The Timeshare Beat Home | Today's Headlines | Back to Previous Page
|
The Timeshare Beat Home | Today's Headlines | Back to Previous Page |
|
|
|
Press Release: U.S. Attorney
November 22, 2002
BOSTON, MA -- Two women were indicted yesterday in connection with a massive telemarketing fraud scam centered
on the sale of bogus appraisals of timeshare units.
United States Attorney Michael J. Sullivan and Kenneth R. Jones, Postal Inspector in Charge of the U.S. Postal
Inspection Service in New England, announced that SALLY Z. WILLIAMS, age 47, of Las Vegas, Nevada and DONNA M.
JOHN, age 43, of Marion, Ohio, were indicted by a federal grand jury on charges of conspiracy to commit mail fraud
and wire fraud. WILLIAMS was also indicted on 30 counts of mail fraud.
The two defendants and the charges against them were added to a pre- existing indictment charging three others,
ROGER CANZANO, EDWARD LONEY and VINCENT COREY, with conspiracy, mail fraud and wire fraud. COREY was charged with
money laundering, in addition to the conspiracy and fraud charges.
To date, nine people have already been convicted in connection with this telemarketing fraud operation. On October
30, 2002, Chief U.S. District Judge William G. Young sentenced one of the leaders of this fraud operation, SHOLEM
JOEL EPSTEIN, who was convicted after a four-week trial, to 9 years' imprisonment. Chief Judge Young earlier sentenced
the founder of this scheme, DONALD GONCZY, who had pleaded guilty, to 7 years' imprisonment. In handing down these
sentences, Chief Judge Young described the telemarketing fraud case as "the most enormous, sophisticated,
complex, and far-reaching mail fraud scheme that this Court has ever seen."
"This case demonstrates the great lengths people will go to perpetrate their fraud," said U.S. Attorney
Sullivan. "Today's indictments reflect this office's commitment to hold accountable all individuals who prey
upon the unsuspecting public to line their own pockets -- whether it is through telemarketing fraud, securities
fraud or other white collar crimes."
The superseding indictment alleges that WILLIAMS and JOHN, each ran one of the appraisal companies that sold fraudulent
appraisals to timeshare owners. CANZANO is alleged to have run appraisal companies in Michigan and Windsor, Ontario.
He is facing trial in January 2003 on these charges. COREY and LONEY are fugitives.
DONALD GONCZY, the mastermind of this complex telemarketing scam, pleaded guilty after the first week of his trial
in June 2002. GONCZY was arrested in St. Maarten on these charges in January 2001. Earlier this fall, GONCZY's
son, SCOTT GONCZY was sentenced to 3 years and 10 months' imprisonment. GONCZY's daughter, JILL GONCZY UPTON, who
cooperated with the government, received a sentence of 3 months' community confinement, to be followed by 1 year
and 3 months of home detention. Her husband, MICHAEL UPTON, was sentenced to 2 years' incarceration. TODD GONCZY,
DONALD GONCZY's oldest son, who pleaded guilty at the outset of this case and assisted in the prosecution of his
father and siblings, received a sentence of 5 years' probation. PETER TRAIN and BUCK SHELTON, two other participants,
who were not related to the GONCZY family, received sentences of 2 years and 3 years and 5 months' imprisonment
respectively. Co-defendant JOHN HANDEL will be sentenced on December 11, 2002. HANDEL faces a maximum penalty of
5 years' imprisonment and a $250,000 fine on each of his five mail fraud convictions.
According to the indictment, the defendants and their co-conspirators, established a complex network of more than
a dozen companies designed to persuade timeshare owners who were interested in selling their timeshares to purchase
a $399 "appraisal" of their timeshare. The scheme passed timeshare owners through a series of boiler
rooms to complete the fraud. First, the defendants established a number of purported "buying companies"
based in Florida and Texas which contacted timeshare owners and made a host of misrepresentations, including that
they would buy the person's timeshare if the owner obtained an appraisal and that they would reimburse the owner
for the appraisal fee at the time of closing. The buying companies falsely claimed that they received no fees from
the appraisal companies and had no part in the appraisal process.
Once the buying company persuaded the timeshare owner into selling the timeshare, the buying company referred the
timeshare owner to a purportedly independent service, Multi-State Listing Service ("MLS"), which in fact
was a second boiler room. The timeshare owner would be told that the MLS would put the timeshare owner in touch
with "independent and internationally recognized" appraisal companies.
MLS then provided the timeshare owner with three "independent" appraisal companies supposedly with personnel
in the area of that person's timeshare. Every one of these appraisal companies was phony and established solely
to execute this fraud scheme. The "appraisal" companies were run by DONALD GONCZY's children, close friends,
or former telemarketers from the boiler rooms. JILL GONCZY UPTON and her husband, MICHAEL UPTON, ran one of the
appraisal companies, known as RCI Appraisals, located at 75 Iyanough Road in Hyannis, Massachusetts. SCOTT GONCZY,
another son, operated Interval International Appraisals ("IIA") in Providence, Rhode Island. Other "appraisal"
companies were opened, the indictment alleges, by JOHN in Florida, by CANZANO in Michigan and Windsor, Ontario,
by WILLIAMS in Nevada, and by others in Georgia and Louisiana.
The indictment alleges that after speaking with an MLS representative, and selecting an appraisal company, the
timeshare owner was next contacted by a third boiler room operation called the Appraisal Referral Center ("ARC").
The ARC telemarketers falsely represented that they were actually calling from the appraisal company the timeshare
owner had selected. In this call, the timeshare owner was coaxed, through more misrepresentations, into providing
his or her credit card number. At this point, the timeshare owner was then billed approximately $399 for the appraisal.
Eight weeks later, according to the indictment, the appraisal companies mailed the timeshare owner a bogus two-page
"appraisal" that falsely represented that the timeshare had been inspected as part of the appraisal process.
The indictment alleges that these reports were simply printed off a database at a cost of just $7.50 to the appraisal
company. JOHN HANDEL signed roughly 10,000 fraudulent appraisals for RCI and IIA, and was paid $5 for each report
he signed. HANDEL signed several thousand reports using a fictitious name he created, James Rose. The appraisal
reports issued by these purportedly "independent" companies had virtually identical formats and standard
language, and often contained the same typographical errors. The indictment alleges that the defendants sold $15,409,000
in fraudulent appraisals to approximately 38,000 timeshare owners located throughout the country.
The vast majority of the more than 38,000 timeshare owners who purchased appraisals as part of this scheme either
never received a purchase offer from the buying company, or received "low-ball" offers that were 15%
of the "appraised" value. When timeshare owners pressed the buying companies for answers, they were confronted
with unreturned phone calls, answering machines, disconnected numbers or a litany of excuses for the delay in processing
their paperwork. Over the course of the five years the scheme operated, only 11 out of the 38,000 people were able
to sell their timeshares to the buying companies.
The case was investigated by the U.S. Postal Inspection Service and the Florida Department of Law Enforcement.
It is being prosecuted by Assistant U.S. Attorneys Carmen M. Ortiz and Joshua S. Levy, and auditor Thomas Zappala,
all in Sullivan's Economic Crimes Unit.
Source: U.S. Attorney