Founder Of $50 Million Mail Fraud Scheme Arrested In Florida
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Baltimore, Maryland – Eric Epstein, age 57, of Pompano Beach, Florida (previously of Owings Mills, Maryland) was arrested today on charges of mail fraud and conspiracy to defraud the Internal Revenue Service. Epstein was indicted on August 24, 2017 and charged with committing mail fraud to obtain more than $50 million in money and property from various businesses through the fraudulent sale of light bulbs and cleaning supplies.
The arrest was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge Kimberly Lappin of the Internal Revenue Service, Criminal Division; and Inspector in Charge Robert B. Wemyss of the United States Postal Inspection Service, Washington Division.
According to the indictment, in or about 2003, Epstein co-founded a telemarketing business, Midway Industries, based in Maryland that sold lightbulbs and cleaning supplies to businesses, schools, churches, non-profit organizations, and government offices. Epstein obtained money from thousands of victim businesses by convincing them to pay for light bulbs and cleaning supplies that they never ordered, and deceived the businesses about the amounts Midway would bill for products.
Epstein sold a majority financial interest in Midway in 2012 for $15 million, however he retained an ownership stake, received a regular paycheck, and continued to advise and supervise Midway employees. From 2003 through 2014, Midway employees would cold call businesses stating that the business had an existing business relationship with Midway, make false representations, send unwanted orders, and inflate the price of products. The inflated prices were regularly 900% greater than the prices Midway paid for the supplies. At times, invoices were more than 8000% higher than the true amount due.
Employees at Midway worked on commission, the amount of which was often determined by Epstein. Epstein offered financial incentives to employees based on customer payments, and employees were rewarded with gift cards in order to induce them to place initial orders.
Epstein caused victims’ checks payable to Midway corporate entities to be cashed at money remitters, while Epstein personally kept and used the money. Epstein and others at Midway used Midway credit cards for lavish personal expenditures, such as luxury furniture and vehicles.
If convicted, Epstein faces a maximum sentence of 20 years in prison for mail fraud conspiracy and 5 years in prison for conspiracy to defraud the Internal Revenue Service. Epstein is scheduled to have an initial appearance in U.S. District Court in Baltimore on September 15, 2017.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Acting United States Attorney Stephen M. Schenning thanked the FBI, IRS and USPS for their work on the investigation. Mr. Schenning commended Assistant U.S. Attorneys Sean R. Delaney and Harry M. Gruber who are prosecuting the case.