Defendants Sentenced in Connection with Business Opportunity Scams
WASHINGTON – The Justice Department announced that on Aug.11, 2009, two individuals were sentenced in connection with South Florida business opportunity scams. Stewart Pope was sentenced in connection with his participation in fraudulent business opportunity sales at a Miami firm called Global Resources ("Global"). Pope, who pleaded guilty to mail fraud as well as conspiracy to commit mail and wire fraud, was sentenced to 27 months in prison and ordered to pay $4,313,093 in restitution.
Pope was listed as the President of Global in the company’s marketing materials, communications with potential customers, and disclosure documents. In reality, Pope’s name was used to hide the involvement of Global’s true owners and principals, who, among other things, had a history of selling various sorts of failed business opportunities. Pope’s conviction and sentence brings to eight the number of individuals [Richard Goodman, William Judd, Stewart Pope, Lisa Cohan, Larry Taylor, Frank DiMezza, Laura Fadlon and John Maginnis] convicted in this scam that victimized over 200 people and caused more than $4,000,000 in losses.
Global promoted business opportunities to consumers across the country through television commercials and other media, touting the profits that could be earned by purchasing a Global distributorship, and urging consumers to call a telephone number that appeared in the advertisements. Potential purchasers were told that for a purchase price of approximately $15,000, Global would provide three terminals, numerous prepaid cell phones, and advertising material, and that potential purchasers would earn their investment back in approximately six months to a year. Global salespeople told consumers that Global would find viable, high-traffic locations to place the terminals; relocate any terminals that underperformed; only sell distributorships in a limited geographic area; and provide ongoing technical support and customer service. In fact, the locations where terminals were placed drew almost no business and many of the prepaid cell phones did not work.
A business opportunity salesperson was also sentenced on Aug.11, 2009, in connection with a similar scheme. Debra Filik was sentenced in connection with her role as a salesperson for Secure Payment Services of America, LLC ("Secure Pay"). Filik, who pleaded guilty to mail fraud, was sentenced to 30 months imprisonment and ordered to pay $507,8933 in restitution. Filik was a salesperson referred to as a "closer." She routinely misrepresented a number of aspects of Secure Pay’s business opportunity to potential purchasers. Filik was the second person sentenced in connection with Secure Pay, a scam that victimized over 100 people and caused more than $1,000,000 in losses.
Like Global, Secure Pay victimized consumers from across the country. Potential purchasers were told that for a purchase price of approximately $13,000, Secure Pay would provide three bill payment terminals. Filik told potential buyers that they would be provided with viable, high traffic locations to place the terminals and that, when the public used the terminals to pay personal bills, the terminal owner would earn commissions. Filik told prospective buyers that they would earn their investments back in 14 months or less. She misrepresented the profits purchasers would earn, the viability of locations, and ongoing customer support and technical assistance that Secure Pay would provide. Filik also gave out the names of the company's references, who falsely claimed to be successful Secure Pay distributors.
"We are continuing to prosecute individuals who take advantage of hard economic times by offering false hope to people looking for income," said Assistant Attorney General Tony West. "The lure of a business opportunity is the promise of a stream of income coming from kiosks, vending machines, automated teller machines, or other mechanisms for selling goods or services to the public. The problem is that the promises of good locations and potential profits are often completely bogus, as are the references and locators involved in these cases. We have prosecuted over 100 people in this sort of scam in recent years. These cases are just two examples," West added.
In addition to Pope, seven other individuals were previously convicted and sentenced in connection with the Global Resources fraud. Two of the principals of the firm, Richard Goodman and William Judd, were sentenced to 70 months and 46 months in prison, respectively. John Maginnis, Larry Taylor, and Lisa Cohan, salespeople referred to as closers, were sentenced to 84 months, 51 months, and 16 months in prison, respectively. Closers made several misrepresentations about the profits that would be generated by the business, territorial limitations, the viability of locations, and ongoing customer support and technical assistance that Global would provide. Closers also gave out the names of Global’s references, who falsely claimed to be successful Global distributors.
Defendants Frank DiMezza and Laura Fadlon, a/k/a "Laura Sadlon," were Global references who fraudulently held themselves out as successful Global distributors. In reality, neither DiMezza nor Fadlon ever purchased a Global distributorship, and they were paid to lie to prospective purchasers. DiMezza and Fadlon were each sentenced to 27 months in prison. All defendants were ordered to pay restitution to the victims of the offenses.
Defendant Noel Beres was another participant in the Secure Pay scheme who was charged and sentenced to prison. He was a Secure Pay owner and received a final sentence of 34 months in prison.
Acting U.S. Attorney Jeffrey H. Sloman, from the Southern District of Florida, said: "Business opportunity schemes, which scam innocent consumers looking to improve their financial situation, are difficult for even educated consumers to detect. However, business opportunity promoters need to realize that this type of fraud will be detected by law enforcement, vigorously prosecuted, and result in serious jail time in this District."
"The Postal Inspection Service remains vigilant to uncover individuals who use the mail to commit fraud on the American public," said U.S. Postal Inspector in Charge Henry Gutierrez, based in Miami. "We have devoted substantial resources in recent years to uncovering the activities of individuals like these defendants who falsely promise that consumers will be able to make money by investing in what often seems to be the latest trend, such as cell phones, DVD rental machines or Internet kiosks. The desire of Americans to start their own businesses should not be exploited in this fashion," added Inspector in Charge Gutierrez.
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which brought a related civil suit earlier and made a criminal referral. The Global Resources case was prosecuted by Josh Burke and Jill Furman, and the Secure Pay case was prosecuted by Richard Goldberg and Matthew Ebert, of the United States Department of Justice, Office of Consumer Litigation.