A US federal grand jury has returned an indictment against four men accused of tricking hundreds of victims into investing around $8 million in a bogus 'cashless ATM' business.
The 90-count indictment alleges that between March 2003 and January 2005, the operators of Mac Investments - Jeff Teitelbaum, Maria Gonzalez, Christopher Livanos, and William Hoberg - tricked over 300 investors into handing over money for the cashless ATMs.
The machines issue paper receipts that can be redeemed for cash at the business where they are located. The defendants marketed them for around $1500 a piece, claiming investors could expect revenues of $1 to $2 per transaction.
They told victims that MAC would maintain the machines and administer the payment of revenues generated.
According to the indictment, most victims purchased numerous machines, which were to be placed at undisclosed retail locations, such as casinos and fast food restaurants.
But in January 2005 the operations of MAC came to an abrupt halt and investors were unable to contact or locate the firm's purported employees or the ATMs.
According to the indictment, the ensuing investigation revealed MAC neither acquired nor placed any cashless ATM machines in retail locations. The earnings statements mailed to victims and posted on the Web site were fictitious.
"Distributions made to victim investors of purported earnings, were nothing more than partial returns of other victim investor funds, in the manner of a Ponzi scheme. Newly acquired funds were partially disbursed to victim investors as a way to continue the fraud and entice additional investments," says a statement.
The men face charges of conspiracy, wire and mail fraud and transactional money laundering.
Livanos was arrested yesterday whilst Gonzalez and Hoberg have received summonses and will be arraigned on the charges on 11 March. Teitelbaum remains at large.