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Feds: Greenlawn woman pleads guilty in $30 million mail fraud scheme

Lorraine Chalavoutis, of Greenlawn, is seen outside federal

Lorraine Chalavoutis, of Greenlawn, is seen outside federal court in Central Islip in July 2018. Credit: James Carbone

A Greenlawn woman pleaded guilty Monday for her role in a mail fraud scheme that federal prosecutors said fleeced thousands of victims of more than $30 million by enticing them to pay a fee in hopes of winning a cash grand prize that never existed.

Lorraine Chalavoutis, 64, pleaded guilty in federal court in Central Islip to conspiracy to commit mail fraud in a scheme that prosecutors said included many elderly victims.

"With today’s plea, Chalavoutis has admitted her role in a nefarious and fraudulent scheme to enrich herself by tricking elderly and vulnerable victims into believing they had won a cash prize that they could collect after paying her modest fees," Jacquelyn M. Kasulis, acting U.S. attorney for the Eastern District of New York, said in a statement. "Protecting the community from those who commit fraud to deliberately prey on the false hopes of the vulnerable remains a priority of this office and the Department of Justice."

Chalavoutis' defense attorney Bruce Barket said Monday that his client, who had a career as a bookkeeper and accountant, is "otherwise an exemplary citizen" and a "well-respected woman in her community."

While Chalavoutis could face up to 20 years in prison, Barket said it would "not be unjust" if she received probation.

"She acknowledged her minor role in this scheme, where she made virtually no money in comparison to the principals," Barket said. "While the maximum is 20 years, we don't expect her to get anywhere near that."

Chalavoutis was arrested in 2018 along with co-conspirators Tully Lovisa, of Huntington Station, the accused leader of the scheme, and Shaun Sullivan, 37, of Merrick. Both Lovisa and Sullivan previously pleaded guilty to conspiracy to commit mail fraud and are awaiting sentencing, prosecutors said. Several other defendants also have pleaded guilty to conspiracy to commit mail fraud in connection with the scheme.

"Chalavoutis set up and ran the administrative and financial operations that allowed this fraud scheme to work," Acting Assistant Attorney General Brian M. Boynton said in a statement. "The Department of Justice is committed to protecting elderly and vulnerable Americans and to prosecuting those who defraud them."

According to prosecutors, Chalavoutis, using consumer lists that she and Lovisa and Sullivan obtained, conspired to mail fraudulent prize notices to thousands of people across the country between December 2010 and July 2016.

The victims who received the mailings were directed to pay a $20 or $25 fee for "delivery" or "processing," according to the original indictment. The mailings included pre-addressed return envelopes for the victims to send payment by cash, check or money orders. But the biggest windfall any of the victims received was a $1 check, prosecutors have said.

Sentencing has been set for Jan. 18.

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