Fraudulent Business Opportunity Venture Operator Sentenced to 78 Months in Prison
Fraudulent Operations Were Based in Costa Rica; Prospective Clients Told Companies Located in United States
WASHINGTON – Donald Williams was sentenced today in connection with a series of Costa Rica-based business opportunity fraud ventures, the Justice Department and the U.S. Postal Inspection Service announced. U.S. District Court Judge Marcia G. Cooke in Miami sentenced Williams to a term of 78 months in prison and a term of five years of supervised release. Williams also was ordered to pay $3.9 million in restitution to victims of the scheme.
Williams pleaded guilty to conspiracy to commit mail and wire fraud on June 29, 2010. He was arrested in Houston on May 7, 2010, following his indictment by a federal grand jury in Miami on March 9, 2010. The indictment charged that Williams and his co-defendants, Silvio Carrano, Patrick Williams and Gregory Fleming, conspired with others in Costa Rica to fraudulently sell beverage and greeting card business opportunities to U.S. citizens. The business opportunities purportedly included assistance in establishing, maintaining and operating the ventures.
The charges form part of the government’s continued nationwide crackdown on business opportunity fraud. Two co-conspirators who worked with Williams in Costa Rica, Stephen Schultz and Dilraj Mathauda, previously pleaded guilty in federal court in Miami and were sentenced in related cases. Charges against Williams’ co-defendants, as well as those against defendants Jeffrey Pearson and Sirtaj Mathauda in the related cases, remain pending.
In pleading guilty, Williams admitted that he worked for fraudulent companies known as USA Beverages Inc., Twin Peaks Gourmet Coffee Inc. and Cards-R-Us Inc. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., and otherwise made it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica.
After USA Beverages, Williams worked for Twin Peaks Gourmet Coffee Inc., which was a Florida and Colorado corporation. Twin Peaks also sold business opportunities to own and operate coffee beverage sale display racks. Twin Peaks rented office space in Fort Collins, Colo., to make it appear to potential purchasers that Twin Peaks’ operations were fully within the United States. However, Twin Peaks was actually operated from Costa Rica.
Williams later worked for Cards-R-Us Inc., which was a Nevada corporation that sold business opportunities to own and operate greeting card sale display racks. Cards-R-Us rented office space in Reno, Nev., to make it appear to potential purchasers that Cards-R-Us’ operations were fully within the United States. However, like USA Beverages and Twin Peaks Gourmet Coffee, Cards-R-Us was actually operated from Costa Rica.
Williams admitted that he and his co-conspirators made numerous false statements to potential purchasers of the business opportunities. Williams and other salesmen falsely told potential purchasers that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Posing as references purportedly living in various cities in the United States, Williams and other conspirators told false tales of their success as business opportunity owners. Through these and other misrepresentations, the conspirators led purchasers to believe that they likely would earn substantial profits.
"Scam artists who engage in schemes like this one cause major financial hardship for consumers who are trying to start a business and earn an honest living," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Business opportunity fraud is a serious crime that we will pursue aggressively, as this prison sentence demonstrates."
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, especially the offices based in Miami and Phoenix. Assistant Attorney General West also commended the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps in the Justice Department’s Office of Consumer Litigation.