Press Release: U.S. Attorney
October 23, 2001
BOSTON, MA -- Four Massachusetts residents and six Florida men have been named in a fifty-count indictment for
running an appraisal fraud scam and money laundering operation that in a four year period defrauded in excess of
$12 million from approximately 20,000 victims nationwide.
United States Attorney Donald K. Stern and Kenneth Jones, Inspector in Charge of the U.S. Postal Inspection Service
in Boston, announced yesterday that among those indicted by the grand jury were the ringleader of the operation,
DONALD L. GONCZY, age 66, a resident of Florida, along with his son, SCOTT GONCZY, age 41, his daughter, JILL GONCZY,
age 36, and his son-in-law, MICHAEL UPTON, age 43, all of whom live in Hyannis. JOHN HANDEL, age 50, of Hyannis
and Nottingham, New Hampshire, was also named in the indictment, along with five other Florida residents: VINCENT
COREY, age 65, of 10140 Marlin Circle, Boca Raton, Florida; EDWARD LONEY, age 58, of 4661 NW Second Avenue, Boca
Raton, Florida; BUCK SHELTON, age 52, of 5622 Stull Avenue, Orlando, Florida; PETER TRAIN, age 57, of 750 Locke
Road, Deerfield Beach, Florida; and S. JOEL EPSTEIN, age 53, of 621 NE 26th Avenue, Pompano Beach, Florida.
The indictment was returned on February 7, 2001 and unsealed yesterday following the arrests of several of the
defendants. DONALD GONCZY was arrested on these charges in St. Maarten, Netherlands Antilles on January 30, 2001,
on a criminal complaint, and has been detained pending his extradition to the United States.
``As demonstrated by this case and the federal charges brought last week in an unrelated case against Denis Morin,
the leader of an extensive telemarketing fraud operation based in Montreal, Canada, telemarketing fraud continues
to be a serious problem,'' commented U.S. Attorney Stern. ``Although people are aware that such frauds exist, the
schemes have become so sophisticated that even the wary are fooled. People who receive solicitations from telemarketers
should treat them with a healthy dose of skepticism and should be very reluctant to write a check or provide credit
card information. These crimes are very difficult to prosecute -- an ounce of prevention is worth a pound of cure.''
According to the indictment, DONALD GONCZY and his co-conspirators, established a complex network of more than
a dozen companies designed to convince timeshare owners who were interested in selling their timeshares to purchase
a $400 ``appraisal'' of their timeshare. According to the indictment, the scheme operated through a series of steps.
First, the defendants had established a number of purported Buying Companies based in Florida and Texas which would
contact timeshare owners and make a host of misrepresentations, including that they would buy their timeshare if
the owner obtained an appraisal and that they would reimburse the owner for the appraisal fee at the time of closing.
Once the Buying Company had gotten a timeshare owner interested in obtaining an appraisal to sell their timeshare,
the Buying Company then referred the timeshare owner to a purportedly independent service, Multi-State Listing
Service (``MLS'') -- a second boiler room, which would put the timeshare owner in touch with independent and approved
appraisal companies. The Buying Companies falsely claimed that they received no fees from the appraisal companies
and had no part in the appraisal process.
The indictment alleges that in the second phase of the scheme, MLS would provide the timeshare owner with a list
of three to four ``independent'' appraisal companies supposedly with personnel in the area of that person's timeshare.
According to the indictment, every one of these appraisal companies was part of this scheme. The appraisal companies,
the indictment alleges, were opened for the sole purpose of executing this scheme and were run by GONCZY's children,
his friends, or former telemarketers from the boiler rooms involved in the scheme. JILL GONCZY and MICHAEL UPTON
ran one of these appraisal companies that operated at different times under three separate names: Resort Condo
International Appraisals, Inc., Resort Certified Appraisals, Inc., and Resort Evaluations, Inc., all located at
the same address at 75 Iyanough Road in Hyannis. SCOTT GONCZY operated another appraisal company, Interval International
Appraisals, out of Providence, Rhode Island. Other appraisal companies were located in Florida, Michigan, Nevada,
Georgia, Louisiana, and Windsor, Ontario.
The indictment alleges that after speaking with an MLS representative, the timeshare owner was next contacted by
a third boiler room operation. These telemarketers, according to the indictment, 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 additional misrepresentations, into providing his or her credit card number, the indictment
alleges. At this point, the timeshare owner was then billed for the appraisal.
The indictment alleges that the next step in the scheme was that roughly eight weeks later, the appraisal companies
would mail the timeshare owner a bogus two-page ``appraisal'' that falsely represented that the timeshare had been
inspected as part of the appraisal process. According to the indictment, these reports were simply printed off
a database at a total cost to the appraisal companies of roughly $25 each, which included a $5-$10 payment to the
person who signed the report, falsely verifying the purported inspection. The appraisal report issued by these
purportedly ``independent'' companies, spread out across the United States, had virtually identical formats and
standard language and often contained the same typos.
According to the indictment, the defendants sold over $12 million in fraudulent appraisals. JILL GONCZY and MICHAEL
UPTON's company alone is alleged to have sold more than $2.6 million in worthless appraisals. SCOTT GONCZY's appraisal
company grossed over $1 million, according to the indictment.
The vast majority of the more than 20,000 timeshare owners who purchased appraisals as part of this scheme, the
indictment alleges, either never received an offer or received paltry offers far below the market value. According
to the indictment, 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 last four years, the indictment alleges, only twelve of the more than 20,000 people who purchased
appraisals from these defendants actually closed on the sale of their timeshare.
The indictment also includes money laundering and forfeiture charges against DONALD GONCZY, COREY and EPSTEIN.
These charges are based on the allegation that the appraisal companies wired over $7 million to accounts controlled
by COREY and EPSTEIN, who then used these funds to promote the scheme by paying telemarketer commissions and operating
expenses, such as rent, utilities, and purchases of lists of potential timeshare owners interested in selling,
known as ``lead lists''. The money laundering charges in the indictment against DONALD GONCZY are based on the
allegation that the appraisal companies transferred another $2.8 million to an account DONALD GONCZY controlled,
which he then used for personal expenses, such as a $2000 Provincetown vacation rental, numerous clothing expenses,
and a $50,000 Bentley Coupe.
All of these defendants are charged with multiple counts of mail fraud and wire fraud. Each of the charges carries
a maximum penalty of five years' imprisonment and a $250,000 fine, as well as restitution. Each of the money laundering
charges against DONALD GONCZY, COREY and EPSTEIN carry a maximum penalty of twenty years' imprisonment and a $500,000
fine.
Tips to Avoid Telemarketing Fraud -- (Courtesy of AARP-Massachusetts)
-- Beware of anyone who asks you to send money or buy anything sight
unseen, unless you are certain you are dealing with a reputable firm.
-- Never give out your credit card information over the phone.
-- Don't pay for a free prize. Free is free. If a caller tells you the
payment is for taxes on the prize, he or she has violated federal law.
-- Offering to send a messenger to pick up your payment is a clear sign of
fraudulent activity.
-- Asking the caller to put the offer in writing rarely offers protection
to the consumer. It often leads to credible-looking letters that in the
consumer's mind seem to legitimize what in fact is a bad deal.
The case was investigated by the U.S. Postal Inspection Service and the Florida Department of Law Enforcement and
is being prosecuted by Assistant U.S. Attorneys Joshua S. Levy and Carmen M. Ortiz of Stern's Economic Crimes Unit.
The Asset Forfeiture part of the case is being handled by Assistant U.S. Attorney Jennifer Boal of Stern's Asset
Forfeiture Unit.
SOURCE: U.S. Attorney