Phony Phone Directory: Fla. Firm Guilty of $425 Million Fraud, Trading on Yellow Pages' Name, Say Prosecutors

Atlanta, GA (CBS) United Directories, a Jacksonville, Fla. firm, made almost $425 million in four years by selling advertising for a business directory they were compiling. The problem, say federal authorities, is that the directory itself was at the heart of a fraud the company was perpetrating, and now the firm's top executives are facing criminal charges, according to the Atlanta Journal-Constitution.

The company president, Mark Stuart Smith, and operations manager, Christopher Jon Gregory, are charged with conspiracy to commit mail fraud and money laundering, says the newspaper. The bookkeeper, Marian Phelan, is also charged with money laundering. The three are to appear in an Atlanta federal court next week to face the charges.

United Directories reportedly sent solicitations to businesses, asking them to purchase advertising space for about $300. The solicitations contained the well-known, Yellow Pages "walking fingers" logo, which U.S. Postal Inspector Robbie Johnson says was an attempt to deceive clients into thinking they were renewing their ads in the actual Yellow Pages directory.

An Atlanta post office box was one address to which the ad buyers were asked to send their money, authorities say.

Prosecutors say 162,000 companies responded to the money laundering scheme, and although United Directories did, in fact, publish a business directory in 2008, it contained only 55,000 of the 162,000 businesses that had paid for advertising space.