Competition Bureau investigation leads to sentencing for deceptive telemarketing operation

OTTAWA, March 30, 2007 — Two Toronto-based telemarketing firms, along with the owner, have pleaded guilty and were sentenced following a Competition Bureau investigation into a deceptive telemarketing scam involving the sale of office toner products. Edward Leefe, 45, of Toronto, Lexcan International Corp. and H&P Communications Inc. pleaded guilty to 11 charges under the Competition Act , as well as related charges under the Criminal Code. The accused also operated as The Calcom Business Centre, Lexam International Corp. and MPL.

Justice H.E. Sachs of the Superior Court of Ontario imposed a $50,000 fine and an 18-month conditional sentence on Mr. Leefe, who also pleaded guilty to Criminal Code charges of fraud over $5,000, possession of proceeds derived from the commission of an indictable offence and failing to comply with an undertaking to refrain from deceptive telemarketing.

A fine of $1.5 million was levied against Lexcan International Corp. and H&P Communications Inc., while Justice Sachs ordered that over $78,000 worth of seized cheques be returned to victims in Canada and the United States. Leefe and the corporations are prohibited for a 10-year period from engaging in any manner of telemarketing.

“The Competition Bureau encourages businesses during Fraud Prevention Month and throughout the year to recognize the signs of potential scams, report them to the authorities and stop fraud,” said Raymond Pierce, Deputy Commissioner, Competition Bureau.

Mr. Leefe’s telemarketing operation promoted the sale of toner products to businesses across Canada and the United States, as well as to not-for-profit organizations, churches, schools, universities and government agencies. Employees of these organizations were deceived into providing the make and model of their office equipment, on the false pretences of responding to a survey or receiving a catalogue.

Leefe then used a deliberate and scripted series of false and misleading representations designed to convince prospective customers that they had an existing business relationship with his operation. He instructed his telemarketers not to disclose the actual price of the toner products or that the cartridges were re-manufactured.

Businesses and organizations were persuaded by these deceptive practices to pay exorbitant prices for toner products they did not want and did not order. Customers who refused to pay were subjected to aggressive collection practices and threatened with court action and collection agencies.

Shirley A. Herrell, who worked for Leefe as office manager, pleaded guilty to a deceptive telemarketing charge during an earlier proceeding.

The Bureau wishes to thank the Toronto Strategic Partnership, which assisted in this investigation. The Partnership is an international law enforcement partnership dedicated to combatting mass marketing fraud. Members include the Competition Bureau, the Toronto Police Service, the Ontario Provincial Police, the RCMP, Ontario Ministry of Government Services, the U.S. Federal Trade Commission, the U.S. Postal Inspection Service, and the UK’s Office of Fair Trading.

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.

For media enquiries, please contact:
Maureen McGrath
Competition Bureau
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