Telemarketers plead guilty to operating office supplies scam

Competition Bureau Investigation Uncovers Deceptive Telemarketing Operation

TORONTO, June 29, 2004 — Four Toronto-based telemarketing firms and six people that targeted Canadian and U.S. consumers using deceptive telemarketing practices have pleaded guilty and were fined following a Competition Bureau investigation.

Hanson Publications Inc., Associated Merchant Paper Supplies Inc., Copier Supply Centre Inc. and OS Networks Inc., were fined a total of $100,000. Adrian Towning, director of all the firms, and Charles Hamouth, director of both Hanson and Associated Merchant Paper Supplies, received 10 month conditional sentences comprised of six months house arrest and four months curfew. In addition, their sentences included one year probation and 75 hours community service. Company managers who received fines were: (Russell) Todd Ivison $20,000; Jamie Lynes $10,000; Neil Underwood $10,000; and Sean Beesley $5,000. Lynes, Underwood and Beesley were also sentenced to 50 hours community service and one year probation.

Between May 1999 and September 2002, telemarketers used false and misleading sales techniques to induce U.S. organizations to purchase business directories and credit card paper supplies, and Canadian organizations to purchase photocopier toner cartridges. The telemarketers led potential clients to believe that their organization had an established business relationship with the telemarketing firms and that products had been ordered, or that the purpose of the call was to confirm business information for accuracy or product delivery.

All companies and individuals received a 10-year prohibition order banning them from selling business directories, credit card paper supplies, photocopier and printer toner cartridges, or any other nondurable office supplies. The order also bans them from telemarketing any product unless they have the customer's agreement to purchase the product either in writing or in a face-to-face transaction.

In addition, the telemarketers did not always disclose mandatory information during the telephone conversation, such as the purpose of the call, the price of the product, and terms and conditions of delivery.

The Bureau received hundreds of complaints about the marketing practices of Hanson Publications, Associated Merchant Paper Supplies, Copier Supply Centre and OS Networks, either directly or from other law enforcement and government agencies, including the PhoneBusters National Call Centre, the U.S. Federal Trade Commission and various Better Business Bureaus.

"The Bureau is concerned about the scope and magnitude of scams originating in Canada, aimed at businesses both here and in the U.S.," said Raymond Pierce, Deputy Commissioner, Competition Bureau. "Stopping such crimes and bringing those responsible to justice are priorities for the Competition Bureau."

Hanson Publications and Associated Merchant Paper Supplies had offices in Toronto, Ontario and Montreal, Quebec. The Bureau investigation led to the laying of criminal charges in both regions under the deceptive telemarketing provisions of the Competition Act and related provisions under the Criminal Code. A preliminary inquiry before the Quebec Court is scheduled to begin on September 27, 2004 for the Montreal accused, defendants 2951-8313 Quebec Inc., Albert Mouyal, Ricardo Aquino and Kristof Jausz.

The Bureau appreciates the assistance of the Toronto Strategic Partnership, which includes the Toronto Police Service, the York Regional Police, the Ontario Provincial Police, the Ministry of Consumer and Business Services, the Federal Trade Commission (FTC), the U.S. Postal Inspection Service, and the State of Ohio Attorney General's Office.

The FTC conducted a parallel litigation, which resulted in a ban prohibiting Charles Hamouth and Adrian Towning from selling directories or non-durable office supplies in the United States and requiring them to turn over $853,000 (U.S.) for consumer redress. Details of the settlement with the FTC are available at http://www.ftc.gov/opa/2004 /01/hansonpubs.htm.

The U.S. court also entered an order prohibiting Montreal defendant Albert Mouyal from telemarketing business directories and non-durable office supplies into the United States, and requires him to post a $500,000 (U.S.) bond before telemarketing other products. Further details of the settlement with the FTC are available at http://www.ftc.gov/opa/2004/05/ hanson.htm.

In November 2002, the Bureau issued a warning to businesses and not-for-profit organizations both in Canada and the U.S. to take caution before supplying information to telemarketers about their office equipment or about the individuals responsible for purchasing office supplies.

Information notice > Deceptive Telemarketing of Office Supplies

The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

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