Federal and International

Three Florida Residents Plead Guilty to Fraud Charges Related to Bogus Business Opportunities

Washington, DC—(ENEWSPF)—February 14, 2014. Three individuals charged in connection with operating a series of fraudulent business opportunity companies pleaded guilty this week in the U.S. District Court for the Southern District of Florida.  Mitchell Berman (aka Brian Griffin) of Boca Raton, Fla., and Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo) of Coconut Creek, Fla., pleaded guilty this morning to one count of conspiracy to commit mail fraud.  Steven Axelrod (aka Michael Hutton) of Wellington, Fla., yesterday entered a plea to one count of conspiracy to commit mail fraud.  With their pleas, the defendants admit they operated a series of fraudulent companies that sold coffee display rack business opportunities to buyers who were told falsely that they would receive display racks and packets of coffee, as well as assistance in establishing and maintaining a business selling the coffee.  The business opportunities the defendants sold cost a minimum of approximately $10,000 each.

The defendants admit that they operated, beginning in August 2000 and continuing through October 2011, a series of five companies: Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee and South Beach Coffee.  Each company operated for six months to a year, and after one company closed, the next one opened. 

The defendants admit that Berman and Gallo ran the companies, while also working as salesmen together with Axelrod.  All three defendants made numerous false statements to potential purchasers of the business opportunities to induce them to buy.  Among the false statements were that purchasers likely would earn substantial profits, that prior purchasers of the business opportunities were earning substantial profits, that purchasers would be given lucrative “commercial accounts” and that the company would provide assistance in establishing and maintaining the business.  According to the indictment, purchasers made little to no money on their investments, were unable to find profitable locations or accounts and were not provided the support promised by defendants.  In making misrepresentations to potential purchasers, Berman also was violating a December 2000 federal court order barring him from misrepresenting profits, locations and other aspects of business opportunities. 

Also according to the indictment, once purchasers began filing complaints with the Better Business Bureau or state authorities, the defendants shut down each of their companies in turn, and opened the next one.  In order to evade detection, all the defendants used aliases and gave out false addresses for the companies.  Berman and Gallo also avoided listing their own names on corporate and promotional documents and instead paid people who did not work at the companies to be titular presidents. 

All three defendants will be sentenced later this year by Judge William J. Zloch in Ft. Lauderdale, Fla.  Each faces a maximum statutory term of 20 years in prison, a possible fine and mandatory restitution.

Assistant Attorney General of the Justice Department’s Civil Division Stuart F. Delery commended the investigative efforts of the U.S. Postal Inspection Service.  The case is being prosecuted by Trial Attorneys Cindy Cho and Chris Parisi of the Consumer Protection Branch of the Justice Department’s Civil Division. 

Source: justice.gov