Wednesday, May 11, 2011

Man Convicted of Eleven Counts of Fraud in Connection with Business Opportunity Scheme

Yesterday, May 10, 2011, a federal jury in Miami convicted Sirtaj Mathauda of nine counts of mail fraud, two counts of wire fraud, and conspiracy related to a fraudulent business opportunity scheme according to a Department of Justice Press Release.

The complaint charged Mathauda and his co-conspirators of operating bogus companies known as Apex Management Group, USA Beverages Inc., Omega Business Systems and Nation West Distribution. According to the complaint, “the companies operated largely out of phone rooms in Costa Rica and marketed to residents in the United States.”

The companies sold “business opportunities” to own and operate vending machine routes, beverage distributorships, and greeting card distributorships. These opportunities were sold as a complete package, including retail display racks or vending machines, access to high-traffic locations, and assistance in maintaining and operating such businesses. However, the promises of good locations and business assistance were fabricated.

Based on evidence presented at trial, salesmen in the phone rooms told potential customers that the companies were located in the United States and would provide profitable distribution routes for either the vending machines or retail display racks. Further, salesmen asserted that the companies had a track record of success. This so-called “record of success” was backed by phony references pretending to be satisfied customers of the companies.

Mathauda owned, managed or worked at the fraudulent companies in Costa Rica between 2004 and early 2009. Several of his co-conspirators Dilraj “Rosh” Mathauda, Stephen Schultz, Silvio Carrano, Donald Williams, Patrick Williams and Gregory Fleming, previously pled guilty in Miami in connection with their roles in these fraudulent business opportunity scams.

All of the defendants were charged as part of the government’s continued nationwide crackdown on business opportunity fraud. A stance supported by Tony West, Assistant Attorney General for the Justice Department’s Civil Division who stated that “The Department of Justice will continue to prosecute aggressively those who are exploiting consumers to make a quick buck for themselves.” The DOJ is honing in on business opportunity fraud because it “imposes major financial hardship on innocent, hardworking victims” especially now during tough economic times.

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