Promise of Riches Ends in Heartbreak, Tears : Crime: A hearing is set for a man accused of bilking at least 37 people out of thousands of dollars in a sweepstakes scam.

Kathleen Ogden knew the Internal Revenue Service was not to be taken lightly. And the allure of a brand-new Mercedes Benz 300 E was just too tempting to pass up.

So when a man claiming to represent the IRS told Ogden she could claim the Mercedes--or $52,975 in cash--the Washington state mother of three listened. When he said that all she had to do was prepay $535 in luxury tax, she complied.

“He asked me if I had that much money,” Ogden, 38, recalled Thursday. “I said no, but that if it meant getting $52,975, I would find a way. He said, ‘Good for you, Mrs. Ogden.’ ”

Ogden, at the time recovering from surgery, took money from her children’s clothing allowance and borrowed the rest using a credit card.

Now, she says she should have realized she was getting taken.

She was not alone.

By the time John Kevin Zachary was arrested in Los Angeles this month, he had allegedly pulled the same scam on at least 37 people from all over the country, authorities said.

Zachary, 32, faces arraignment Monday in federal court on 15 counts of wire fraud and five counts of false impersonation of an IRS officer. His public defender, Carlton F. Gunn, said Zachary will plead not guilty.

According to the indictment released this week, Zachary telephoned victims in at least seven states, identified himself as an IRS agent, and announced that they had won the grand prize in a sweepstakes.

Working from two pay phones in the lobby of a downtown Los Angeles motel, he instructed the “winners” to wire a luxury tax of about $500 in order to be awarded the prizes. He assured them that the tax money would not be collected until the new Mercedes was delivered.

To hear his victims tell it, Zachary kept them on the phone for hours at a time, talking fast, loudly and persuasively. He shared details--allegedly bogus details--of his life and job and gained the confidence of even the most leery of his targets.

In several cases, once the “tax” money had been wired, Zachary allegedly called the victims and told them the Mercedes would be driven to their front doors in a matter of minutes. Just stay put and wait for it, he told them before hanging up.

Zachary allegedly told many of the victims they had won the Reader’s Digest Sweepstakes, one of the most well-known and largest of such mail-in games of chance. Some of the victims indeed had participated in the sweepstakes, so Zachary’s spiel seemed all the more credible.

“He sounded so convincing,” said Pamela Murphy of Lexington, Ky. Her supposed booty included a Mercedes equipped with a cellular phone, a trip to Hawaii and a video camcorder.

Zachary commanded his victims’ attention most effectively by invoking the name of the dreaded IRS.

“When he said he was an IRS agent, my heart started pounding,” Ogden said from her home in Federal Way, Wash. “Great, I thought. What do we owe the IRS? Did something go wrong with our income tax return? You think immediately you have to pay them. They are sticklers (who) you don’t fool with.”

But the voice on the phone quickly assured her that the news was good. The caller then began his pitch: He had been trying to reach her for months to inform her of the winnings; the runners-up in the sweepstakes were eagerly waiting in the wings to claim the prizes if she did not, and she had to act quickly.

Ogden believes the imposter got to her at a moment when she was particularly vulnerable and gullible, offering unlikely hope in desperate times. After a yearlong layoff, her husband had just started work at Boeing, and she had recently undergone surgery to be fitted with a pacemaker.

“We were just trying to get back on our feet,” Ogden said. “I was depressed that morning about our financial situation. The recession is hitting us, hitting everybody. . . . We were feeling the pinch (and) I was depressed.”

Then came the offer of riches.

“In my exuberance,” Ogden said, “I didn’t take the time to think. I didn’t take the time to pray.

“I wanted it. In my greed, I wanted it,” she said of the $52,975. “I had plans for it.”

Ogden said she sat with her husband and three children and drew up a list of how they would spend the money. A portion would go to friends and family who were struggling financially. Some would be seed money for a college fund for the children.

“The thing that hurt most was the look on their faces,” Ogden said. “I gave my family hope and then I pulled the rug out from under them. . . . It took me three weeks before I stopped waking up at night and crying.”

It is not clear how Zachary obtained the names and phone numbers of his alleged victims. Assistant U.S. Atty. Matthew Frank declined to discuss details of the case.

Craig Lowder, a spokesman for Reader’s Digest Associates Inc., said the firm, unlike many mail-order companies, does not sell or rent out its mailing lists.

“Our list and the ability to manage it is far too valuable for us to share,” Lowder said from Reader’s Digest corporate headquarters in Pleasantville, N.Y.

Because Reader’s Digest’s mailing lists contain the names of about 50 million people, he said, it is not difficult for any scam artist to select victims randomly and end up with a number of people who have participated in the sweepstakes.

He cautioned that Reader’s Digest always informs its sweepstakes winners in writing and never by phone. He warned consumers that legitimate sweepstakes never require a winner to spend money to collect a prize.

“If it’s a legitimate sweepstakes . . . it’s a game of chance. No purchase necessary. None.”

Zachary, who is accused of working with at least three unindicted accomplices, used the scam to collect $10,000 before his arrest at a pay phone at Los Angeles City College on June 5, federal prosecutors said.

Investigators spent six months building their case after victims began reporting the alleged fraud to police, Western Union and the IRS. Phone calls were traced to the motel where Zachary lived and worked, and pictures were taken of his alleged accomplices as they cashed the wired money orders, authorities said.

The maximum penalty for each offense of wire fraud is five years in prison and a fine of $250,000. The IRS impersonation charge carries a three-year penalty and a $250,000 fine for each offense.