Diamond Jim's touts a doctor, a sheik and a colonel as its operators, but authorities say its business is to cheat Uncle Sam.
In the past three months, the Fort Lauderdale firm has offered consumers a $100 information package that it claims shows how to get away with using 2- cent stamps instead of the proper 25-cent postage on first-class mail, U.S. Postal Inspection Service officials said.
Postal authorities are investigating Diamond Jim & Associates Inc. and at least 100 people across the country for possible mail fraud, saying they are illegally encouraging consumers to use insufficient postage.
These people charge between $5 and $100 for the information packages, but their letters fail to say that buyers will receive only a copy of a section of a federal law that was eliminated in the Postal Reorganization Act of 1970, Postal Inspector Tom Hudson said.
The now-defunct regulation said that postage for first-class mail weighing two ounces or less was 2 cents plus the regular rate, which was 6 cents at the time.
"It never said it was OK to use 2-cent stamps," Hudson said.
"They're misrepresenting a law that's obsolete," he said. "I would classify what they're doing as downright nasty. People think they can get something for nothing, but we hope to bring some legal action against them."
Authorities warn recipients of the offer not to buy the bogus information packages or to start selling the material to others. They urge consumers who receive the offer or the package to forward it to their postmaster or postal inspector.
"What makes it illegal is the scam that's enclosed," Postal Inspector Bill Posey said. "It meets all the mail fraud elements: money, usage of the mail and the devising and implementing of a scheme."
The maximum penalty for mail fraud is a $1,000 fine and five years in prison, per letter, Posey said.
None of the operators listed on Diamond Jim's offer letter -- Dr. James T. Brodie, Sheik Abdullah Ali Akbar and Col. Marvin T. Smith -- could be located for comment. The company's phone has been disconnected and no one answered at the address listed in the telephone directory, 307 Tarpon Drive.
The company is not registered with the state, and it does not have the licenses required by the city and Broward County.
Diamond Jim's and other promoters have successfully sent an undetermined number of letters bearing 2-cent stamps around the country. The fact that the letters were delivered without collection of the postage due tends to bolster their claims, Posey said.
"You received my letter with (2-cent) postage didn't you!" Diamond Jim's offer letter says.
The promoters have gotten away with mailing letters carrying inadequate postage because no one checks the mail until it reaches the carriers, Posey said. The carriers often do not have time to look at every letter, he said.
And even careful carriers may not spot the insufficient postage, Hudson said, because the 2-cent Mary Lyon commemorative stamp used resembles the 25-cent Jack London stamp.
Postal officials said they have alerted mail carriers nationwide to watch for inadequate postage on first-class mail.
"We want to stop this scheme because we don't want consumers to have to pay 23 cents in postage due to pay for a mail fraud scam," Posey said.
Postmasters in several states, including New York, North Dakota and South Carolina, in the past 1 1/2 months have returned between 200 and 300 letters mailed by Diamond Jim's, said Tom Snell, manager of the New River Station post office in Fort Lauderdale.
"The carrier might have taken them out and tried to collect postage due from the customer," Snell said. "When they refused, they tried to send the letters back here."
Snell said postal authorities have been unable to recoup any of the postage due from Brodie, who lists himself as Diamond Jim's president.
Posey said authorities traced the origins of the mail operation to a Los Angeles man who apparentlyh came across the now-defunct federal law in April.
"He sent out 1,000 letters bearing 2-cent stamps figuring that some of them would be delivered," Posey said. "Then the snowball effect began."
Recipients of the California man's letter ordered his information package for $10, then made their own copies of the letter and law and began to promote the offer to others, Posey said.
"Someone out there said, 'Gee, I can mail my own mail at 2 cents and save some money,' but where the big bucks is, is to Xerox this and do the same thing," Posey said.