Two more expat scam suspects detained on U.S. indictments

Two more expats in Costa Rica have been detained as workers in the long-running business opportunity frauds that preyed on frequently elderly U.S. citizens. The U.S. Justice Department and the U.S. Postal Inspection Service announced the arrests Monday.

The suspects are John White, an American, and Kerry Michael Deevy, a Canadian. The U.S. prosecutors say they were involved in the USA Beverages Inc. and Twin Peaks Gourmet Coffee, Inc., scams. Eight persons already have been detained, and seven of them already have been sentenced.

The scams were run out of Escazú, Santa Ana and also in offices in the Sabana Office Center, although the scammers gave would-be customers the impression that the businesses were located in the United States.

The two newest detainees were indicted by a federal grand jury in Miami on Nov. 29, 2011, said the Justice Department.

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 Co., said the Justice Department. 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 Justice Department:

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 Cards-R-Us, a fronter and reference for Premier Cards, a fronter for Coffee Man, and a fronter and reference for Nation West.

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, New Mexico. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colorado, and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nevada. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Nation West was registered as a Colorado corporation and also rented office space in Denver.

A.M. Costa Rica verified that the Fort Collins location was simply a mail drop.

The Justice Department said that both defendants were charged with conspiracy to commit mail and wire fraud, and with committing their offenses via telemarketing. In addition, the agency added, both defendants were charged with five counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, White and Deevy face a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. They also face a maximum statutory term of 25 years in prison on each of the mail and wire fraud counts, a possible fine and mandatory restitution.

The United States intends to seek the extradition of White and Deevy from Costa Rica, said the Justice Department.

Prior court cases involving the same companies established that there were some 250 victims in the United States and each put up at least $10,000, the Justice Department has said.

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