FROM: U.S. DEPARTMENT OF JUSTICE
Monday, July 1, 2013
Three Florida Residents Arrested on Charges of Fraud
Indictment Alleges That Defendants Operated Fraudulent Companies for Years Despite December 2000 Court Order
Three individuals charged in connection with operating a series of fraudulent business opportunity companies were arrested Friday following their indictment by a federal grand jury in Miami on June 25, 2013, the Justice Department and the U.S. Postal Inspection Service announced today. Mitchell Berman (aka Brian Griffin), of Boca Raton, Fla., Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo), of Coconut Creek, Fla., and Steven Axelrod (aka Michael Hutton), of Wellington, Fla., were arrested and charged with conspiracy to commit mail fraud and mail fraud. Mitchell Berman was also charged with criminal contempt of court.
The indictment alleges that the defendants operated a series of fraudulent companies that sold coffee display racks business opportunities. Buyers were told they would receive display racks and packets of coffee, as well as assistance in establishing and maintaining a business selling the coffee.
Beginning in August 2000 and continuing through October 2011, the indictment charges that Berman, Gallo, and Axelrod operated a series of five coffee display rack business opportunity companies: Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee and South Beach Coffee. The business opportunities the defendants sold cost a minimum of approximately $10,000. Each company operated for six months to a year, and after one company closed, the next opened.
The indictment alleges that Berman and Gallo ran the companies, while working as salesman together with Axelrod. All three defendants allegedly made numerous false statements to potential purchasers of the business opportunities to induce them to buy. Among the misrepresentations alleged in the indictment are that purchasers would likely 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 was violating a December 2000 federal court order barring him from misrepresenting profits, locations, and other aspects of business opportunities.
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 allegedly used aliases and gave out false addresses for the company. The indictment alleges that 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.
"The Department of Justice is committed to protecting consumers from business opportunity fraud schemes," said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. "As this indictment demonstrates, we will continue to prosecute individuals who seek to swindle innocent Americans out of their hard-earned money."
All three defendants were charged with conspiracy to commit mail fraud. In addition, Berman was charged with 8 counts of mail fraud and 9 counts of criminal contempt; Gallo was charged with 8 counts of mail fraud; and Axelrod was charged with 4 counts of mail fraud. If convicted, Berman, Gallo, and Axelrod face a maximum statutory term of 20 years in prison, a possible fine, and mandatory restitution on each conspiracy and mail fraud count. Berman faces a maximum statutory term of up to life in prison, a possible fine, and mandatory restitution on each of the criminal contempt counts.
"Business opportunity schemers use deceit to target and victimize hard-working Americans who are seeking opportunities to better provide for themselves and their families," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. "We will continue to vigorously pursue these individuals who seek to steal the American Dream from their victims."
"Cases like this one illustrate the Postal Inspection Service’s dedication to investigating business opportunity fraud that insidiously targets innocent victims," said Ronald Verocchio, U.S. Postal Inspector in Charge in Miami.
The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants.
Acting Assistant Attorney Stuart Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by Assistant Director Richard Goldberg and Trial Attorney Cindy Cho of the Consumer Protection Branch of the Civil Division of the Department of Justice.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.