Businessman Sentenced to Prison in Franchise Scam : Court: In addition to 4 1/2-year term, Don David Wilson is told to pay $10,000 in restitution, a fraction of the $3.5 million he was accused of taking from his victims.

A former San Fernando Valley 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 also ordered to pay only $10,000 in restitution, a fraction of the $3.5 million that federal prosecutors say he cheated out of 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 Wednesday, was persuading his victims to phone supposedly thrilled clients who were actually Wilson himself or hired “singers.”

“They were paid 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” since prosecutors had sought six years in prison and $75,000 in restitution.

“I think that Don has expressed his remorse for what he did,” federal Public Defender Guy Iversen said. “He has admitted perpetuating this scenario; he’s sorry for it and feels the sentenced imposed is fair.”

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. A former Sherman Oaks resident, Wilson was indicted in December, 1992, and became a fugitive until Jan. 22, 1993, when he was stopped for speeding in Lubbock, Tex.

His crimes of fraud 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.

First, he would advertise his services as a franchise consultant on respected, news-oriented radio stations around the country, providing listeners with a toll-free number to call. Then Wilson would travel coast-to-coast with slick brochures, meeting potential investors in person.

Those who fell for the scheme paid initial franchise fees of $28,480 in the belief that they would be selling desirable products in busy stores chosen by marketing experts.

Instead, Wilson’s investors received plastic buckets of pens and pencils, self-help tapes and solar barbecues, and their assigned network of retailers included dingy shops with few customers, authorities contended.

Wilson was convicted once before of a similar scheme in Santa Clara County, Birnholz said. After the 1970 verdict, he served nearly two years in state prison on charges of conspiracy, forgery and grand theft, she said.