{"id":24823,"date":"2016-06-28T18:20:33","date_gmt":"2016-06-29T01:20:33","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=24823"},"modified":"2016-06-28T18:20:33","modified_gmt":"2016-06-29T01:20:33","slug":"23-indicted-126-million-telemarketing-scheme-involving-sale-toner-copiers-printers","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=24823","title":{"rendered":"23 Indicted for a $126 Million Telemarketing Scheme Involving the Sale of Toner for Copiers and Printers"},"content":{"rendered":"

SANTA ANA, CALIF.<\/strong><\/span><\/p>\n

\n

\"criminal_justice_jurisprudenceFederal authorities and Huntington Beach Police officers Tuesday arrested 20 defendants indicted by a grand jury on charges of participating in a long-running telemarketing scheme that targeted small businesses and charities by selling them toner products for printers and photocopiers at grossly inflated prices, according to officials.<\/span><\/p>\n

The indictment unsealed after this morning\u2019s arrests alleges that participants in the scheme fraudulently induced over 50,000 victims to send more than $126 million to telemarketers who posed as the victims\u2019 regular supplier of toner products at prices as much as ten times the normal retail price. <\/span><\/p>\n

\"Toner\"The 30-count indictment, which charges 23 defendants, alleges a conspiracy that started in 1988 and was orchestrated by Gilbert N. Michaels, a West Los Angeles man who had previously been ordered by federal and state court judges to cease fraudulent and deceptive business practices related to toner sales, according to officials.<\/span><\/p>\n

Michaels owned and operated IDC SERVCO, a Culver City-based business that sold toner to small businesses, charities such as Easter Seals Disability Services and the United Way, schools, churches, city governments and other entities in the United States and Canada. <\/span><\/p>\n

In addition to the 20 defendants arrested this morning, two other defendants have agreed to surrender in the coming days. <\/span><\/p>\n

Authorities continue to search for the final defendant. <\/span><\/p>\n

\u201cThis toner fraud has been a tremendous burden on small businesses across America for many years,\u201d said United States Attorney Eileen M. Decker. \u201cThe fraud had a tremendous impact on some victims, who reported a severe impact on their finances, and the collective losses caused by the fraud were massive.\u201d <\/span><\/p>\n

\u201cThis case originated from the initiative of the Huntington Beach Police Department,\u201d said Special Agent in Charge L. Robert Savage of the U.S. Secret Service\u2019s Los Angeles Field Office. \u201cTheir long-term partnership and steadfast collaboration with the Secret Service and other law enforcement agencies led to the dismantling of a large-scale fraud operation, which impacted victims throughout the United States.<\/span><\/p>\n

Deirdre Fike, the Assistant Director in Charge of the FBI\u2019s Los Angeles Field Office, said. \u201cThe actions of the defendants, some of whom became millionaires through the scheme, specifically targeted and victimized America\u2019s small businesses and charities.\u201d <\/span><\/p>\n

The indictment outlines a scheme in which telemarketers at a series of companies called victim organizations and claimed to be their regular supplier of toner or affiliated with those suppliers. <\/span><\/p>\n

The telemarketers typically told employees at the victim companies that the price of toner had increased and they had not been notified, however, the victims now had a chance to purchase toner at the previous, lower price. <\/span><\/p>\n

Believing that they were dealing with their regular supplier of toner supplies, employees at the victim companies signed order confirmation forms, which prompted Michael\u2019s company to ship toner to victims and send invoices that demanded payment at inflated prices. <\/span><\/p>\n

When the victim companies realized they had been scammed, they called IDC to complain. The victims were told IDC could not cancel the order or refund money because the victims had signed order confirmation forms, according to the indictment, which further alleges that IDC failed to disclose its relationships to the telemarketing companies that had actually brokered the fraudulent deals. <\/span><\/p>\n

In many cases, the indictment alleges, IDC employees threatened victims with collections or legal action if they did not pay an invoice. In the cases where IDC agreed to take toner back, victims were forced to pay significant \u201crestocking fees.\u201d <\/span><\/p>\n

The indictment alleges that most victims received toner at no extra cost as part of their printer or copier service agreements. <\/span><\/p>\n

The indictment alleges the telemarketers knew there had not been a price increase for toner, and failed to disclose that the prices they were charged were two to ten times the regular cost of toner. Another aspect of the fraud was that the telemarketers failed to disclose that they were affiliated with IDC.<\/span><\/p>\n

In a series of court orders dating back to November 1988, Michaels and his companies were prohibited from making false statements \u2013 such as that they were a usual supplier of photocopier supplies or that there had been price change \u2013 and they were required to provide oversight to \u201cindependent sales companies.\u201d <\/span><\/p>\n

Michaels allegedly violated these court orders by working with and providing financing to independent sales companies that were engaged in deceptive and fraudulent practices, despite the fact that IDC received thousands of complaints from victims claiming they had been defrauded.<\/span><\/p>\n

The defendants named in the indictment are:<\/span><\/strong><\/p>\n