9TH PERSON SENTENCED IN BUSINESS OPPORTUNITY VENTURES FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 13, 2013

Ninth Individual Sentenced in Connection with Costa Rica-based Business Opportunity Ventures That Defrauded Americans

Michael Kerry Deevy, a Canadian citizen, was sentenced today in connection with a series of business opportunity fraud ventures based in Costa Rica, the Justice Department and the U.S. Postal Inspection Service announced.  Beginning in 2006, Deevy and his co-conspirators in Costa Rica are alleged to have fraudulently induced purchasers in the U.S. to buy business opportunities from companies known as Cards-R-Us Inc., Premier Cards Inc. and Nation West.  The business opportunities cost purchasers thousands of dollars each, with most paying at least $10,000.  Today’s sentencing forms part of the government’s continued nationwide crackdown on business opportunity fraud.

“Business opportunity fraud schemes such as this one can crush the dreams – and wipe out the savings – of Americans who simply want to operate their own small businesses,” said Stuart F. Delery, Assistant Attorney General for the Civil Division.  “The Department of Justice will continue to prosecute those who engage in these schemes, whether they set up shop here or abroad.”

“Business opportunity schemes target believers in a system that rewards those who are willing to sacrifice and work hard in the hope of getting ahead,” said U.S. Attorney for the Southern District of Florida Wifredo Ferrer.  “In this particular case, the business opportunity fraud ventures were based in Costa Rica and targeted purchasers in the United States, including South Florida.  Today’s sentence will hopefully send a message to those who are contemplating engaging in schemes such as this that, no matter where you are, we will pursue and prosecute you and bring you to justice for these illegal schemes.”

Deevy was sentenced by U.S. District Court Judge Patricia A. Seitz in Miami to 60 months in prison and 5 years’ supervised release.  Deevy also was ordered to pay $4,541,914 in restitution.  Prior to Deevy’s sentencing today, 11 other individuals were charged in connection with related business opportunity fraud ventures based in Costa Rica.  Deevy is the ninth of those individuals to be convicted and sentenced in the U.S.

On April 11, Deevy pleaded guilty to one count of conspiracy, three counts of mail fraud and nine counts of wire fraud in connection with the business opportunity scheme.  Deevy was arrested in Costa Rica in 2011 and extradited to the U.S. in 2012 following his indictment by a federal grand jury in Miami on Nov. 29, 2011.  The indictment alleged that Deevy and his co-conspirators purported to sell greeting card and vending machine business opportunities, including assistance in establishing, maintaining and operating these businesses.  Each company operated for several months, and after one company closed, another one opened.

Co-conspirators at the companies made numerous false statements to potential purchasers of the business opportunities.  They indicated that purchasers likely would earn substantial profits; prior purchasers of the business opportunities were earning substantial profits; purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the companies worked with third party “locators” familiar with the potential purchasers’ areas who would secure, or had already secured, high-traffic locations for the prospective buyers’ merchandise display racks or machines.

In addition to these “locators,” the companies also employed various other types of sales representatives, including fronters, references and closers.  Fronters spoke to prospective purchasers when they initially contacted the company in response to an advertisement.  References told potential buyers that they had purchased one of the business opportunities and were making a profit.  Closers subsequently spoke to potential purchasers to finalize deals.  In pleading guilty, Deevy admitted that he was a fronter and reference for Cards-R-Us Inc., Premier Cards Inc. and Nation West.

“This investigation shows the resolve of the U.S. Postal Inspection Service to protect the American public from predatory business opportunity frauds,” said Ronald Verrochio, U.S. Postal Inspector in Charge, Miami Division.  “We will continue to work with our law enforcement partners in the United States and overseas to root out these schemes.”

Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service.  The case was prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Alan Phelps with the Consumer Protection Branch of the U.S. Department of Justice’s Civil Division.