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January 8, 2002

Web Shopping Mall Charged As Illegal Pyramid

The South Florida Sun-Sentinel reported in early January that the U.S. Attorney's Office in Miami is prosecuting a case involving a purported Internet shopping mall that was revealed to be an illegal pyramid scheme.

In his article, reporter Jeff Shields describes how William Caudell, founder and CEO of Professional Resource Systems International in Boca Raton, attracted 48,000 people from around the world into his scheme that cheated them out of $13 million. 

PRSI charged a $295 "application fee", qualifying users for the "Small Office/Home Office System", that allowed them access to their own site on an Internet shopping mall.

But in actuality, there were no sites.  According to Assistant Attorney General Jody Collins, there was never any intention of providing any sites.  Instead, PRSI recruited "CyberManagers" who recruited others to buy into the plan; the new recruits then sought additional participants to pay the fee---all elements of a classic, illegal pyramid scheme.

U.S. Judge Donald Middlebrooks sentenced Caudell to 11 years and three months in prison for mail fraud on January 7.  Judge Middlebrooks reduced the minimum 14-year sentence because of Caudell's cooperation in prosecuting his partners, including reputed organized crime figures who funded PRSI.

According to reporter Shields, Caudell stated that PRSI had "started with honorable intentions", but "I turned it loose to people I had no control over."  Those people included Joseph "Joey Flowers" Rotunno, identified by federal prosecutors as the head of New York's Colombo crime family's South Florida group.  He and his partners supplied $40,000 to PRSI in May 1999, and took over the company's finances, according to defense attorney Stephen Golembe.  Rotunno is serving a 6-1/2 year sentence on racketeering charges.

The investigation into PRSI is ongoing, and the U.S. Attorney has advised the chief informant, Richard Snell, that he is under investigation also.  However Snell told the Sun-Sentinel that he is immune from prosecution because of his cooperation agreement with the state.

The U.S. Justice Department in Washington is also prosecuting the case.  Defense attorney Golembe told reporter Shields that "there's a real focus on this case, on the organized crime members of this case whom (Snell) will be testifying against."

In December, Larry Barrow, PRSI's assistant executive director, pleaded guilty to conspiracy to commit wire fraud. Florida Attorney General Bob Butterworth has sued Caudell, Rotunno, and Caudell's brother-in-law, Gil Gillespie, along with  PRSI principals Ben Tobin and Salvatore Argento, in an attempt to recoup some of the company's losses.

Rotunno, Tobin and Argento have invoked the Fifth Amendment and refused to provide depositions in the lawsuit, which is scheduled for trial sometime this spring, according to Assistant Attorney General Collins.

The court has appointed Lewis Freeman as receiver to oversee PRSI's finances and recover losses for victims.  Reporter Shields wrote that as of June 30, 2001, $5.7 million had been located, according to PRSI's website.  Freeman uses the website, www.prsiinc.com, to provide information on the recovery effort and the prosecution of company officials. 

 

 Original Source: South Florida Sun-Sentinel (by Jeff Shields), January 8, 2002

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