John White, Business Opportunity Fraud, Florida 2011

A U.S. citizen and a Canadian citizen were arrested last week in Costa Rica in connection with the operation of a series of fraudulent business opportunities following their indictment by a federal grand jury in Miami, Florida on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced.

John White, an American, and Kerry Michael Deevy, a Canadian, were arrested based on charges that they and their co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud. Prior to these arrests, eight other individuals were charged and arrested in connection with business opportunity fraud ventures based in Costa Rica. Seven of those eight other individuals have been convicted in the United States. The eighth individual, Jeffrey Pearson, is in custody in Costa Rica.

Beginning in May 2005, White, Deevy and their co-conspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Company. According to the indictment, the business opportunities the defendants sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.

The indictment alleges that the defendants, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, according to the indictment, White and Deevy operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.

According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations, according to the indictment.

The indictment alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.

The indictment alleges that White, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, closer and reference for Premier Cards, and a fronter, closer and reference for Coffee Man.

The indictment alleges that Deevy, using assumed names, was a fronter and reference for various companies.

The indictment alleges that White and Deevy used various means to make it appear to potential purchasers that the businesses were located entirely in the United States, when in reality, they operated out of Costa Rica.

The indictment charges that White and Deevy, and their co-conspirators, committed business opportunity fraud and wire fraud.

This case is a part of the government’s ongoing effort to crack down on business opportunity fraud schemes, which have resulted in significant financial losses for victims across the country.

White and Deevy are currently being held in Costa Rica pending extradition to the United States.

Source: https://www.justice.gov/archives/opa/pr/two-individuals-arrested-connection-costa-rica-based-business-opportunity-fraud-ventures