Laguna Niguel : Arraignment Set for Monday in Fraud Case

A 61-year-old Laguna Niguel man is scheduled to be arraigned Monday in U.S. District Court in Los Angeles in connection with a mail fraud scheme in which businesses were swindled out of an estimated $20,000, authorities said.

Kenneth E. Phillips is accused of sending phony bills to companies for services never received or ordered, a Los Angeles city attorney’s office spokesman said.

In some cases, the name or logo of ChexSystems Inc., a legitimate company that has its headquarters in Minneapolis, was used. In others, the spokesman said, the named used was CheckSystems. The solicitations were made through a post office box in Los Angeles, the spokesman said.

Los Angeles City Atty. James K. Hahn said in a statement: “Phillips mailed phony invoices and solicitations in the guise of invoices to thousands of businesses for mechanical services on check protector equipment. Most of (the businesses) were not taken in by the scam, but we have identified several companies that were deceived and sent Phillips checks totaling up to $20,000.”

The U.S. Postal Service initiated the investigation last March after the real ChexSystems company complained. That firm had been contacted by a number of regular customers who had received the bogus bills.

Phillips was being held in Los Angeles County Jail in lieu of $7,500 bail after his arrest Thursday on a 21-count criminal complaint charging one count of grand theft and 20 counts of making false statements, authorities said. He was arrested shortly before postal inspectors searched his home.

Grand theft is punishable by up to one year in jail and a fine of $1,000. Each of the misleading-statement counts carries a maximum penalty of six months in jail and a fine of $2,500.