National Business Opportunity Fraud Scam Results in Indictments for Ten Individuals

Ten individuals have been charged in relation to a national business opportunity fraud scam that defrauded thousands of victims across the country, the Department of Justice announced this week in a release.

According to the indictment, managers, sales representatives and operators of companies associated with Multivend LLC, d/b/a Vendstar, made material misrepresentations to customers about the profits the customers would receive for bulk candy vending machines. During these calls, the various individuals would also falsely claim to operate their own profitable vending machine businesses.

Vendstar sales representatives promised to give customers the necessary equipment and supplies to operate a successful vending machine business, the indictment said. The companies affiliated with Vendstar had no special expertise in selecting locations for the machines, and would often place them in locations where the business owners had not consented to the placement of the machines. Many of the business owners soon demanded that the machines be removed, DOJ said.

The machines resulted in little business and Vendstar’s customers lost the bulk of their investments. According to DOJ, the typical Vendstar customer paid about $10,000 for the business opportunity.

“Business opportunity fraud is a serious crime that insidiously targets Americans in search of a better future for their families,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “We will continue to work with the Postal Inspection Service and use our law enforcement resources to investigate and uncover business opportunity fraud.”

Each of the defendants named in the indictment has been charged with conspiracy to commit mail and wire fraud, and an enhanced penalty for telemarketing, which would create a maximum sentence of 10 years in prison. Several defendants were also charged with mail fraud, and/or wire fraud, each of which carry a maximum of 20 years in prison.

"Business opportunity schemes, like this candy vending machine venture, take advantage of individuals through misrepresentations and outright fraud,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “Instead of becoming successful entrepreneurs, the individual investors become victims of fraud, often losing their life’s savings. In this way, business opportunity schemes tarnish the American Dream of success through hard work. We will help protect the investing public by prosecuting these cases aggressively.”