Competition Bureau Canada

Competition Bureau Canada

July 27, 2009 12:06 ET

Deceptive Telemarketer Receives Jail Time

TORONTO, ONTARIO--(Marketwire - July 27, 2009) - The Competition Bureau announced today that a Toronto man has received a two-year sentence in a federal penitentiary and the maximum period of probation of three years for his involvement in a fraudulent telemarketing scheme that generated an estimated $158 million over a 10-year period.

Bernard Fromstein, 57, the founder and former President of DataCom Marketing Inc., pled guilty in the Ontario Superior Court of Justice to five criminal charges under the deceptive telemarketing provisions of the Competition Act for his part in a business directory scheme. In addition to his jail sentence, Mr. Fromstein is also prohibited from engaging in any form of telemarketing for 10 years.

"The Bureau welcomes this decision, which sends a strong message to scammers who deliberately cause harm to businesses and consumers through deceptive telemarketing schemes," said Andrea Rosen, Deputy Commissioner of Competition. "Our commitment is clear: We will continue to take action against those who engage in this type of criminal behavior."

Mr. Fromstein participated in a scheme in which DataCom telemarketers contacted customers in Canada and the United States, claiming that they were updating information in their business directory listings. The telemarketers implied that the businesses had ordered a listing in the past and that someone in the company had already authorized an order. By using this "assumed sale" technique, which led customers to believe that they had already ordered a listing when in fact they had not, the company successfully deceived businesses.

The telemarketers failed to disclose which company they represented, the price of the product, the terms and conditions to return it, the purpose of the call and the nature of the product, as required by the telemarketing provisions of the Competition Act. Customers subsequently received a business directory, which they ordered based on this fraudulent representation.

Proceedings are pending against others charged in connection with this scheme, including: Judy Neinstein, 65, of Toronto, Ontario, and James Sharo, 59 and George Pavlopoulos, 38, both of St-Hubert, Quebec, as well as two companies: DataCom Marketing Inc. and DataCom Direct Inc. Paul Barnard, 57, has already received a two-year conditional sentence for his role in the scam and has been prohibited from engaging in telemarketing activities for life.

This investigation was conducted with the assistance of the U.S. Federal Trade Commission, the Toronto Strategic Partnership, PhoneBusters and the Service de Police de la Ville de Montreal. Members of the Toronto Strategic Partnership include the Competition Bureau, the Toronto Police Service, the Ontario Provincial Police, the RCMP, Ontario's Ministry of Government and Consumer Services, the U.S. Federal Trade Commission, the U.S. Postal Inspection Service, and the U.K. Office of Fair Trading.

Recognizing the seriousness of deceptive telemarketing, the Bureau recently launched Operation Mirage, a campaign designed to combat business directories scams, targeting 50 locations in the greater Montreal area. This action was conducted under the newly amended Competition Act, which allows for significantly higher penalties for those convicted of criminal telemarketing offences.

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

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