Ron Lengacher, Ogden, pleaded guilty Thursday afternoon in federal court to mail fraud in a "boiler room" sales scam that pretended to offer everything from vacations in Hawaii to fur coats.
Apparently nothing of value was ever delivered by Lengacher's International Travel Council, said Assistant U.S. Attorney Gordon Campbell. But prosecutors charged that ITC and its predecessors managed to fleece people from Utah, Florida, Ohio, Illinois and Pennsylvania.Lengacher, who was charged with 12 felony counts, offered an "Alford" plea, in which a defendant admits the government has such a strong case that he must plead guilty yet still maintains he is innocent. Legally, the plea has the same effect as an ordinary guilty plea.
"I'm tired of this whole messy mess," Lengacher told U.S. District Judge David K. Winder. "There was nothing - no intention to defraud anybody on my behalf. . . . The people who I was involved with were very fine manipulators, and I don't know what they've got in their pocket at this point."
Originally Lengacher's operation, based in Ogden, was called Rainbow's End.
"As ITC, they sold coupons represented to be good for free round-trip air travel to Jamaica or Hawaii, upon payment of a $29 registration fee," says the indictment. "None of the things being sold were of value as represented."
Campbell said, "Everybody in the place knew (the flight coupons) were worthless."
One man lost $6,000, thinking he was buying himself and his relatives a fine vacation.
Lengacher, named in the indictment as the managing supervisor of ITC, used the fictitious name Ron Lynn, Campbell said.
In the boiler room operation, saleswomen were stationed in a small central office with telephones and lists of names and numbers of potential customers. They were given scripts or "pitch sheets" to use in talking with potential customers.
Starting in the summer of 1987, the FBI realized people around the country were complaining about being duped by International Travel Council. Then in September 1987, half a dozen women in their late teens and early 20s visited the FBI to say they were working in an operation that seemed fraudulent.
Customers contacted by ITC were told that they had been sent a package of travel coupons as part of a sweepstakes. They were told they had won either first or second place in the sweepstakes, but some problem with the records prevented the caller from saying which.
They were told they must send a cashier's check for $500 to receive the package containing either $5,000 or a $1,600 mink coat.
Campbell told Winder that part of the scheme sometimes involved contacting some well-known photographer in the area targeted. The photographer would be asked to set up an appointment to photograph the lucky winner opening the package, for the purpose of getting publicity photos for the sweepstakes.
When the unsuspecting photographer called the equally unsuspecting victim, that would seem to confirm the story.
Campbell told Winder that sometimes when the "winner" opened his box, there would be a magazine picture of a fur coat inside. Back in Utah, he said, the perpetrators "would have a big laugh."
According to the prosecutor, certain employees were assigned to handle what the boiler room called "heat calls" - telephone calls or visits from irate customers. The employees would make up stories to mollify them.
Campbell said a man who had sold vacations to a woman used a fictitious name in the process.
When the woman's heat call came, the employee assigned to the calls said the man had been killed in an automobile accident in California and that he had the vouchers with him at the time. The operation was doing all it could to recover the vouchers.
Campbell said a few days later, a card came from the woman, expressing sympathy for the death of the fictitious employee. People in the boiler room had a big laugh about that, he said.
Winder accepted the guilty pleas and set sentencing for 8 a.m. on March 24.