February 17, 2012
If the name "Eric Stein" rings a bell, it's likely because you saw him featured on CNBC's "American Greed". Stein was sentenced to eight years in federal prison for his role in a 1990s television commercial scam that victimized some 1,750 investors out of an estimated $50 Million. On the other hand, Eric Stein's name may also be familiar to you because it appears that after engaging in a multi-million dollar fraud, as detailed in the CNBC expose, he seems not to have stayed on the remorseful course that he proclaimed he had found at the end of that show.
In what must now be a somewhat painful reminder of how easily it is to get conned by a con, the Pennsylvania Securities Commission had prominently posted "Confessions of a Scam Artist" (largely the reprint of a 2004 Wall Street Journal story about Stein). In the preamble to the 12-page posting, the Pennsylvania Securities Commissions expresses its "hope [that] this booklet and the information it offers help you become a wiser investor." Alas, hope springs eternal - as does fraud.
On January 24, 2012, Stein, 54, New York, NY was arrested and charged with one count of mail fraud and one count of wire fraud in a criminal Complaintin federal court in Manhattan. Among the more jarring aspects of this new case is that Stein was running his alleged fraud while out on supervised release for his prior conviction.
NOTE: The charges contained in theComplaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
According to the Complaint, Stein operated a company, Return-A-Pet LLC, which he claimed provided enrolled pet owners with access to a toll-free number (supposedly staffed 24 hours-a-day) and printed on the pet's ID tag. The goal here was to facilitate the timely return of lost pets to their owners. Hey, not a bad idea - sounds like a good investment for pet owners. Of course, Stein allegedly had more in mind than simply helping pet owners track down their lost pooch. Stein saw this concept as an opportunity to sort of franchise the business through the sale of distributorships to investors.
Allegedly, from June 2007 to January 2010, Stein sold Return-A-Pet distributorships for upfront fees of $5,000 to $50,000. Understandably, Stein wasn't comfortable using his real name - gee, wonder why - and falsely claimed to be a Robert Philips. Moreover, in his effort to entice investors and close the sale, Stein allegedly ran Internet and print ads in which false statements were made. To top it off, he provided phony references to those potential investors who tried to check out him and the company: turns out that those providing the references were individuals recruited by Stein to provide fake testimonials of their positive experiences with Return-A-Pet.
SIDE BAR: You can still see the old Return-A-Pet online marketing effort at an old ad on FranchiseSolutions.com. According to the displayed promotional content, Return-A-Pet is "America's Most Popular Pet Registry," with the promise of a 30% profit. You will also be presented with this gushing testimonial:
"We were looking for a simple way to make extra money, that didn't take up too much of our free time. Since we love our dogs, we figured this was a great way to earn a few extra dollars. We had NO idea that tags and registrations would be in such high demand!" - Vanessa and Lori
Once Stein pocketed the upfront fees, the investors allegedly never received the materials and services promised. According to the Complaint, Stein just pocketed the bucks - at least $500,000.
If convicted, Stein faces a maximum sentence of 20 years in prison on each count.
If convicted, hey, who knows, Stein may also face another shot at a whole new episode on "American Greed."
On February 15, 2011, Stein pleaded guilty to one count of mail fraud and one count of wire fraud. In addition to paying $528,000 in restitution to his victims, Stein faces a maximum sentence of 20 years in prison on each count. Sentencing is scheduled for June 13, 2012.