FROM: COMMODITY FUTURES TRADING COMMISSION
CFTC Orders Florida Firms, Joseph Glenn Commodities LLC and JGCF LLC, and Owners Scott Newcom and Anthony Pulieri to Pay over $1 Million in Restitution and Penalties for Fraudulent Off-Exchange Transactions in Precious Metals with Retail Customers
Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against two Boca Raton, Fla., companies, Joseph Glenn Commodities LLC (Joseph Glenn) and JGCF LLC (JGCF), and their sole owners and principals, Scott Newcom and Anthony Pulieri (the Respondents) for engaging in illegal, fraudulent off-exchange financed transactions in precious metals with retail customers.
The CFTC Order, filed on March 27, 2013, requires Joseph Glenn, JGCF, Newcom, and Pulieri to pay approximately $635,000 in restitution to customers for their losses and to return approximately $330,000 remaining in customers’ accounts. The Order requires Pulieri to pay a civil monetary penalty of $100,000. The Order also permanently prohibits the Respondents from registering with the CFTC and imposes a five-year trading ban on trading for others. In addition, the Order prohibits the Respondents from violating the Commodity Exchange Act, as charged, and requires them to comply with certain undertakings, including fully and expeditiously cooperating with the CFTC.
The Illegal and Fraudulent Transactions
The CFTC Order finds that from July 2011 through June 2012, the Respondents solicited retail customers, generally by telephone or through Joseph Glenn’s website, to buy physical precious metals such as gold, silver, copper, platinum, or palladium in what are known as off-exchange leverage transactions. According to the Order, the customers paid the Respondents a portion of the purchase price for the metals, and Joseph Glenn and JGCF purportedly financed the remainder of the purchase price, while charging the customers interest on the amount they purportedly loaned to customers.
The CFTC Order states that such financed off-exchange transactions with retail customers have been illegal since July 16, 2011, when certain amendments of the Dodd-Frank Wall Street and Consumer Protection Act of 2010 (Dodd-Frank Act) became effective. As explained in the Order, financed transactions in commodities with retail customers like those engaged in by the Respondents must be executed on, or subject to, the rules of an exchange approved by the CFTC. Since the Respondents’ transactions were done off-exchange with retail customers, they were illegal.
Furthermore, the CFTC Order states that when Joseph Glenn and JGCF engaged in these illegal transactions they were acting as dealers for a metals merchant called Hunter Wise Commodities, LLC (Hunter Wise), which the CFTC charged with fraud and other violations in federal court in Florida on December 5, 2012 (see CFTC Press Release 6447-12). Hunter Wise was purportedly Joseph Glenn’s and JGCF’s source for the metal and the loans. As alleged in the CFTC Complaint against Hunter Wise and according to the CFTC Order in this case, however, neither Joseph Glenn, JGCF, nor Hunter Wise purchased or held metal on the customers’ behalf, or disbursed any funds to finance the remaining balance of the purchase price. The Order finds that the Respondents’ customers thus never owned, possessed, or received title to the physical commodities that they believed they purchased.
The Order also finds that the Respondents defrauded their customers by misrepresenting the profitability of the financed off-exchange transactions and failing to disclose associated commissions, service, and interest fees.
CFTC staff responsible for this matter are Jon J. Kramer, Joy H. McCormack, Elizabeth M. Streit, Scott R. Williamson, Rosemary Hollinger, and Richard Wagner.
Friday, March 29, 2013
Thursday, March 28, 2013
JUSTICE ISSUES BUSINESS REVIEW LETTER TO INTELLECTUAL PROPERTY EXCHANGE INTERNATIONAL
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, March 26, 2013
Justice Department Issues Business Review Letter to Intellectual Property Exchange International
Department Declines to State Enforcement Intentions Due to Business Model’s Uncertainties and Potential Competitive Concerns
WASHINGTON – The Department of Justice today declined to state its enforcement intentions regarding the implementation of a proposal submitted by IPXI Holdings LLC and its wholly-owned subsidiary Intellectual Property Exchange International Inc. (IPXI) to develop an exchange for the trading of unit license rights (ULRs) to sets of patents. The department said that although IPXI’s proposed exchange potentially could benefit the intellectual property (IP) marketplace and encourage innovation through increased licensing efficiency, sublicense transferability and greater transparency, it also potentially raises competitive concerns. Due to the inherent uncertainties and potential competitive concerns associated with IPXI’s novel business model, the department declined to state its enforcement intentions.
The department’s position was stated in a business review letter to counsel for IPXI from Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
IPXI proposes to create a proprietary market for patent licenses. To do so, the company intends to obtain exclusive patent licenses that it will then sublicense through the sale of tradable instruments called ULRs, which are standardized licenses for defined sets of patents and uses under terms and conditions set jointly with patent holders. As part of the process, IPXI will review the patent rights at issue by examining validity, current infringement and other issues, and determine market interest to license those patents.
IPXI may become the exclusive licensor of patents or patent bundles that might otherwise compete. IPXI has proposed certain procedures that might mitigate the likelihood that anticompetitive effects will materialize. However, because IPXI cannot predict in advance the patents or markets that might be at issue, the department is unable to engage in the fact-intensive analysis necessary to assess the likely competitive effects of the proposal. In addition, given the novelty of IPXI’s proposal, it is possible that other potential competitive concerns may later emerge once IPXI’s platform is operational.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Tuesday, March 26, 2013
Justice Department Issues Business Review Letter to Intellectual Property Exchange International
Department Declines to State Enforcement Intentions Due to Business Model’s Uncertainties and Potential Competitive Concerns
WASHINGTON – The Department of Justice today declined to state its enforcement intentions regarding the implementation of a proposal submitted by IPXI Holdings LLC and its wholly-owned subsidiary Intellectual Property Exchange International Inc. (IPXI) to develop an exchange for the trading of unit license rights (ULRs) to sets of patents. The department said that although IPXI’s proposed exchange potentially could benefit the intellectual property (IP) marketplace and encourage innovation through increased licensing efficiency, sublicense transferability and greater transparency, it also potentially raises competitive concerns. Due to the inherent uncertainties and potential competitive concerns associated with IPXI’s novel business model, the department declined to state its enforcement intentions.
The department’s position was stated in a business review letter to counsel for IPXI from Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
IPXI proposes to create a proprietary market for patent licenses. To do so, the company intends to obtain exclusive patent licenses that it will then sublicense through the sale of tradable instruments called ULRs, which are standardized licenses for defined sets of patents and uses under terms and conditions set jointly with patent holders. As part of the process, IPXI will review the patent rights at issue by examining validity, current infringement and other issues, and determine market interest to license those patents.
IPXI may become the exclusive licensor of patents or patent bundles that might otherwise compete. IPXI has proposed certain procedures that might mitigate the likelihood that anticompetitive effects will materialize. However, because IPXI cannot predict in advance the patents or markets that might be at issue, the department is unable to engage in the fact-intensive analysis necessary to assess the likely competitive effects of the proposal. In addition, given the novelty of IPXI’s proposal, it is possible that other potential competitive concerns may later emerge once IPXI’s platform is operational.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Wednesday, March 27, 2013
COMPUTER COMPANY AND OWNER SENTENCED FOR TRAFFICKING IN COUNTERFEIT GOODS AND ENVIRONMENTAL CRIMES
FROM: U.S. ENVIRONMENTAL PROTECTION AGENCY
Michigan Computer Company Owner Sentenced for International Environmental, Counterfeiting Crimes
WASHINGTON — A Michigan computer company and its owner were sentenced today for trafficking in counterfeit goods and services and violating environmental laws.
U.S. District Judge David M. Lawson sentenced Mark Jeffrey Glover, to 30 months in prison and a $10,000 fine, and his company, Discount Computers, Inc. (DCI), a $2 million fine with $10,839 in restitution to Mich. landlord, for trafficking in counterfeit goods and services. DCI was also sentenced for storing and disposing of hazardous waste without a permit. Glover pleaded guilty to the charges on his behalf and that of his company in October 2012.
DCI, headquartered in Canton, Mich., with warehouses in Maryland Heights, Mo., and Dayton, N.J., operated as a broker of used electronic components, including computers and televisions. DCI resold working and disassembled broken items, selling them for scrap. A large part of DCI’s business involved exporting used cathode ray tube (CRT) monitors to countries in the Middle East and Asia.
Egypt prohibits the importation of computer equipment which is more than five years old. To evade this requirement, all three DCI locations replaced the original factory labels on used CRT monitors with counterfeit labels, which reflected a more recent manufacture date. Over a five-year period, DCI sent at least 300 shipments to Egypt, with a total shipment value of at least $2.1 million, constituting more than 100,000 used CRTs monitors.
Under federal law it is illegal to knowingly use a counterfeit mark on or in connection with goods and services for the purpose of deceit or confusion. It is also illegal to store and dispose of hazardous waste, which includes certain electronic waste, or e-waste, without a permit. Glass from older CRT monitors is known to contain levels of lead, which is toxic hazardous waste. When deposited in a landfill the lead can leach out and contaminate drinking water supplies.
As a result, these types of monitors are required to be disposed of as hazardous waste under the Resource Conservation and Recovery Act. By exporting older CRTs with fraudulent manufacture dates, Mark Jeffrey Glover sent a large quantity of older e-waste overseas which was subjected to improper recycling, increasing the potential for environmental and human exposure to hazardous materials.
"EPA is committed to taking action on illegal exports of e-waste because they often end up in countries that lack the capacity to manage them safely," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "Today’s sentence, the first in an e-waste case, should serve as a warning that if you are caught illegally exporting hazardous e-waste for profit, there will be serious consequences."
"Mr. Glover and his company falsified labels to conceal the age of computer monitors and their potential for hazardous waste," said Barbara L. McQuade, United States Attorney for the Eastern District of Michigan. "We hope this case will encourage others to comply with laws designed to protect drinking water and prevent human exposure to toxic waste."
"When potentially hazardous e-waste is not properly disposed of, human lives can seriously be impacted," said William Hayes, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Detroit. "The investigation confirmed that the defendant repeatedly and illegally exported used cathode ray tubes overseas. Homeland Security Investigations stands with our law enforcement partners ready to prevent any company from ignoring U.S. controls to export hazardous e-waste."
E-waste is a global concern because used electronic equipment contains more than 1,000 different substances including toxic heavy metals and organics that, if disposed of improperly, can cause significant pollution problems. Improper e-waste disposal is common in third world and developing countries because they are ill equipped for proper recycling, refurbishing, and disposal. It is also common in these countries to find black-market recycling groups that extract valuable metals from e-waste without regard for the safety of their impoverished employees who are exposed directly to toxic materials.
The case was prosecuted by the U.S. Attorney's Office in the Eastern District of Michigan by Assistant U.S. Attorney Jennifer Blackwell. The case was investigated by agents of the U.S. Environmental Protection Agency's Criminal Investigation Division and U.S. Department of Homeland Security–Homeland Security Investigations, Detroit
Michigan Computer Company Owner Sentenced for International Environmental, Counterfeiting Crimes
WASHINGTON — A Michigan computer company and its owner were sentenced today for trafficking in counterfeit goods and services and violating environmental laws.
U.S. District Judge David M. Lawson sentenced Mark Jeffrey Glover, to 30 months in prison and a $10,000 fine, and his company, Discount Computers, Inc. (DCI), a $2 million fine with $10,839 in restitution to Mich. landlord, for trafficking in counterfeit goods and services. DCI was also sentenced for storing and disposing of hazardous waste without a permit. Glover pleaded guilty to the charges on his behalf and that of his company in October 2012.
DCI, headquartered in Canton, Mich., with warehouses in Maryland Heights, Mo., and Dayton, N.J., operated as a broker of used electronic components, including computers and televisions. DCI resold working and disassembled broken items, selling them for scrap. A large part of DCI’s business involved exporting used cathode ray tube (CRT) monitors to countries in the Middle East and Asia.
Egypt prohibits the importation of computer equipment which is more than five years old. To evade this requirement, all three DCI locations replaced the original factory labels on used CRT monitors with counterfeit labels, which reflected a more recent manufacture date. Over a five-year period, DCI sent at least 300 shipments to Egypt, with a total shipment value of at least $2.1 million, constituting more than 100,000 used CRTs monitors.
Under federal law it is illegal to knowingly use a counterfeit mark on or in connection with goods and services for the purpose of deceit or confusion. It is also illegal to store and dispose of hazardous waste, which includes certain electronic waste, or e-waste, without a permit. Glass from older CRT monitors is known to contain levels of lead, which is toxic hazardous waste. When deposited in a landfill the lead can leach out and contaminate drinking water supplies.
As a result, these types of monitors are required to be disposed of as hazardous waste under the Resource Conservation and Recovery Act. By exporting older CRTs with fraudulent manufacture dates, Mark Jeffrey Glover sent a large quantity of older e-waste overseas which was subjected to improper recycling, increasing the potential for environmental and human exposure to hazardous materials.
"EPA is committed to taking action on illegal exports of e-waste because they often end up in countries that lack the capacity to manage them safely," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "Today’s sentence, the first in an e-waste case, should serve as a warning that if you are caught illegally exporting hazardous e-waste for profit, there will be serious consequences."
"Mr. Glover and his company falsified labels to conceal the age of computer monitors and their potential for hazardous waste," said Barbara L. McQuade, United States Attorney for the Eastern District of Michigan. "We hope this case will encourage others to comply with laws designed to protect drinking water and prevent human exposure to toxic waste."
"When potentially hazardous e-waste is not properly disposed of, human lives can seriously be impacted," said William Hayes, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Detroit. "The investigation confirmed that the defendant repeatedly and illegally exported used cathode ray tubes overseas. Homeland Security Investigations stands with our law enforcement partners ready to prevent any company from ignoring U.S. controls to export hazardous e-waste."
E-waste is a global concern because used electronic equipment contains more than 1,000 different substances including toxic heavy metals and organics that, if disposed of improperly, can cause significant pollution problems. Improper e-waste disposal is common in third world and developing countries because they are ill equipped for proper recycling, refurbishing, and disposal. It is also common in these countries to find black-market recycling groups that extract valuable metals from e-waste without regard for the safety of their impoverished employees who are exposed directly to toxic materials.
The case was prosecuted by the U.S. Attorney's Office in the Eastern District of Michigan by Assistant U.S. Attorney Jennifer Blackwell. The case was investigated by agents of the U.S. Environmental Protection Agency's Criminal Investigation Division and U.S. Department of Homeland Security–Homeland Security Investigations, Detroit
Monday, March 25, 2013
HOSPICE BUSINESSES PAY $12 MILLION SETTLE FALSE CLAIMS ACT ALLEGATIONS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, March 20, 2013
Hospice of Arizona and Related Entities Pay $12 Million to Resolve False Claims Act Allegations
Hospice of Arizona L.C., along with a related entity, American Hospice Management LLC, and their parent corporation, American Hospice Management Holdings LLC, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to the Medicare program for ineligible hospice services, the Justice Department announced today.
The Medicare hospice benefit is available for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain, and stress of a terminal illness. Today’s settlement resolves allegations that Hospice of Arizona, and its related entities, submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care or for whom the hospice billed at a higher reimbursement rate than it was entitled.
The government alleged that Hospice of Arizona and its related entities, engaged in certain practices that resulted in the admission of ineligible patients or inflated bills, including pressuring staff to find more patients eligible for Medicare, adopting procedures that delayed and discouraged staff from discharging patients from hospice when they were no longer appropriate for such services, and not implementing an adequate compliance program that might have addressed these problems. As part of the settlement, American Hospice Management Holdings has agreed to enter into a corporate integrity agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
"This settlement is the result of the Justice Department’s efforts to prevent the misuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons at the end of their lives," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division.
"The hospice industry relies on the Medicare Trust Fund, and payments for unnecessary services jeopardize its financial viability," said U.S. Attorney for the District of Maryland Rod J. Rosenstein.
"Medicare and taxpayers depend on hospice agencies to provide medically appropriate services to terminally ill patients," said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona. "When providers place more importance on the bottom line than on the care of these vulnerable patients, they can expect to face serious penalties."
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.
The allegations settled today arose from a lawsuit filed by a former Hospice of Arizona, L.C. employee, Ellen Momeyer, under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery. The whistleblower in this case will receive $1.8 million. The case is United States ex rel. Momeyer v. Hospice of Arizona, L.C., et al., No. 1:10-cv-280 (D. Md.).
This matter was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Maryland, and the Office of the Inspector General for the Department of Health and Human Services.
The claims settled by this agreement are allegations only; there has been no determination of liability
Wednesday, March 20, 2013
Hospice of Arizona and Related Entities Pay $12 Million to Resolve False Claims Act Allegations
Hospice of Arizona L.C., along with a related entity, American Hospice Management LLC, and their parent corporation, American Hospice Management Holdings LLC, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to the Medicare program for ineligible hospice services, the Justice Department announced today.
The Medicare hospice benefit is available for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain, and stress of a terminal illness. Today’s settlement resolves allegations that Hospice of Arizona, and its related entities, submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care or for whom the hospice billed at a higher reimbursement rate than it was entitled.
The government alleged that Hospice of Arizona and its related entities, engaged in certain practices that resulted in the admission of ineligible patients or inflated bills, including pressuring staff to find more patients eligible for Medicare, adopting procedures that delayed and discouraged staff from discharging patients from hospice when they were no longer appropriate for such services, and not implementing an adequate compliance program that might have addressed these problems. As part of the settlement, American Hospice Management Holdings has agreed to enter into a corporate integrity agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
"This settlement is the result of the Justice Department’s efforts to prevent the misuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons at the end of their lives," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division.
"The hospice industry relies on the Medicare Trust Fund, and payments for unnecessary services jeopardize its financial viability," said U.S. Attorney for the District of Maryland Rod J. Rosenstein.
"Medicare and taxpayers depend on hospice agencies to provide medically appropriate services to terminally ill patients," said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona. "When providers place more importance on the bottom line than on the care of these vulnerable patients, they can expect to face serious penalties."
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.
The allegations settled today arose from a lawsuit filed by a former Hospice of Arizona, L.C. employee, Ellen Momeyer, under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery. The whistleblower in this case will receive $1.8 million. The case is United States ex rel. Momeyer v. Hospice of Arizona, L.C., et al., No. 1:10-cv-280 (D. Md.).
This matter was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Maryland, and the Office of the Inspector General for the Department of Health and Human Services.
The claims settled by this agreement are allegations only; there has been no determination of liability
Sunday, March 24, 2013
MAN PLEADS GUILTY IN BUSINESS OPPORTUNITY FRAUD VENTURES CASE
FROM: U.S DEPARTMENT OF JUSTICE
Wednesday, March 20, 2013
Dual U.S.-Costa Rican Citizen Pleads Guilty in Connection with Costa Rica-based Business Opportunity Fraud Ventures
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
Sean Rosales pleaded guilty in Miami federal court to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Rosales, a dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities, was arrested in Chicago late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.
Eleven other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted in the United States.
"The Department of Justice is committed to cracking down on financial fraud, including business opportunity fraud schemes," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities."
Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.
Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.
"Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. "Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas."
" The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity schemes ," said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.
Wednesday, March 20, 2013
Dual U.S.-Costa Rican Citizen Pleads Guilty in Connection with Costa Rica-based Business Opportunity Fraud Ventures
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
Sean Rosales pleaded guilty in Miami federal court to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Rosales, a dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities, was arrested in Chicago late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.
Eleven other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted in the United States.
"The Department of Justice is committed to cracking down on financial fraud, including business opportunity fraud schemes," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities."
Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.
Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.
"Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. "Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas."
" The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity schemes ," said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.
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