SEVENTH INDIVIDUAL SENTENCED IN CONNECTION WITH COSTA RICA-BASED BUSINESS OPPORTUNITY FRAUD VENTURES
Operation Had Connections to Florida, New Mexico, Wisconsin and Colorado
Sirtaj Mathauda, a former resident of South Florida, 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. Mathauda was sentenced by U.S. District Judge Joan A. Lenard in Miami to a term of 21 years in prison, to be followed by 5 years of supervised release. A restitution hearing is scheduled for October 3, 2011.
A jury in Miami, Florida, found Sirtaj Mathauda guilty of conspiracy, mail fraud and wire fraud following a two-week trial in late April. Evidence at trial showed that Mathauda was one of the managers of a scheme involving fraudulent companies known as Apex Management Group, USA Beverages, Inc., Omega Business Systems, and Nation West Distribution. The companies operated telemarketing rooms in Costa Rica from which Mathauda and his co-conspirators sold phony vending machine, coffee, and greeting card distribution routes to Americans who wanted to own small businesses. Many victims paid $10,000 or more for the purported business opportunities, but received little or nothing valuable in return. At sentencing, the court found that Mathauda and his partners bilked more than $2.5 million from more than 250 victims between 2004 and 2009.
Mathauda is one of eight persons indicted in three related cases in the Southern District of Florida involving fraudulent business opportunities based in Costa Rica. In addition to Apex Management, USA Beverages, Omega Business Systems, and Nation West, other phony business opportunities included Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc., and Powerbrands Distributing Company. Six of the defendants – Stephen Schultz, Dilraj Mathauda, Donald Williams, Silvio Carrano, Gregory Fleming, and Patrick Williams – previously pled guilty and were sentenced to significant prison terms. Jeffrey Pearson, who is alleged to have been involved in many of the fraudulent business opportunities, remains in custody in Costa Rica. The United States continues to seek his extradition.
Testimony at Mathauda’s trial showed that salesmen at the companies read scripts full of false claims to potential customers. Co-conspirators also played the role of “locators,” who lied to victims about supposedly profitable locations for the distribution routes. Some of the same salesmen who pitched customers also made phony reference calls in which they pretended to be satisfied purchasers of the business opportunities.
Evidence at trial demonstrated that each company operated for several months before closing and leaving victims with no recourse. Soon after one company closed, the next opened as the scheme repeated itself. The various companies used bank accounts, office space and other services in Florida and elsewhere to make it appear as though they were located in the United States. In reality, the companies were mostly operated from phone rooms in Costa Rica. The co-conspirators transferred money paid by victims to bank accounts in Costa Rica and elsewhere.
“Business opportunity fraud causes serious harm to victims who are trying to start an honest business and earn a living,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The court’s stiff sentence – over 20 years in prison for this defendant – sends a strong message to those who seek to exploit consumers to make a quick buck for themselves.”
“Fraudulent business opportunity sellers should realize that all financial fraud will be prosecuted vigorously. This is true even if the schemers operate from outside of the United States,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “International law enforcement cooperation eliminates safe havens for those who seek to commit fraud from overseas.”
“Telemarketers engaged in fraud using the U.S. Mail and overnight delivery services will be investigated thoroughly no matter where they attempt to hide. This international and domestic investigation illustrates the Postal Inspection Service’s resolve to protect the American public from financial fraud in all its forms,” said Henry Gutierrez, U. S. Postal Inspector in Charge in Miami.
Assistant Attorney General West and U.S. Attorney Ferrer commended the investigative efforts of the Postal Inspection Service, and the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. The case was prosecuted by trial attorneys Jeffrey Steger and Alan Phelps of the U.S. Department of Justice Office of Consumer Protection Litigation.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.