of the purchased services.  Shah and Smith are alleged to have controlled each aspect, including determining which products or services the downstream sales floors could sell and setting how much they could charge.

Shah and Smith are alleged to have taken great strides to conceal their scheme, including incorporating their business entities under third parties’ names, using encrypted messaging applications to communicate with their alleged co-conspirators, sending shares of their fraudulent proceeds to offshore bank accounts, and making cash withdrawals designed to avoid currency transaction reporting requirements.  Shah is alleged to have amassed more than $5 million in criminal proceeds over the past several years.

The alleged scheme culminated in one count each for Shah and Smith of conspiracy to commit wire fraud in connection with telemarketing, which carries a maximum sentence of 30 years, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years.  At her arraignment on April 2 (pushed from its original date of March 31 when too many public observers crashed the virtual feed), Shah pled not guilty and was released on a $1 million personal recognizance bond.

It would seem that Shah’s alleged crimes did, indeed, pay her enough to land a spot on one of the most coveted reality television platforms, known for its opulence and drama.  It certainly looks like Season 2 will have no shortage of either.