It was the worst kind of paper jam.
A 79-year-old toner salesman was sentenced to four years in prison for executing a multimillion-dollar scam that caused tens of thousands of small businesses and charities to pay heavily inflated prices for printer cartridges.
Gilbert Michaels, of West Los Angeles, was accused of using telemarketing companies for boilers to trick victims into paying up to ten times the retail price of the toner, federal prosecutors said. In December 2019 he was convicted with six more people for conspiracy, mail fraud and money laundering.
Michaels’ operation dates back to the 1970s. Prosecutors say he may have defrauded more than 50,000 victims nationwide over the years. In a span of six years, prosecutors said Michaels sold $ 126 million worth of toner to carefree victims.
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Gilbert Michaels of West Los Angeles was accused of using boiler telemarketing companies to trick victims into paying up to ten times the retail price of the toner.
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Among the victims were a YMCA, a California country club, a Christian preschool in Alabama, a tow truck company, and a steel workers union in Kentucky.
In the pre-sentencing court records, Michaels’ attorneys said his client was a Navy veteran with poor health. They said the charges against him had their roots in the nature of the toner sales business and that many of the allegations were based on allegations of skewed competitors.
Michaels ’lead attorney, Paul Meyer, declined to comment.
During a six-week trial, prosecutors said Michaels’ companies, IDC Servco and Mytel International, handled the billing and shipping of toner cartridges, while relying on separate boiler room equipment to make sales. .
As part of the scam, telemarketers would claim to be representatives of toner supply companies with many of the companies that already had contracts. Then, telemarketers would tell victims that the price of toner had risen, but that they could buy it at the previous and lower price, according to prosecutors.
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IDC sent inflated bills to a Southern California storage company that only used typewriters to do business, according to court documents.
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Believing that they were dealing with their usual suppliers, the victims would sign the order confirmation forms. IDC would then send toner to the victims along with heavily inflated bills. When companies would complain, IDC would threaten legal actions or hand them over to collection agencies, prosecutors said. If IDC agreed to recover the toner, they would demand significant “replacement rates,” prosecutors said.
Authorities took up the scheme in a case when IDC sent inflated bills 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 did not reveal that they were working with IDC. Prosecutors said it was a direct violation of several court orders following an investigation by the Federal Trade Commission in the late 1980s, in which Michaels and his companies were required to use independent sales companies. and were forbidden to make false statements.
The company had reached similar agreements over the years following investigations by officials from several states.
The other six conspirators operated the boiler room call centers, prosecutors said.