ENCINO : Ex-Businessman Sentenced in Franchise Fraud

A former Encino businessman was sentenced Wednesday to 4 1/2 years in federal prison for a scheme in which he offered franchises to sell high-quality “impulse items” such as hosiery and batteries, but instead provided investors with cheap plastic pens to display in tiny, low-volume shops.

Because of his age, 60-year-old Don David Wilson was ordered to pay only $10,000 in restitution, a fraction of the $3.5 million that federal prosecutors say was lost by more than 100 victims around the country.

Many of Wilson’s victims were elderly people looking for a way to supplement their retirement incomes, and they believed the phony financial documents and credit references Wilson arranged from his offices in Encino, Assistant U.S. Atty. Diane E. Birnholz said.

His “most egregious misrepresentation,” Birnholz said, was persuading his victims to phone supposedly thrilled clients who were actually Wilson himself or people hired “to sing the praises of his companies,” Birnholz said.

A lawyer for Wilson called the sentence by U.S. District Judge J. Spencer Letts “reasonable and fair.” Prosecutors had sought six years in prison and $75,000 in restitution.

Wilson has been held at the federal Metropolitan Detention Center in Downtown Los Angeles since April, when a jury found him guilty of eight counts of mail fraud and two counts of interstate transportation of money obtained by fraud. He was taken into custody immediately after the verdict because authorities considered him a flight risk.

Wilson’s crimes occurred between 1982 and 1988, according to Birnholz, when he operated Great American Service Merchandising Corp. and P.O.P. American Corp. on Ventura Boulevard.