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Monetary crime: California man, 79, sentenced to four years in jail for inflating printer toner costs to small companies and charities

It was the worst jam.

A 79-year-old toner salesman was sentenced to four years in prison for committing a decade-long multi-million dollar fraud that resulted in tens of thousands of small businesses and charities overcharging printer cartridges.

Gilbert Michaels, of west Los Angeles, was accused of using telemarketing stores in boiler rooms to induce victims to pay ten times the retail price of toner, federal prosecutors said. In December 2019, he and six others were convicted of conspiracy, postal fraud and money laundering.

Michaels' operation dates back to the 1970s. Prosecutors say he has defrauded more than 50,000 victims across the country over the years. Over a six-year period, prosecutors said Michaels sold $ 126 million worth of toners to unsuspecting victims.

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Gilbert Michaels, of West Los Angeles, was accused of using telemarketing stores in boiler rooms to induce victims to pay ten times the retail price of toner.

Among the victims were a YMCA, a California country club, a Christian preschool in Alabama, a tow truck company and a local steelworkers union in Kentucky.

In the court records prior to the verdict, Michaels' attorneys said their client was a Navy veteran in poor health. They said the allegations against him were based on the breakneck nature of the toner sales business and many of the allegations were based on allegations from biased competitors.

Michaels & # 39; senior attorney Paul Meyer declined to comment.

During a six-week trial, prosecutors said that Michaels' companies, IDC Servco and Mytel International, handled billing and shipping of the toner cartridges while relying on separate boiler room equipment for sales.

As part of the scam, the telemarketers pretended to be representatives of toner suppliers with whom many of the companies already had contracts. The telemarketers would then tell the victims the toner price had gone up, but they could buy it at the previous, lower price, prosecutors said.

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IDC sent inflated bills to a Southern California storage company that only used typewriters for business, according to court documents.

Believing that they were dealing with their regular suppliers, the victims signed order confirmation forms. IDC then sent toners to the victims along with heavily inflated bills. If the companies complained, IDC would threaten legal action or hand them over to debt collection agencies, prosecutors said. If IDC agreed to take back the toner, they would charge substantial "restocking fees," prosecutors said.

Authorities became aware of the system in one case when IDC was sending inflated bills to a Southern California warehouse company that only used typewriters for business, according to court documents.

One aspect of the fraud was that the telemarketers did not disclose that they work with IDC. Prosecutors said this was a direct violation of several court orders following an investigation by the Federal Trade Commission in the late 1980s that asked Michaels and his companies to hire independent sales companies and were prohibited from making false statements.

The company had made similar agreements over the years following investigations by officials in several states.

The six other co-conspirators operated the call centers in the boiler room, the prosecutor said.

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