Three Florida Residents Sentenced for Mail Fraud in Connection with Misrepresenting Business Opportunities
Three individuals who pleaded guilty to conspiracy to commit mail fraud in connection with operating a series of fraudulent business opportunity companies were sentenced in the United States District Court for the Southern District of Florida. Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo), of Coconut Creek, Fla., and Mitchell Berman (aka Brian Griffin), of Boca Raton, Fla., were sentenced on Friday to 120 months and 78 months imprisonment, respectively. Steven Axelrod (aka Michael Hutton), of Wellington, Fla., was sentenced to 15 months imprisonment.
“These sentences reflect the Department of Justice’s continued commitment to protecting consumers from fraud schemes,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division. “Those who violate court orders and who seek to deprive innocent, hardworking Americans of their hard-earned money will be held accountable.”
The defendants operated a series of fraudulent companies that sold coffee display rack business opportunities. These business opportunities, as advertised by the defendants to potential purchasers, consisted of the following: bags of coffee, display racks in which to place the coffee, profitable locations for the display racks, assistance in placing the display racks in profitable locations, and other customer services.
Berman and Gallo, with Axelrod as salesman, operated the first company in approximately 1999, leading to a December 2000 federal court order barring Berman, the company, and its successors from misrepresenting profits, locations, and other aspects of business opportunities. Over the course of the next twelve years, beginning in August 2000 and continuing through October 2011, the defendants opened and closed five more iterations of the same company: Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee, and South Beach Coffee. They sold business opportunities for a minimum of approximately $10,000. In order to evade detection, all the defendants used aliases and gave out false addresses for the companies. According to the indictment, Berman and Gallo also avoided listing their own names on corporate and promotional documents, and instead paid people who did not work at the companies to be titular presidents. They operated each company for six months to a year, shutting down when purchasers began complaining, only to reopen again after a period of time.
In selling these business opportunities, all three defendants made numerous false statements to potential purchasers of the business opportunities to induce them to buy. Among the misrepresentations are that purchasers would likely earn substantial profits, that prior purchasers of the business opportunities were earning substantial profits, that purchasers would be given lucrative “commercial accounts,” and that the company would provide assistance in establishing and maintaining the business. According to the indictment, purchasers made little to no money on their investments, were unable to find profitable locations or accounts, and were not provided the support promised by defendants. In making misrepresentations to potential purchasers, Berman was also violating a 2000 federal court order.
The matter was handled by the Department of Justice’s Consumer Protection Branch with the investigative efforts of the Postal Inspection Service. The case was prosecuted by Trial Attorneys Cindy Cho and Christopher Parisi of the Consumer Protection Branch of the Civil Division of the Department of Justice.