Printer Toner $126M Fraud!
Printer toner can get expensive, so you’d do anything to buy it at a rather cheap rate right? Well federal prosecutors for a $126M printer toner fraud say the sales pitch went like this. “The price of printer toner has gone up, but customers can lock in at the lower rate they’ve been paying for the office supply.”
However, but the time that thousands of small businesses, charities and other companies had purchased orders for toner. The expensive toner which is used by many laser printers, photocopy machines, had seen the fine print it was too late for them.
Over a number of years
It turns out that they had been conned out of over $126M over 6 years, stating that the scheme had actually gone on for a number of decades according to the Justice Department.
The man, who prosecutors in the US say that the mastermind of the scheme was sent to federal prison for 4 years. Followed by 2 years of home confinement. The scheme consisted of telemarketers misrepresentation that they were affiliated with actual suppliers of printer toners. Forcing victims to pay for supplies that they didn’t actually need.
How?
The mastermind, Gilbert N. Michaels, was found guilty in 2019, which prosectors say that they defrauded more than 50,000 victims and led to the convictions of 6 other people. Sentencing was delayed due to COVID.
Michaels, 79, was owner and president of Mytel International, the telemarketing company involved in the scheme. He was also owner and president of IDC Servco, which fulfilled orders for the printer towner. According to a 2016 indictment.
Prosecutors say that both companies misled victims into believing they were connected with existing suppliers of their printer toner. Which many of them already receiving at no additional charge as part of the lease agreements for office equipment.
Federal prosecutors say that IDC Servco employees threatened to use a collections agency or take legal action if they refused to pay for the invoices of printer toner. Other cases victims were charged onerous restocking fees if they tried to return the toner, prosecutors said.
Sentencing
“Mr. Michaels led a conspiracy whose deceptive practices were particularly harmful to the small-business community,” Ciaran McEvoy, a spokesman for the U.S. attorney’s office in Los Angeles, said an email to the New York Times. “We will continue to vigorously prosecute these kinds of cases and obtain justice for victims.”
A lawyer for Mr. Michaels, who remains free because of medical reasons, said in a phone interview with the New York Times, that his client would appeal his sentence and conviction.
“We felt that the charges were overblown, for lack of a better term,” said the lawyer, Joel Levine.
Also, Mr Michaels was found by a federal jury, guilty, of 1 count of conspiracy to commit mail fraud, 10 counts of mail fraud and 5 counts of money laundering. The trial lasted 6 weeks.
Printer Toner Fines and Prison
So, Michaels has been ordered to pay a $200,000 fine and report to federal prison by Nov 1st. Michaels has several several medical conditions. Which include chronic obstructive pulmonary disease. He had a net worth of $6.7 million, according to the minutes of the trial.
Mr Michaels and 20 others accused of being connected to the scheme in 2016. After arrest the Huntington Beach Police Department called it “Operation Tone It Down.” While authorities had said at the time that Michaels was warned about deceptive telemarketing practices.
While, TonerNews.com, a website devoted to writing about printing supplies, called Mr. Michaels “the California toner pirate godfather”.
(NYT)
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