Judge Sentences Another Long Island Sales Rep In Vendstar Biz-Op Scam

Posted On: 2/6/2017

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TAGS: Richard R. Goldberg, bulk vending biz-op, Multivend LLC, Vendstar, Judge Joan M. Azrack

DEER PARK, NY -- Richard R. Goldberg, 44, of Holbrook, NY, is the latest of 24 defendants to be convicted of fraudulently selling vending machine businesses in connection with Multivend LLC, doing business as Vendstar, which was based here.

U.S. District Court Judge Joan M. Azrack of the Eastern District of New York sentenced Goldberg, a Vendstar sales representative, to 36 months in prison followed by three years of supervised release. He was also ordered to pay $546,487.77 in restitution. Goldberg was found guilty after a six-week trial in 2015 of wire fraud and conspiracy.

"The defendant enticed people to pay $10,000 or more for a business that he promised would be prosperous, when he knew it was likely to fail," said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department's civil division. "That is a serious and reprehensible crime. The Department of Justice is committed to protecting consumers by prosecuting such frauds."

According to court documents, Vendstar, which closed in July 2010, sold vending machine businesses in which it promised to provide equipment, product, locations, and everything else buyers would need to succeed.

Vendstar reportedly advertised in newspapers and on the Internet, and sold nationwide. But, according to prosecutors, the company's sales representatives -- with the knowledge and approval of its managers -- misrepresented the business opportunity's likely profits, the income that its prior customers were earning, return on investment speed, location quality and level of assistance from locating companies recommended by Vendstar. Vendstar referred customers to locating companies that did not find profitable locations and regularly changed their names to stay ahead of constant complaints, according to documents. During the past five years that it was in business, Vendstar reportedly made more than $60 million in sales. Buyers received the vending machines, but little else, and many lost most or all of their investments.

Readler commended the U.S. Postal Inspection Service for its thorough investigation. The case was prosecuted by senior litigation counsel Patrick Jasperse and assistant director Alan Phelps of the civil division's consumer protection branch. During the past 10 years, about 170 individuals have been convicted of fraudulently selling business opportunities in cases prosecuted by this branch.

Last month, a federal judge sentenced two other Vendstar sales representatives to prison for fraudulently selling vending machine businesses. | READ MORE