Gilbert Michaels, Made $126 Million On Overpriced Printer Toner Scam
A 79-year-old toner salesman was sentenced to four years in
prison for running a decades-long, multimillion-dollar scam that caused tens of
thousands of small businesses and charities to pay hugely inflated prices for
printer cartridges.
Gilbert Michaels of West Los Angeles was accused of
utilizing boiler-room telemarketing businesses to dupe victims into paying as
much as 10 times the retail price for toner, federal prosecutors said. He was
convicted with six others of conspiracy, mail fraud and money laundering in
December 2019.
Michaels’s operation dates back to the 1970s. Prosecutors
say he may have defrauded more than 50,000 victims around the country over the
years. In one six-year stretch, prosecutors said Michaels sold $126 million
worth of toner to unsuspecting victims.
Among the victims were a YMCA, a California country club, a
Christian preschool in Alabama, a tow-truck company and a steelworkers union
local in Kentucky.
In pre-sentencing court filings, Michaels’s attorneys said
their client was a Navy veteran in poor health. They said that the charges
against him were rooted in the cutthroat nature of the toner business and that
many of the allegations were based on accusations from biased competitors.
Michaels’s lead attorney, Paul Meyer, declined to comment.
During a six-week trial, prosecutors said Michaels’s
companies, IDC Servco and Mytel International, handled billing and shipping of
the toner cartridges, while relying on separate
boiler-room outfits to make the sales.
As part of the scam, the telemarketers would pretend to be
representatives of toner-supply companies many of the businesses already had
contracts with. The telemarketers would then tell the victims that the price of
toner had increased, but they could buy it at the previous, lower price,
prosecutors said.
Believing they were dealing with their regular suppliers,
the victims would sign order confirmation forms. IDC would then ship toner to
victims along with highly inflated invoices. When the companies would complain,
IDC would threaten legal action or to turn them over to collection agencies,
prosecutors said. If IDC did agree to take the toner back, it would demand
significant “restocking fees,” prosecutors said.
Authorities caught on to the scheme in one case when IDC
sent inflated invoices to a southern California storage company that only used
typewriters to do business, according to court documents.
One aspect of the fraud was that the telemarketers didn’t
disclose they were working with IDC. Prosecutors said this was direct violation
of several court orders following a Federal Trade Commission probe in the late
1980s, in which Michaels and his companies were required to use independent
sales companies and were prohibited from making false statements.
The company had reached similar agreements over the years
following investigations by officials in several states.
The six other co-conspirators operated the boiler-room call
centers, prosecutors said.
Comments
Post a Comment