WASHINGTON – Two individuals charged in connection with the operation of a fraudulent business opportunity scheme were arrested today following their indictment by a Miami federal grand jury on Oct. 21, 2008, the Justice Department and the U.S. Postal Inspection Service announced. According to the charges, Gold Star Vending Inc., purported to sell table top shooter machines, along with assistance in establishing, maintaining and operating a businesses involving the machines. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Michele Benitez of Titusville, Fla., and George Hustus of Miami who have been apprehended were indicted for their involvement in the Utah corporation that had connections to Miami. Also charged were Robert Nicol and Andrew Vogen of Salt Lake City. Gold Star Vending sold business opportunities from approximately May 2005 to January 2007. All the defendants were charged with conspiracy and with committing their offenses via telemarketing. Nicol also was charged with three counts of wire fraud.
The business opportunity sold for a minimum price of approximately $8,000. According to the indictment, Gold Star Vending told potential purchasers that independent firms would find locations, such as restaurants, in which to place the machines. The company also told potential purchasers that, if they invested, they would earn substantial profits when members of the public fed quarters into the table top machines. Gold Star Vending salespeople referred potential purchasers to references who, according to the indictment, told false tales of their success as business opportunity owners.
The indictment alleges that Nicol was Gold Star Vending’s owner, operator and a salesman. Vogen, Benitez and Hustus were charged as false references.
In addition, the indictment states that Vogen and Benitez used false names and cell phones to disguise their true identities and locations. The indictment also alleges that Gold Star Vending was a continuation of a scheme Nicol and Vogen operated in connection with Table Top Vending Inc., another Utah business opportunity firm.
"Potential investors should be given a full list of all people who have purchased such business opportunities in the past," said Gregory G. Katsas, Assistant Attorney General for the Justice Department’s Civil Division. "Fraudulent promoters typically use fake and handpicked references. The law requires that a list of prior purchasers be provided by the company before entering into a contract with the prospective buyer."
If convicted, Nicol, Vogen, Benitez and Hustus face a maximum statutory term of 10 years’ imprisonment, a possible fine and mandatory restitution on the conspiracy count. Nicol also faces a maximum statutory term of imprisonment of 20 years on each of the wire fraud counts, a possible fine and mandatory restitution.
"Many individuals prosecuted in this District have gone to prison for this sort of scam, for periods up to 23 years," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "Business opportunity promoters need to realize that this type of fraud will be detected and prosecuted vigorously."
Assistant Attorney General Katsas and U.S. Attorney Acosta commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Richard Goldberg and Phillip Toomajian with the Civil Division’s Office of Consumer Litigation.