Jailed For Costa Rica-Based Business Fraud

News Americas, WASHINGTON, D.C., Weds. July 27, 2011: A former South Florida man will have to spend 252 months in prison for his role in a series of Costa Rica-based business opportunity fraud ventures.

Sirtaj Mathauda was sentenced by U.S. District Judge Joan A. Lenard in Miami and was also slapped with five years supervised release.

A jury in Miami found Mathauda guilty of conspiracy, mail fraud and wire fraud following a two-week trial in late April. Evidence at trial showed that Mathauda was one of the managers of a scheme involving fraudulent companies known as Apex Management Group, USA Beverages Inc., Omega Business Systems and Nation West Distribution.

The companies operated telemarketing rooms in Costa Rica from which Mathauda and his co-conspirators sold phony vending machine, coffee and greeting card distribution routes to Americans who wanted to own small businesses. Many victims paid $10,000 or more for the purported business opportunities, but received little or nothing valuable in return.

At sentencing, the court found that Mathauda and his partners bilked victims between 2004 and 2009 out of more than $2.5 million.
Mathauda is one of eight men who have been indicted in three related cases in the Southern District of Florida involving fraudulent business opportunities based in Costa Rica. In addition to Apex Management, USA Beverages, Omega Business Systems and Nation West, other phony business opportunities were known as Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company.

Six of the defendants – Stephen Schultz, Dilraj Mathauda, Donald Williams, Silvio Carrano, Gregory Fleming and Patrick Williams – previously pleaded guilty and were sentenced to significant prison terms. Jeffrey Pearson, who is alleged to have been involved in many of the fraudulent business opportunities, remains in custody in Costa Rica. The United States continues to seek his extradition.

Testimony at Mathauda’s trial showed that salesmen at the companies read scripts full of false claims to potential customers. Co-conspirators also played the role of “locators,” who lied to victims about supposedly profitable locations for the distribution routes. Some of the same salesmen who pitched customers also made phony reference calls in which they pretended to be satisfied purchasers of the business opportunities.

Evidence at trial demonstrated that each company operated for several months before closing and leaving victims with no recourse. Soon after one company closed, the next opened as the scheme repeated itself. The various companies used bank accounts, office space and other services in Florida and elsewhere to make it appear as though they were located in the United States. In reality, the companies were mostly operated from phone rooms in Costa Rica. The co-conspirators transferred money paid by victims to bank accounts in Costa Rica and elsewhere.

“Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously. This is true even if the schemers operate from outside of the United States,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “International law enforcement cooperation eliminates safe havens for those who seek to commit fraud from overseas.”