Ten Indicted in $60 Million Invention Promotion Scam,
Involving Over 34,000 Victims

May 18, 1999

Source: U.S. Attorney's Office

SPRINGFIELD, Mass., Two Indictments were unsealed today in
federal district court charging ten individuals with mail fraud,
money laundering and tax evasion stemming from their operating
or participating in an invention promotion scam that netted $60
million.

United States Attorney Donald K. Stern, Michael Ahern, Inspector
in Charge of the Northeast Division U.S. Postal Inspector's Office,
and Michael Lahey, Acting Chief of the U.S. Internal Revenue
Service's Criminal Investigation Division in Boston, announced
today the unsealing of two Indictments charging ten individuals
for their involvement in a $60 million mail fraud scheme that
defrauded over 34,000 victims while operating in Westfield,
Massachusetts, from 1982 through 1996.

The charges in this case resulted from a lengthy investigation by
the U.S. Postal Inspection Service and the U.S. Internal Revenue
Service into the business activities of three invention promotion
companies: American Inventors Corporation ("AIC"), formerly
located at 82 Broad Street, Westfield, Massachusetts; American
Institute for Research and Development ("AIRD")
, formerly located
at 16 North Elm Street, Westfield, Massachusetts; and
Washington Financial Group ("WFG"), formerly located in West
Palm Beach, Florida and Enfield, Connecticut.

The government charges that inventors submitted their ideas to
the three companies to obtain a fair and honest appraisal of the
merits and worth of their ideas. Thereafter, the companies falsely
misled the inventors about the merits and worth of their ideas
through mailings and sales presentations called "inside sales
pitches" and "set-up pitches". The fraud scheme culminated with
face-to-face meetings between salespersons and the inventors,
called "outside sales pitches", during which the salespersons
made false statements about how much money the companies
believed that inventors could make. As a result, inventors paid
thousands of dollars in fees, usually between $200 and $10,000,
for worthless patenting and marketing services.

U.S. Attorney Stern stated: "The only thing successful about
these companies was the unparalled size and scope of their
scam, which yielded $60 million dollars from over 34,000 victims.
The patenting and marketing services they provided were
worthless. The big dreams of small inventors were exploited by
this cynical and cruel hoax."

Inspector in Charge Ahern commented: "Four years ago, this
scheme came to our attention. The result of this Indictment
today is indicative of our commitment to aggressively pursue
those who victimize consumers through the U.S. mail."

Acting Chief Lahey stated: "The Internal Revenue Service is
aggressively combating consumer fraud, in particular
telemarketing fraud, by conducting in- depth financial
investigations. By teaming with other federal agencies, IRS
special agents can share their special skills to help protect the
public from unscrupulous telemarketers."

The first Indictment charges the defendants as follows:

RONALD BOULERICE, age 60, of 400 Woodland Way, Russell,
Massachusetts, and the former owner and President of AIC, and
owner of AIRD and WFG; JOHN SAMSON, age 59, a resident of
173 Linseed Road, West Hatfield, Massachusetts, and a former
Vice-President of AIC and the former President of AIRD; and
LAURIE BOULERICE, age 35, a resident of 55 Maple Street,
Easthampton, Massachusetts, daughter of RONALD BOULERICE,
and a former Vice-President of AIC and the former President of
Massachusetts Patent Services, are charged with conspiracy to
commit mail fraud, mail fraud, conspiracy to commit money
laundering, money laundering, conspiracy to defraud the U.S.
Internal Revenue Service, and filing false income tax returns.

JOHN HOIME, age 49, a resident of 25 Tannery Road, No. 9,
Westfield, Massachusetts, and the former manager of AIC's Sales
Department, is charged with conspiracy to commit mail fraud, mail
fraud, conspiracy to commit money laundering, and money
laundering.

DIANE TAGLIAVINI, age 46, a resident of 48 Stephanie Lane,
Westfield, Massachusetts, and a former AIC salesperson; LEON
GILDEN
, age 52, formerly a resident of Spokane, Washington, and
a former patent attorney for AIC and AIRD, JEFFREY REHBEIN,
age 33, a resident of 47 Arcadia Road, Longmeadow,
Massachusetts, and a former AIC salesperson; SCOTT FAVREAU,
age 35, a resident of 862 Armory Street, Springfield,
Massachusetts, and a former AIC salesperson; BEN ABEL, age 60,
a resident of 19 Fuller Drive, Brattleboro, Massachusetts, and a
former salesperson; are charged with conspiracy to commit mail
fraud and mail fraud.

-- The Fraud Scheme --

According to the Indictment and other public documents, RONALD
BOULERICE became the owner of AIC in March, 1981 and
operated AIC until it closed its doors in September, 1995. RONALD
BOULERICE created AIRD in December, 1992, and installed
SAMSON as its nominee president in July, 1993. RONALD
BOULERICE, however, continued to control AIRD. The Indictment
charges that RONALD BOULERICE and SAMSON secretly started
another invention promotion company, WFG, in late, 1994, and
owned and operated WFG until September, 1996.

The companies portrayed themselves as invention promotion
companies in the business of assisting inventors in patenting
and/or marketing their ideas or inventions. The companies spent
millions on advertising, placing advertisements in national
publications such as USA Today, Reader's Digest, and TV Guide,
and mailing out millions of "deck cards" that encouraged inventors
to call a "1-800" number.

The companies operated their scheme to defraud in the following
manner:

1) When contacted by inventors, the companies mailed an
information packet, which included a promotional brochure, that
encouraged inventors to send in their ideas and obtain a free,
professional assessment. The promotional brochure stressed the
company's experience, professionalism, integrity, and track record
in successfully bringing certain ideas to market. In 1993 alone,
AIC mailed over a 100,000 information packets to inventors.

2) The "Inside Pitch": After an inventor mailed in his or her idea, a
salesperson telephoned the inventor and delivered a sales
presentation. Inventors were encouraged to pay an initial fee
that ranged over the time of the conspiracy from $169 to $289.
They were told the fee was for a registered patent attorney's
opinion letter and a marketing analysis report. The salesperson
would tell the inventor that if the opinion letter and marketing
report were favorable, the company would then offer their
packages for patenting and/or marketing services. The
salesperson would not disclose the fees for those future services.

3) The "Set-up Pitch": An inventor who paid the initial fee would
be contacted by a salesperson approximately two months later
and delivered a second sales presentation. The inventor would be
told that the opinion letter and the marketing report had been
favorable, and that the salesperson wanted to schedule a
personal meeting to discuss marketing and/or patenting services.

4) If the inventor agreed, a salesperson met the inventor in
Westfield or in one of their leased offices throughout the country.
At this meeting, the salesperson would advise the inventor for
the first time about the company's patenting and/or marketing
service fee plan.

5) At this meeting, the inventor would be told that the idea had
survived two rigorous screening processes and that only 5 or 6
inventors out of 100 ever made it as far as a personal meeting.
The inventor would also be told that the company had
established realistic minimum figures for a cash advance and a
royalty in the amounts of $30,000 and $60,000 respectively that
a manufacturer would pay for the idea. The inventor would be
advised to buy the most expensive service fee.

6) The inventor was told that the patenting and marketing
services provided by the company would include applying for a
patent and beginning the marketing program. The marketing
program was to involve sending brochures to manufacturers and
bringing the inventors' ideas to trade shows.

The Indictment alleges, and other public documents on file show,
that the companies defrauded inventors by making material
misrepresentations and omitting material facts throughout their
sales pitches including misrepresenting in its promotional brochure
its proven track record.

The companies further misrepresented in the promotional
brochure the careful assessment an inventor's idea received so
that only those ideas that were determined to have commercial
potential were accepted. In fact, the companies assessed leads
in a cursory fashion and accepted many more ideas than it
rejected. In fact, positive patent opinion letters were generated
almost 100% of the time, with no disclosure to inventors of the
existence of negative patent opinion letters.

The marketing reports provided to inventors were "boilerplate",
containing no research unique or specific to the inventors' ideas
and always concluding that the ideas had market potential. The
manufacturers $30,000 cash advance and $60,000 royalty figures
were the same for every inventor's idea as well. In fact, the
companies had never obtained either cash advances or annual
royalties from any manufacturer for any idea that approached
those figures.

The companies also misrepresented that they "shared the
financial risk" with inventors by claiming that they received most
of the profits from sharing in royalties or through agreements with
manufacturers, when in fact all of their profits came from the
up-front service fees.

As a result of these misrepresentations and others stated in the
Indictment, AIC amassed over $58 million in gross revenues during
its existence. AIRD made approximately $3 million in gross
revenues in approximately three years, and WFG generated
approximately $250,000 during its brief existence. Among the
inventors misled and defrauded were the inventors of the
"Recycled Jean Bag", the "Gastronomy Tube Holder", the "Air
Conditioned Suit", the "Thumb Hold Nail Clipper", the "Binge Buster
Fork", the "Hook and Loop Dickey" and the "Tritium Night Sight".

RONALD and LAURIE BOULERICE, SAMSON, and HOIME are also
charged in the Indictment with conspiracy to launder money and
money laundering as a result of their having used the fraudulently
obtained proceeds to promote AIC, AIRD, and WFG through
increased advertising in order to attract more inventors.

-- The Tax Evasion Schemes --

The second Indictment also unsealed today charges LISA
BOULERICE, age 35, a resident of 55 Maple Street, Easthampton,
Massachusetts, and a daughter of RONALD BOULERICE, with
conspiracy to defraud the U.S. Internal Revenue Service and
filing false income tax returns.

The two Indictments further allege that RONALD, LAURIE and
LISA BOULERICE, and SAMSON, and several other unnamed AIC
employees also conspired to defraud the U.S. Internal Revenue
Service in a number of ways:

First, the Indictments allege that beginning in September, 1992,
RONALD BOULERICE doubled the salaries of SAMSON, LAURIE
BOULERICE, and at least two other unnamed AIC employees. On a
weekly basis, SAMSON, LAURIE BOULERICE, and the two other
AIC employees cashed their payroll checks and returned a portion
of their salary increase to RONALD BOULERICE. RONALD, LAURIE
and LISA BOULERICE, and SAMSON, as well as the other AIC
employees then filed false personal income tax returns that
disguised this payroll kickback scheme.

Second, the Indictments also allege that in late 1992, RONALD
BOULERICE created a sham corporation called Massachusetts
Patent Services and made his daughter, LAURIE BOULERICE, the
president and owner even though RONALD BOULERICE really
controlled the company. RONALD and LAURIE BOULERICE then
created an inflated invoice scheme that padded Massachusetts
Patent Services' invoices, which allowed RONALD BOULERICE to
skim $151,000 in income from Massachusetts Patent Services and
give money to LAURIE BOULERICE under the guise of being
legitimate income.

Third, the Indictments allege that RONALD BOULERICE had AIC
pay for his personal expenses and obligations by falsely
submitting personal expenses as business expenses to AIC and
other entities. Some of these personal expenses included
improvements to his personal residence, a $26,000 trip to the Far
East, and money to his daughter, LISA BOULERICE, who RONALD
BOULERICE had put on the payrolls of AIC and Massachusetts
Patent Services even though she did not work for either
company.

As a result of these various tax fraud schemes, RONALD
BOULERICE did not report at least approximately $490,000 in
additional income during the years 1992 through 1994. RONALD
BOULERICE owes an additional tax liability of approximately
$188,000.

This case is the result of a joint investigation by the U.S. Postal
Inspection Service and the U.S. Internal Revenue Service's
Criminal Investigation Division. The case is being prosecuted by
Assistant U.S. Attorney William M. Welch II of Stern's Springfield
office.


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