Criminal Sentencing in ETS Payphones Business Opportunities Fraud
"The evidence showed that from 1996 through September 2000, EDWARDS, the founder of ETS Payphones, Inc. (ETS), raised capital to grow his coin-operated payphone business by using a network of independent insurance agents to sell payphones to investors throughout the United States for $5,000 to $7,000 per phone. EDWARDS convinced investors to buy payphones and lease them back to ETS for what EDWARDS claimed would be a recession-proof, guaranteed profit of approximately 14% per year. EDWARDS promised he would buy back their phones upon request, when, in fact, the company did not have the financial ability to do so. The scheme defrauded approximately 12,000 nationwide investors out of more than $400 million." (my emphasis)
"United States Attorney David E. Nahmias said of [the September 2005] verdict, "As the witnesses and the evidence proved at trial, this was a tragic case of fraud that victimized over 12,000 people, most of whom were retired and living on fixed incomes. The victims thought they were investing in a legitimate business, but it was in fact a Ponzi scheme, that netted EDWARDS over $21 million. We hope that the jury's verdict has brought some measure of justice to the many victims of this fraud."
How could anyone of the investors have determined that this was a Ponzi scheme? What simple due diligence could they had done which may have detected this scam or fraud? (Which apparently although too good to be true, didn't sound too good to be true. Thankfully.)
Charles Ponzi's scheme, like many before and after it, requires motivated salesman. In Ponzi's case, the salesman were given an immediate cash commission of 10% for each note they sold. Likewise in the ETS business opportunities fraud or scam, "EDWARDS also used a significant portion of the fraud proceeds to promote the scheme to defraud by paying commissions to the many sales agents who sold the payphones to the victims" (my emphasis). Since the commissioned sales staff were independent insurance agents, the commission structure would have to be disclosed to the investors -had they thought to ask.
Comments
I bought 4 phones at $28,ooo each. I think I must have some stock somewhere that recognizes that I have some ownership which I could sell. Does anyone know where that contact can be made?
Posted by: Rev. Merlin Schendel | April 4, 2006 11:08 PM
I bought 66 payphones at $7,000 each! I am a widow..and was REALLY SWINDLED...as other people were. What can I do? I am told by Reliance Trust Company, in Atlanta, GA. that I have "stock" with ETS, but I must pay them a fee before the "stock" is released to me. However, the "stock" is worth very little, if nothing!(?) Each month the interest fee is rising! I really need some help!
Posted by: B. M. Wilson | May 29, 2006 9:46 PM
bm wilson you owe reliance nothing ....they did not do their custodial responsibilities by monitoring ETS for you
Posted by: sells | November 13, 2006 9:08 PM
looks like our stock is worth pennies I had 400,000 invested of my retirement savings hopefully the suits will net us some return although it appears mini compared to the investment. If anyone has updated info appreciate it being posted
Posted by: sells | November 13, 2006 9:11 PM
I am unclear as to what duties Reliance owed, could you expand upon your point.
Posted by: michael webster
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November 14, 2006 2:38 AM