13 Indicted in ‘Boiler Room’ Sales Fraud Probe

A Malibu man and 12 associates alleged to have been operating one of the largest office supply telephone “boiler room” fraud schemes in the U.S. were indicted Thursday on mail fraud and racketeering charges by a Los Angeles federal grand jury.

Several related companies operated by Sheldon Lawrence Block, 36, of Malibu, president and owner of Park Distributing Inc., allegedly grossed $36 million from 1981 to late 1985 from fraudulent office supply sales, the indictment said.

U.S. Postal Service officials said they believed Park Distributing was one of the largest fraudulent telephone sales operations in terms of sales, employees and the number of complaints filed by customers. More than 2,000 written complaints were filed by customers between 1981 and 1985, the indictment said.

Contact by Telephone

Block’s employees allegedly contacted businesses all over the country from telephone sales offices--or “boiler rooms”--in Culver City, Los Angeles, San Diego and Phoenix.

The salespeople allegedly misrepresented themselves as the customer’s regular office products supplier. These misrepresentations induced customers to place orders for photocopying supplies. Then, the customers were frequently overbilled and cheated on their orders in other ways, the indictment alleges.

“This indictment is the product of years of investigation,” said Assistant U.S. Atty. David Katz. “This is the latest prosecution to emerge from the joint federal and state task force set up to investigate, prosecute and shut down boiler room schemes.”

In September, 1985, nine of Block’s employees were charged with mail fraud. In December, mail fraud charges were filed against two other Park Distributing employees. All of these 11 people have pleaded guilty and will be sentenced in March or April, Katz said.

Homes Used for Bond

The indictment also calls for the forfeiture of all the money raised by the alleged scheme and six pieces of property believed to have been purchased with money from the companies. An arrest warrant was issued for Block on Jan. 24. On Feb. 4, he posted a $1-million bond by pledging his two homes in Malibu and one in Westlake Village.

Warrants are being issued for the remaining defendants, who include: Sharon Lynn Castro, 35, of Hawthorne; Steven Allen Yatomi, 30, of Sylmar; Stuart Harris Schechter, 29, of Hollywood; Emanuel Schechter, 57, of Woodland Hills; David Robertson, 31, of Santa Monica; Barbara Kieserman, 57, of Los Angeles; Brian Alan Lushing, 28, of Los Angeles; John Franklin Cox, 29, of Hollywood; Daniel D. Brown, 31, of Redondo Beach; Douglas John Parsons, 25, of Gardena; Vincent James Baca, 46, of Los Angeles and James Nelson Anders, 39, of El Cajon.