Home Business Scam Artist Sentenced

I don’t know about you, but since the dawn of the cell phone age, I don’t see as many pay phones.

Nevertheless, this man recruited a network of life insurance agents to sell his lease schemes.

Life insurance agents who sell annuities usually know older conservative investors who have money to invest parked in CD’s.

They get sick of the CD’s low, taxable interest and will often choose annuities because they pay higher interest and aren’t taxed until later.

But as people do, sometimes we get greedy.

We “know” that someone, somewhere is cashing in on safe, steady profits that regular folks never hear about.

Actually even though we don’t really “know” this, we suspect that there ought to be an “easier way.”

And insurance agents are always looking for ways to make more money than annuities which can pay as little as 3-5% of the deposit. (They’re used to making up to 90% of first year premiums).

So between insurance agents wanting to make more money and investors who are sure there are secret ways to make money they just haven’t heard about, it was easy to come up with a scam like this even though most reasonable people realize… there are far fewer payphones around than there were just a few years ago.

From the Atlanta Business Chronicle

An Atlanta man will spend the next 13 years in prison for defrauding more than 12,000 people out of $400 million in a payphone fraud scheme.

U.S. District Judge Jack T. Camp sentenced Charles E. Edwards, 67, of Atlanta, to prison on charges of wire fraud, money laundering and conspiracy to commit money laundering. Edwards also was ordered to pay $320.4 million in restitution.

The evidence in court showed from 1996 through September 2000, Edwards, the founder of ETS Payphones Inc. (ETS), raised capital to grow his coin-operated payphone business by using a network of independent insurance agents to sell payphones to investors throughout the United States for $5,000 to $7,000 per phone. Edwards convinced investors to buy payphones and lease them back to ETS for what Edwards claimed would be a recession-proof, guaranteed profit of about 14 percent per year. Edwards promised he would buy back their phones upon request, when, in fact, the company did not have the financial ability to do so. The scheme defrauded nearly 12,000 nationwide investors out of more than $400 million.