Toner scam netted alleged fraudsters more than $126 million
Huntington Beach police and federal authorities arrested 21 defendants indicted in a long-running telemarketing scam that netted more than $126 million from victims who were overcharged for printer and copier toner, the Justice Department announced Tuesday.
The grand jury indictment includes 30 counts that allege the defendants attempted to defraud more than 50,000 victims — mainly representatives from companies, charities and schools — by charging them as much as 10 times the retail price for toner. The alleged victims believed the defendants were their regular suppliers.
The alleged victims then complained to IDC SERVCO about the scam, but were told they could not cancel the order or refund money because they had signed confirmation forms.
Huntington Beach police, the U.S. Secret Service, the FBI and the Orange County district attorney’s office worked together for four years on the case.
“This originated from the initiative of the Huntington Beach Police Department,” said Special Agent in Charge L. Robert Save of the Secret Service’s Los Angeles office. “Their long-term partnership and steadfast collaboration with the U.S. Secret Service and other law enforcement agencies led to dismantling a large-scale fraud operation, which impacted victims throughout the United States.”
In 2012, the HBPD received a tip that a suspect may have lived in the city.
“We received a phone call from a man who owned a storage facility in Arizona,” said police spokeswoman Jennifer Marlatt. “He received an invoice for toner but he still used a typewriter, so he knew it was incorrect.”
The caller told police the address on the invoice was in Huntington Beach.
Police contacted and arrested that individual, which “led to a larger investigation,” Marlatt said.
Authorities allege that Gilbert N. Michaels, who owned and operated Culver City-based IDC SERVCO, which sold toner to small businesses in North America, started the scheme in 1988.
“Believing that they were dealing with their regular supplier of toner supplies, employees at the victim companies signed order confirmation forms, which prompted Michaels’ company to ship toner to victims and send invoices that demanded payment at inflated prices,” according to a news release from the U.S. Department of Justice.
Michaels, 73, lives in Beverly Hills but many of the other defendants are from Orange County. Two are Huntington Beach men: James R. Milheiser and Thomas A. Sanetti, both 49.
Three other defendants live in Orange County — one in Garden Grove, two in Newport Beach and another in Fullerton.
Authorities are still looking for two other suspects.
Those found guilty could face up to 20 years in federal prison, according to the news release.
Brittany Woolsey, firstname.lastname@example.org