Another Vending Machine Business Opportunity Scam Ends With Jail Time

November 10, 2011

In December 2006, the Justice Department brought a civil case against Lifestyle Vending and Michael Eisenberg, Long Island, NY, alleging that they made unsubstantiated claims to business opportunity buyers in connection with the sale of vending machines that dispensed candy, soda, and snack.The Complaint set forth three counts that alleged failures to provide prospective franchisees with disclosures required under the Franchise Rule; and improper claims as to potential earnings.

Around March 2008, the case concluded with the entry of an Order  in federal court in the Eastern District of New York barring Eisenberg and others from misrepresenting business opportunities. United States of America (for the Federal Trade Commission), Plaintiff, v. Lifestyle Vending, Inc., a New York corporation; Michael Eisenberg, individually and as an officer of the corporation; and Mary Ann McCulloh, individually and as an officer of the corporation, Defendants  (United States District Court for the Eastern District of New York, Civ. No. CV-06-6421).

I'm guessing that the Feds hoped that the takeaway by Eisenberg from this experience would have been go and sin no more; instead, he seems to have gotten things a tad twisted and interpreted his experience with the folks at the Department of Justice as a challenge: If at first you don't succeed, try, try again. I'm going out on a limb here and guessing that's just not what the federal Judge was going for.

On Second Thought

Having dodged a sizable federal bullet, Eisenberg went out and founded Long Island-based Atomic Vending and Energy Vend. He then used those two entities to re-enter the fabulous world of vending machine sales and offer investors so-called business opportunities. Of course, along with the usual sales puffery that accompanies these things, Eisenberg engaged in the deceptive sales practices that previously got him into hot water with Lifestyle Vending.

Going Criminal

Seems that Eisenberg remained an old dog unable to learn new tricks because he was named in a federal criminal Information, charging him with having served as an owner and salesman for Atomic Vending and Energy Vend from March 2008 to March 2010, during which time each firm fraudulently sold business opportunities to the public for a minimum price of approximately $6,000.

Guilty Plea

On July 19, 2011, Eisenberg pleaded guilty to conspiracy to commit wire fraud for his operation of Atomic Vending and Energy Vend.  As part of his plea agreement, Eisenberg apparently admitted that in furtherance of his business-opportunity vending machine scheme, he and others made false claims about the profits purportedly generated by the firms' vending machines. Eisenberg admitted that his salesmen misled potential buyers into believing that they would recoup their investment in a year or less. As with many of these business opportunity scams, Eisenberg misrepresented that investors' vending machines would be placed in high traffic, high profit locations. Ultimately, the investors earned little if any returns.

On November 8, 2011, Eisenberg was sentenced in federal court in Miami, FL to 28 months in prison, a $7,500 fine, at least $15,000 in restitution and three years supervised release. 

Do Your Homework!

Potential investors would be well-advised to search the online databases of the Federal Trade Commission and the Department of Justice to see if potential businesses or their promoters have any fraud history. Also, there are a number of private websites that now offer some coverage. In the case of Eisenberg, potential investors would have done well to visit the Ripoff Report, where they could have read postings from 2006 from unhappy investors who complained about Eisenberg and Lifestyle Vending. Also read : October 2006 Thread

More relevantly, the Ripoff Report started posting investor warnings about Eisenberg's second foray in August 2009. Specifically, note this October 31, 2011 posting (spelling in the original):

I can't believe I almost got taken by this scam about 6 months ago. I had a funny feeling when talking to the sales guy and all his promises. I googled Michael Eisenberg ftc and saw that this guy has already been in trouble with the ftc. Why is this guy allowed to continue? I will be reporting him to the ftc. I feel sorry for people who bought machines. Eisenber, people probably do not put their real name because they do not want to be hassled by you. Please explain you last run in with the law. This is a con people.

In response to that investor complaint, the Ripoff Report offered this post dated November 25, 2010, purporting to be from Eisenberg (spelling in the original):

It is amazing how anyone can post a comment without identity. Energy Vend always sends out their FTC Required Disclosure Documents with all their information. They are the ONLY AUTHORIZED DISTRIBUTOR of the Trade Marked Jitterbean Vending Program.
Yes there were FTC ISSUES and they are disclosed and resolved. we paid a fine but never were we not allowed to sell an opportunity.
Everyone here uses their real names and I speak to every client prior to them sending any Money to purchase Machines.
It is disturbing that Cowards like this one will not Ever post their Name or their Contact.
My attornesy have began tracking the Identity of this individual and he will be tracked down and all and any legal options will be executed.
Michael Eisenberg, President