Man charged with selling fake discount coupons on Silk Road

The trade in counterfeit coupons still thrives on other underground marketplaces

Counterfeit coupons are sold across underground websites, offering vast discounts on household goods.

Counterfeit coupons are sold across underground websites, offering vast discounts on household goods.

A Louisiana man has been accused of creating counterfeit coupons and selling them on the Silk Road underground websites, potentially defrauding businesses of more than US$1 million, the Justice Department said Thursday.

Prosecutors said Beau Wattigney, 30, of New Orleans, created coupons that look like print-at-home coupons from manufacturers, including fake logos. The coupons offered vast discounts on the retail price of some items.

He offered one of the coupons, for a $50 Visa gift card, for 1 cent, prosecutors said.

Wattigney is alleged to have sold packages of the coupons between May 2012 and last November on the Silk Road 1.0 and 2.0 websites, the now closed underground marketplaces that traded mostly illegal goods.

The coupons were sold under nicknames such as GoldenLotus, PurpleLotus, MoxDiamond and NickMode.

Wattigney was charged with conspiracy to commit wire fraud and conspiracy to commit trademark counterfeiting, in the U.S. District Court for the Eastern District of Louisiana.

More than 50 businesses were targeted and could have sustained as much as $1 million in damages if the coupons were redeemed, according to the indictment. The coupons spoofed services that distribute coupons such as Hopster, Coupons.com, SmartSource and RedPlum.

He allegedly made more than 2,000 sales and advertised one of the products as "The Original S.R. Exclusive Coupon Collection." That package sold for $54.44 to someone in the District of Colombia on the Silk Road 1.0.

There's still a thriving trade in counterfeit coupons, and it's easy to find other groups engaged in the same activity that Wattigney is accused of. A group calling itself TeamLotus has a website that uses a ".onion" address, which uses the Tor network to make its true IP address harder to trace.

TeamLotus offers packs of counterfeit coupon loosely organized into product categories such as baby essentials, breakfast and cereal and cleaning supplies. The packs cost $35 but offer several times that value in savings if redeemed.

On an information page, TeamLotus refers to the person identified by prosecutors as Wattigney, writing that "Purple Lotus has long ago retired and passed the mantle of coupon anarchy to a dedicated, some would say fanatical, cadre of disciples.

"Purple Lotus was the first to admit, that the students had surpassed the master," it said. "That is why he could retire in peace, knowing that his baby would live on for years to come."

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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