Crime & Courts

Fax scam CEO, manager each sentenced for fraud

The president of a Florida consulting firm convicted in a massive fax blast scam was sentenced Friday to 68 months in prison for his role in defrauding thousands of small business owners across the United States, Mexico and Canada.

Richard Hagan, chief executive officer of the Melbourne, Fla.-based PBS Global Inc., also was ordered to make more than $1.02 million in restitution and forfeit a similar amount in ill-gotten gains.

The sentence was agreed upon in advance as part of his guilty plea in September to charges of wire fraud and money laundering.

Hagan told U.S. District Judge Wesley Brown in a statement read in court that his biggest regret was not acting more aggressively to screen new hires and stop the fraud. He said his intentions always were good, and he was never motivated by money.

"I have not changed. I have not gone to the dark side," Hagan said in his prepared remarks.

Hagan also told the judge he realized that as president of the company "the buck stops" with him.

The firm's sales manager, John Persaud, was also sentenced Friday for wire fraud and money laundering. Persaud, of Boca Raton, Fla., got 90 months in prison and was ordered to make restitution of more than $4.04 million plus a money judgment of more than $3.07 million.

Persaud, who also pleaded guilty in September, made no statement to the court.

His sentence also was agreed upon in advance with the government as part of his plea deal, pending the judge's approval.

Brown noted during sentencing that Persaud has a prior history of engaging in fraudulent conduct.

The case began four years ago, when the U.S. Secret Service office in Wichita got an unsolicited fax from the Florida company saying it had buyers interested in purchasing the business.

That prompted the Secret Service and the Wichita Police Department to contact the owner of Engine House Hobbies in Wichita to see if he would cooperate in an undercover investigation.

What investigators uncovered was a fax blasting scam that raked in millions by targeting small business owners who were seeking to sell. The scheme worked by offering sham buyers in order to renege on sales guarantees.

The government said it found more than 4,000 victims in 48 states in addition to some in Mexico and Canada who were defrauded of more than $6.5 million between 2003 and 2004.

Assistant U.S. Attorney Alan Metzger declined to comment on the sentences.

Five former employees have also pleaded guilty to charges including conspiracy, wire fraud and money laundering. They include chief financial officer Brian Renneisen of Media, Penn.; and business analysts Shaun Anthony Smoker of Milwaukee; Andrew Wang of Mount Laurel, N.J.; Marvin Randolph Hicks of Canton, Ga.; and Brandon Cook of Miami, Fla.