Business Opportunity Fraudster sent to Jail in Southern Florida
The U.S. Attorney for the Southern District of Florida announced that "that defendant Thomas Kling was sentenced to prison in connection with a fraudulent scheme to sell DVD vending machines. United States District Court Judge Jose E. Martinez on Thursday sentenced defendant Thomas R. Kling to two years and nine months in prison and ordered him to pay $ 296,700 in restitution to the victims.
Kling was a sales representative at American Entertainment Distributors, Inc. ("AED"), a Hollywood, Florida-based company that fraudulently sold more than $19 million of DVD vending machines to consumers across the United States in 2003-2004. To sell the machines, AED used baseless and wildly exaggerated profit projections, falsely promised to secure good locations for the machines, falsely claimed that the machines were reliable and easy to use, exaggerated the company's longevity, and used phony references." (my emphasis)
Which of these five falsehoods is the easiest to discover? Which of the five falsehoods could reasonably be caught by a decent business opportunity due diligence checklist?
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For a Florida company, the Florida Corporations website is invaluable for due diligence. According the Florida Corporation website, American Entertainment Distributors only started filing annual returns in 2002. Yet according to the brochure that was sent to individuals, AED represented that it was in business since 2000. A technically true claim, since it was incorporated in 2000. But it had not been doing business since 2000.
This business opportunity fraud would have been difficult for the average distributor to discover. The number one tip for due diligence that I use, check with state regulators for the existence of a disclosure document, would not have worked since there was a disclosure document, which however was false.
Technorati Tags: thomas kling, united states district court, united states district, vending machines, florida based company, hollywood florida, aed, defendant, sentenced
