23 People Indicted in Decades-Long, $126 Million Telemarketing Scheme involving Sale of Toner for Copiers and Printers

Santa Ana, California – Federal authorities and Huntington Beach Police officers arrested 20 defendants indicted by a grand jury on charges of participating in a long-running telemarketing scheme that targeted small businesses and charities by selling them toner products for printers and photocopiers at grossly inflated prices.

  • Participants in the scheme fraudulently induced over 50,000 victims to send more than $126 million to telemarketers who posed as the victims’ regular supplier of toner products at prices as much as ten times the normal retail price
  • The 30-count indictment, which charges 23 defendants, alleges a conspiracy that started in 1988 and was orchestrated by Gilbert N. Michaels, a West Los Angeles man
  • Michaels owned and operated IDC SERVCO, a Culver City-based business that sold toner to small businesses, charities (such as Easter Seals Disability Services and the United Way), schools, churches, city governments and other entities in the United States and Canada
  • The indictment outlines a scheme in which telemarketers at a series of companies called victim organizations and claimed to be their regular supplier of toner or affiliated with those suppliers
  • Telemarketers typically told employees at the victim companies that the price of toner had increased and they had not been notified, however, the victims now had a chance to purchase toner at the previous, lower price
  • Believing that they were dealing with their regular supplier of toner supplies, employees at the victim companies signed order confirmation forms
  • The forms prompted Michael’s company to ship toner to victims and send invoices that demanded payment at inflated prices
  • When the victim companies realized they had been scammed, they called IDC to complain. The victims were told IDC could not cancel the order or refund money because the victims had signed order confirmation forms

THE  DEFENDANTS 

  1. Gilbert “Gil” N. Michaels, 73, of West Los Angeles, the owner of G.N.M. Financial Services Inc., doing business as IDC SERVCO and Mytel International, Inc.;
  2. Jerry P. Feldman, 61, of Mar Vista, a longtime associate of Michaels who is the vice president of IDC;
  3. Anjanette S. Lester, 60, of Garden Grove, who owned Supply Processing Center, Inc. and Invoice Processing Center, Inc.;
  4. Glen K. Katayama, 48, of Fullerton, who owned GK Ventures, Inc., Supply Management Center, and Copier Products Center;
  5. Tiffany M. Ostrander, 32, of Newport Beach, who owned Epic Distribution, Inc. and Supply Fulfillment Center;
  6. Ostrander’s husband, Sean S. Moustakas, 35, of Newport Beach, who also owned and/or controlled Epic Distribution, Inc. and Supply Fulfillment Center;
  7. James R. Milheiser, 49, of Huntington Beach, who owned and/or controlled Material Distribution Center, PDM Marketing, Bird Coop Industries, Inc., and Copier Products Center;
  8. Thomas A. Sanetti, 49, of Huntington Beach, who also owned and/or controlled Material Distribution Center; Bird Coop Industries, Inc.; and Copier Products Center, as well as West Coast Distribution and Uncaged Industries, Inc., who has agreed to surrender to authorities in the coming days;
  9. Cynthia A. Weekes, 47, of Pacific Palisades, who owned Coastal Distribution Center, Inc.;
  10. Cynthia Weekes’ husband, Michael B. Weekes, 44, of Pacific Palisades, who also owned Coastal Distribution Center, Inc., the one defendant who is still being sought by authorities;
  11. Daniel C.J. Ellis, 59, of Folsom, who owned Turner Supply Company, Inc. and Tech Transfer, Inc. (doing business as Delray Supply Company), who is expected to appear this afternoon in federal court in Sacramento;
  12. Leah D. Johnson, 52, of Ignacio, Colorado, who owned Capital Supply Center and LJT Distribution, Inc., who is expected to appear this afternoon in federal court in Durango, Colorado;
  13. John A. Buzzard, 60, of San Diego, who also owned and/or controlled Capital Supply Center and LJT Distribution, Inc.;
  14. Jonathan M. Brightman, 49, of West Lake Village, who owned Copy Com Distribution, Inc.; Independent Cartridge Supplier; and Corporate Products, who has agreed to surrender to authorities in the coming days;
  15. Stephen D. Paine, 51, of Hollywood, who owned Case Distribution Services, Inc.;
  16. Sharon Scandaliato Virag, 51, of West Hills, who owned XL Supply, Inc.;
  17. Glen M. Diamond III, 38, of Carlsbad, who owned Specialty Business Center; Specialty Office Products, Inc.; and Elite Office Supplies, Inc.;
  18. Tammi L. Williams, 41, of Chino Hills, who was the office manager at Elite Office Supply, and also worked at Specialty Business Center, Rancho Office Supply and Select Imaging Supplies;
  19. Christina M. Cadena, 49, of Vista, who owned Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
  20. Michelle C. Nunez, 53, of Menifee, who also owned and/or controlled Warehouse Service Center, Inc. and Resource Processing Center, Inc.;
  21. Francis “Frank” S. Scimeca, 51, of Woodland Hills, who owned Supply Central Distribution, Inc. and Priority Office Supply;
  22. Cynda L. Hill, 43, of Rancho Cucamonga, who owned and/or controlled Distribution Service Center, Inc. and C&H Management; and
  23. Cynda Hill’s husband, Henry L. Hill II, 44, of Rancho Cucamonga, who also owned and/or controlled Distribution Service Center, Inc., and C&H Management
  • All 23 defendants are charged with conspiracy to commit mail fraud. Each of the 23 is charged in at least one of the two dozen mail fraud counts alleged in the indictment. Michaels is additionally charged with five counts of money laundering
  • All of the charges in the indictment carry a statutory maximum penalty of 20 years in federal prison, except for two of the money laundering against Michaels, which carry a 10-year maximum prison term
  • An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court