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Took $2.5 Million but Only Printed Tear Sheets

By Published on .

NEW YORK (AdAge.com) -- Starting in 1991, Scott Rose held himself out as publisher of The Jewish World News and told advertisers the paper had a monthly paid circulation as high as 348,000. A staff of telemarketers convinced advertisers to spend more than $2.5 million with Mr. Rose. It turned out to be a scam.

In fact, no newspaper existed -- at least not for readers. After a federal investigation,

.Photo: AP
Bogus publication sold $2.5 million in ads.
Scott Maurice Rose pleaded guilty to mail fraud and last month was sentenced by the U.S. District Court for the Southern District of Illinois to five years in prison.

Enough copies for tear sheets
Mr. Rose admitted in court documents that his employees laid out a paper with the ads solicited by staff next to copy that came mainly from a wire service and other newspapers. But according to court documents, Mr. Rose, of Fairview Heights, Ill., only printed enough copies to send tear sheets to the advertisers and, from time to time, some minimal distribution to synagogues and retail outlets throughout the U.S. For the two years before he went out of business, he printed just 400 to 500 copies of the monthly newspaper each month.

Cases like Mr. Rose's are unusual but not unheard of, and the problem is by no means limited to the Jewish press, according to industry executives. All unaudited media present the opportunity for fraud, said Kirk Whisler, president of the Latino Print Network, the sales coordinator of the National Association of Hispanic Publications. Partly to discourage scams, the Hispanic publishing group instituted a rule in 1990 that all members be audited.

King Pound, president of the Catholic Advertising Media, a Washington, D.C.-based publisher's representative group, said he does not deal with any publication unless it is audited or has a paid circulation verifiable through the U.S. Post Office.

'Tremendous' scam opportunity
"We don't want to condemn all small media, but there's a tremendous opportunity there for scams," said Ellen Tanenbaum

St. Louis Jewish Light..
Bob Cohn, chairman of the ethics committee of the American Jewish Press Association
media buyer at WPP Group's The Media Edge, New York, who bought ads in smaller, ethnic media last year for the U.S. Census Bureau.

An audit, however, is not foolproof. Smaller newspapers and magazines have been known to cut back circulation after an audit, Mr. Whisler said.

What's more, legitimate newspapers are not always audited. The St. Louis Jewish Light, which was instrumental in shutting down Mr. Rose, is unaudited -- but it does have postal records of its circulation. Publisher and Editor in Chief Bob Cohn, also chairman of the ethics committee of the American Jewish Press Association, said AJPA does its own investigations and expels members for fraud.

A dozen phony newspapers
Mr. Cohn estimates a dozen phony Jewish newspapers exist nationally that carry on scams similar to Mr. Rose's operation. Mr. Cohn became aware of Mr. Rose as early as 1992, when local businesses started complaining to his paper.

The victims who bought ad space in Mr. Rose's sham papers were not just mom-and-pop operations, said federal prosecutor Hal Goldsmith.

The sports and entertainment complex Kiel Center, now named Savvis Center, in St. Louis, traded about $23,000 worth of tickets to events such as ice shows and the circus in exchange for advertising space.

"We understood them to be a local paper," said Michele Peck, Savvis marketing manager.

Ms. Peck said the center often trades tickets for ad space with smaller, unaudited papers. "It had always been kind of an honor-system deal," she said. These days, the center insists on receiving copies of the entire newspaper, not just the tear sheets, and also obtains notarized affidavits from radio stations for ads. The Illinois court ruled that Savvis, along with other victims of Mr. Rose's scheme, is entitled to restitution.

Know the players
Elie Rosenfeld of Joseph Jacobs Advertising, a New York agency specializing in Jewish media, said it was unlikely his agency would fall for a scam, simply because he knows the players in the Jewish press. "We know that anybody we haven't heard of who claims a circulation of 350,000 can't be telling the truth," he said.

However, he agreed with Mr. Cohn that as many as a dozen phony newspapers are out there "under our radar screen," out of about 250 legitimate Jewish publications in the country. "There's always someone out there looking to make a buck any way he can."

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