DENVER -- Biz-op promoter Louis Gubitosa was ordered to serve one-and-a-half years in prison and to pay $2.3 million in restitution to victims of a vending machine scam. Gubitosa, who allegedly owned American Vending Systems, is one of five men who are accused of mail and wire fraud in connection with a "business opportunity" offer that involved vending machines, mostly bulk venders, that dispensed energy balls, energy chews and energy shots. | SEE STORY
Gubitosa pled guilty to conspiracy to commit mail fraud on June 10, 2010. He was sentenced on Jan. 20 by Judge Lewis T. Babcock at the Byron G. Rogers Court House in Denver.
In his plea agreement, Gubitosa acknowledged making misrepresentations about the profits that would be generated by the vending machines and the quality of locations available for the venders. Gubitosa also acknowledged using fake references, including a relative.
There is no parole in the federal system and the maximum reduction of a prison sentence for good behavior is 15%.
On May 24, 2010, charges also were brought separately by criminal information filings in Denver against Richard Black, a/k/a "Richard Allen," a/k/a "Richard Houston," and Gary Luckner, a/k/a "Gary Michaels," as well as Trey Friedmann. On May 27, a criminal information was brought against Henry Melvin Hendrix.
Black and Luckner pled guilty on Sept. 17, 2010. Both men admitted to using fake references -- including Richard Black posing as "Richard Allen" and "Richard Houston" -- and making other misrepresentations when they sold business opportunities for vending machines that dispensed highly caffeinated energy snacks and energy shots.
Black and Luckner operated American Vending Systems, National Vending Systems Inc. and Mad Dog Energy Products. Buzz Bites chocolate energy chews, popular in retail, were among the vendible products promoted by Mad Dog.
On Nov. 3, 2010, Friedmann pled guilty to one count of conspiracy to commit mail fraud. He admitted that, when he was a salesman at American Vending, he made misrepresentations about profits, locations and references to induce the sale of business opportunities.
Black and Luckner are scheduled to be sentenced at 3 p.m. on March 15 by Judge Robert E. Blackburn at Denver's Alfred A. Arraj Court House. Friedmann will be sentenced in the morning on the same day by Judge David M. Ebel at the Rogers courthouse.
A fifth vending machine scam artist pled guilty on Sept. 16, 2010. Hendrix, who used the name "Mel Hendrix," admitted pretending to potential purchasers of the business opportunity that he had purchased the vending machines, operated vending machines and was making substantial profits. His sentencing is slated for Feb. 4 before Judge Marcia S. Krieger at the Arraj courthouse.
Under federal law, restitution is ordered in criminal cases on the basis of losses a defendant causes and without regard to the defendant's ability to pay the restitution. To date, the government said it has been unable to collect money from Gubitosa to pay restitution. There is no guarantee that any restitution will be collected, the government added. If restitution is paid, it likely will be a small percentage of the total amount lost.