SANTA ANA, Calif. (CN) — Police rounded up 20 people Tuesday and charged them with a $126 million telemarketing scam that defrauded more than 50,000 victims by selling them toners and printers at grossly inflated prices.
The 30-count federal indictment unsealed after the early morning arrests charged 23 people with posing as their victims' regular suppliers of toner products and charging them as much as 10 times the retail price.
Lead defendant Gilbert N. Michaels, of West Los Angeles, started the scam in 1988 after being ordered by state and federal judges to stop running scams in toner products, the U.S. Attorney's Office said. He owned and operated IDC SERVCO, of Culver City, which sold toner to small businesses, charities such as Easter Seals Disability Services and the United Way, schools, churches, and city governments, prosecutors said.
Two more defendants have agreed to turn themselves in. One is on the lam.
The FBI praised the Huntington Beach Police Department, which began the investigation and participated with the FBI in the Tuesday arrests.
According to the U.S. Attorney's Office, the telemarketers called the small businesses, pretending to be their regular supplier, and told the victims that the price had increased but they had not been notified—but now they could get the stuff at a new lower price. Then they shipped the product at grossly inflated prices, and when the victims complained to IDC SERVCO, they were told there was nothing they could do — though IDC would sue them if they refused to pay.
All 23 are charged with conspiracy to commit mail fraud, and at least one count of mail fraud. Michaels also is charged with five counts of money laundering. Every count is punishable by up to 20 years in prison, except two of the money laundering counts, which are punishable by 10.
Here are the defendants:
Gilbert "Gil" N. Michaels, 73, of West Los Angeles, owner of G.N.M. Financial Services Inc., dba IDC SERVCO and Mytel International, Inc.;
Jerry P. Feldman, 61, of Mar Vista, a longtime associate of Michaels and vice president of IDC;
Anjanette S. Lester, 60, of Garden Grove, who owned Supply Processing Center, Inc. and Invoice Processing Center, Inc.;
Glen K. Katayama, 48, of Fullerton, who owned GK Ventures, Inc., Supply Management Center, and Copier Products Center;
Tiffany M. Ostrander, 32, of Newport Beach, who owned Epic Distribution, Inc. and Supply Fulfillment Center;
Ostrander's husband, Sean S. Moustakas, 35, of Newport Beach, who also owned and/or controlled Epic Distribution, Inc. and Supply Fulfillment Center;
James R. Milheiser, 49, of Huntington Beach, who owned and/or controlled Material Distribution Center, PDM Marketing, Bird Coop Industries, Inc., and Copier Products Center;
Thomas A. Sanetti, 49, of Huntington Beach, who also owned and/or controlled Material Distribution Center; Bird Coop Industries, Inc.; Copier Products Center, and West Coast Distribution and Uncaged Industries, Inc., who has agreed to surrender to authorities soon;
Cynthia A. Weekes, 47, of Pacific Palisades, who owned Coastal Distribution Center, Inc.;
Cynthia Weekes' husband, Michael B. Weekes, 44, of Pacific Palisades, who also owned Coastal Distribution Center, Inc., the one defendant who is still being sought;
Daniel C.J. Ellis, 59, of Folsom, who owned Turner Supply Company, Inc. and Tech Transfer, Inc. dba Delray Supply Company, who was expected to appear Wednesday in Federal Court in Sacramento;
Leah D. Johnson, 52, of Ignacio, Colo., who owned Capital Supply Center and LJT Distribution, Inc., who was expected to appear Tuesday in Federal Court in Durango, Colo.;
John A. Buzzard, 60, of San Diego, who also owned and/or controlled Capital Supply Center and LJT Distribution, Inc.;
Jonathan M. Brightman, 49, of West Lake Village, who owned Copy Com Distribution, Inc.; Independent Cartridge Supplier; and Corporate Products, who has agreed to surrender to authorities;
Stephen D. Paine, 51, of Hollywood, who owned Case Distribution Services, Inc.;
Sharon Scandaliato Virag, 51, of West Hills, who owned XL Supply, Inc.;
Glen M. Diamond III, 38, of Carlsbad, who owned Specialty Business Center; Specialty Office Products, Inc.; and Elite Office Supplies, Inc.;
Tammi L. Williams, 41, of Chino Hills, who was office manager at Elite Office Supply, and also worked at Specialty Business Center, Rancho Office Supply and Select Imaging Supplies;
Christina M. Cadena, 49, of Vista, who owned Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
Michelle C. Nunez, 53, of Menifee, who also owned and/or controlled Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
Francis "Frank" S. Scimeca, 51, of Woodland Hills, who owned Supply Central Distribution, Inc. and Priority Office Supply;
Cynda L. Hill, 43, of Rancho Cucamonga, who owned and/or controlled Distribution Service Center, Inc. and C&H Management; and Cynda Hill's husband, Henry L. Hill II, 44, of Rancho Cucamonga, who also owned and/or controlled Distribution Service Center, Inc., and C&H Management.
