Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Vending machine business opportunity marketers found guilty in fraud scheme, (Feb 5, 2016)

By Linda O’Brien, J.D., LL.M.

Kenneth Levin, the owner of a company that purported to sell lucrative vending machine business opportunities, and his son and manager at the company, Taylor Levin, were found guilty for their participation in a nearly $11 million scheme that victimized at least 1,300 consumers across the country. Kenneth Levin and Taylor Levin were convicted after a three-week jury trial in the federal district court in New York City, the Department of Justice (DOJ) Civil Division announced yesterday.

According to the evidence established at the trial, from January 2005 to December 2011, Kenneth and Taylor Levin perpetrated a scheme to defraud consumers by making material misrepresentations in an effort to induce those consumers to invest thousands of dollars in purported vending machine “business opportunities.” Through a company located in New York City and its successor companies, the defendants and other employees falsely promised customers that if they purchased packages of five or 10 vending machines, the customers would be provided access to established, high-profit locations for the machines and would be connected with experienced “locators,” who would facilitate placing the vending machines in those pre-determined locations.

Additionally, the defendants and other employees falsely promised to provide training and ongoing customer assistance on how to operate a successful vending machine business and misled customers about the features of the vending machines. The defendants also misled prospective customers about the profits customers could earn from the machines and misrepresented that certain employees of the defendants personally owned vending machines that were profitable.

The defendants made these assertions knowing that there were scores of dissatisfied customers who had lost their entire investment instead of making any profit. Through their scheme, the defendants’ companies obtained nearly $11 million from more than 1,300 customers throughout the United States.

Kenneth Levin, 69, and Taylor Levin, 34, both of New York City, were found guilty of all three counts in the Indictment: one count of conspiracy to commit mail fraud and wire fraud and one count each of mail fraud and wire fraud. Each count carries a maximum sentence of 20 years in prison. Kenneth Levin’s sentencing is scheduled for April 1 and Taylor Levin’s sentencing is scheduled for April 15. The five other individuals arrested along with Kenneth Levin and Taylor Levin on March 5, 2015, pleaded guilty for their respective roles in this scheme.

“The defendants convicted in this case twisted the American entrepreneurial spirit to their advantage, luring consumers with the prospect of starting their own business and being their own boss,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Justice Department prosecutors will continue to team together and work with law enforcement to ensure that the crime of business opportunity fraud, in all of its forms, is stopped and perpetrators are prosecuted.”

News: FranchisingDistribution NewYorkNews