10 Individuals, Including 6 Pitchmen, Indicted In Alleged ‘Vendstar’ Bizop Scam That Fleeced Customers $10,000 At A Time, Prosecutors Say

“Instead of becoming successful entrepreneurs, the individual investors become victims of fraud, often losing their life’s savings. In this way, business opportunity schemes tarnish the American Dream of success through hard work. We will help protect the investing public by prosecuting these cases aggressively.” —  U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida., Oct. 10, 2012

Ten alleged bizop fraudsters, including six pitchmen from New York, have been indicted in the Southern District of Florida in a scam involving vending machines that fleeced investors $10,000 at a time, the Justice Department said.

The case was brought after a probe by the U.S. Postal Inspection Service that reached into at least three states and involved a company known as Multivend LLC, which did business as Vendstar. A grand jury returned the indictment in Miami.

Scammers gained a head of steam through newspaper and Internet ads, prosecutors said, alleging that purported “locating companies” assisted Vendstar in the scam.

Despite the claim customers’ machines would be placed at quality locations, the scammers “generally placed consumers’ machines wherever they could as quickly as they could, often in businesses that had not consented to housing the machines and that soon demanded that the machines be removed,” prosecutors said.

“The U.S. Postal Inspection Service will continue to work with our partners in law enforcement to ensure that the U.S. Postal Service isn’t used as a conduit to defrauding the American consumer,” said Tony Gomez, acting inspector in charge of the U.S. Postal Inspection Service in Miami.

Here is the list of defendants:

  • Edward Morris “Ned” Weaver, 39, of Perrysburg, Ohio, the president and chief executive officer of Vendstar.
  • Lawrence A. Kaplan, 54, of Brooklyn, N.Y., the technical support manager for Vendstar.
  • Scott M. Doumas, 40, of East Setauket, N.Y., a salesman and sales manager at Vendstar.
  • Mark Benowitz, 65, of Holtsville, N.Y., a salesman at Vendstar.
  • Richard R. Goldberg, 40, of Bay Shore, N.Y. a salesman at Vendstar.
  • Richard Linick, 70, of Coram, N.Y., a salesman at Vendstar.
  • Paul E. Raia, 61, of Brookhaven, N.Y., a salesman at Vendstar.
  • Howard S. Strauss, 63, of Jericho, N.Y., a salesman at Vendstar.
  • Wallace W. DiRenzo, 67, of Cleveland, Ohio, who operated Nationwide Locating Company, which was based in North Palm Beach, Fla.
  • James P. Ellis, 42, of Northport, Ala., who operated Vending Dreams, Priority Placements, Clear Vision Marketing, Map Marketing and Secure Placement.

From a Justice Department statement (italics added):

Each of the defendants is charged with conspiracy to commit mail and wire fraud, and an enhanced penalty for telemarketing , which together provide for a maximum sentence of 10 years in prison. Weaver, Kaplan, Benowitz, Goldberg, Linick, Raia, Strauss and DiRenzo also are charged with mail fraud, and/or wire fraud, each of which carry a maximum of 20 years in prison.

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4 Responses to “10 Individuals, Including 6 Pitchmen, Indicted In Alleged ‘Vendstar’ Bizop Scam That Fleeced Customers $10,000 At A Time, Prosecutors Say”

  1. I feel bad for the people that were scammed out of their hard earned dollars.

    People really need to be careful before investing in biz ops. Especially vending machines.

    I would tend to think that most really desired locations are already being serviced by a long standing vending company and the chances of getting in somewhere lucrative are almost slim to nil.

    Thanks for letting me know about this and good luck to the victims.

  2. what ever happened to free enterprise and the right to grow your own business.

    if the buyer was a good at starting a business they made money – ive seen their machines everywhere – seems like some people were actually making money.

    this is a bullshit case – seems like the postal service inspectors have nothing else to do – drugs and money are not being transported daily or anything practical to do. interesting

    good job fellas

  3. A business opportunity is just that! An opportunity. If the person who is running the business doesn’t make any money then that doesn’t mean the seller of the biz opp did anything wrong. Businesses fail all the time. I personally have founded and operated 5 different businesses in the last 40 years and was successful in everyone because I worked hard and if something didn’t work I changed the way I did things until it worked. The vending machines were delivered. If anybody is guilty of fraud it is the placement companies. If I bought this vending business I would have placed my own machines. I can see if the opportunity was sold and the vending equipment was not delivered than the company and it’s owners should be prosecuted.

  4. The problem is these machines were advertised as investments, i.e. the seller will find and place the machines for you, you just sit back and watch the money roll in. They aren’t selling the machines outright. This is just a redo of the original Supreme Court Howey decision that defined what is an “investment / security”.

    If the buyers actually got a machine with no placement and no stocking and whatever then obviously buyer assumes all risk. That was NOT what was advertised, thus all the blah blah about opportunity=risk is completely irrelevant. The seller misrepresented the risks and supposedly prime locations and such. That is fraud, and that’s what got them indicted.