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Federal Authorities Charge Man In International Biz-Op Scheme

Posted On: 4/3/2009

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Vending, vending machine, Sirtaj Mathauda, business opportunity, coin-op, coin-operated, Department of Justice

WASHINGTON -- A British citizen has been charged in connection with the operation of a series of fraudulent business opportunities by a Miami federal grand jury. According to the Department of Justice and the U.S. Postal Inspection Service, Sirtaj Mathauda was indicted on March 10 on charges that he and his co-conspirators purported to sell vending along with other business opportunities in deals that included assistance in establishing, maintaining and operating the enterprises.

In June 2004, Mathauda and his coconspirators began marketing fraudulent business opportunities through Apex Management Group Inc., USA Beverages Inc., Omega Business Systems Inc. and Nation West Distribution Co. Typically, each company operated for several months with one company closing and the next opening.

The various companies, said law enforcement authorities, used bank accounts, office space and other services in the Southern District of Florida, New Mexico, Wisconsin and Colorado. The Costa Rican-based defendant and his coconspirators also employed VoIP phone services and virtual offices to make it appear as if they were based in the U.S.

According to the indictment, the defendant made numerous false statements to potential purchasers of the business opportunities who invested a minimum of $10,000. Among the alleged misrepresentations were that the purchasers would likely earn substantial profits; prior purchasers of the business opportunities were earning substantial profits; purchasers would sell a guaranteed minimum amount of merchandise; and locators familiar with the potential purchasers' areas would either secure or had already secured high-traffic locations.

Potential investors were also told that the profits of the companies were based in part on the profits of the business opportunity purchasers to create the false impression that the companies had a stake in the purchasers' success.

The charges against Mathauda are part of the U.S. government's continued nationwide crackdown on business opportunity fraud that has already brought several criminal enterprises to trial over recent years. However, what differentiates Mathauda's alleged operation is its relative sophistication and international scope.

"Business opportunity fraud is a very serious crime. We will continue to work with the Postal Inspection Service and use our law enforcement resources to investigate and uncover business opportunity fraud," said Michael F. Hertz, acting assistant Attorney General for the DoJ's civil division.

According to the indictment:

• Apex Management Group Inc. was registered as a Florida corporation and rented office space in Ft. Lauderdale, FL. It purportedly offered a vending machine business opportunity.

• USA Beverages Inc. was registered as Florida and New Mexico corporations and rented office space in Las Cruces, NM. It purportedly offered a coffee beverage business opportunity.

• Omega Business Systems Inc. was registered as both Wisconsin and Florida corporations and rented office space in Madison, WI. It purportedly offered a greeting card business opportunity.

• Nation West Distribution Co. was registered as a Colorado corporation and rented office space in Denver. It purportedly offered an opportunity with "mini-mall" vending machines.

Mathauda, who has been in jail since Feb. 17, is currently charged with conspiracy and several counts of mail and wire fraud. He faces a maximum statutory term of 25 years' imprisonment, a possible fine and mandatory restitution on the conspiracy count.