$158M telemarketing scam nets prison term

DataCom founder Bernard Fromstein of Toronto faces a two-year sentence in prison for his involvement in a fraudulent telemarketing scheme that generated an estimated $158 million over 10 years.

A Toronto man is facing a two-year sentence in a federal penitentiary for his involvement in a fraudulent telemarketing scheme that generated an estimated $158 million over a 10-year period.

Bernard Fromstein, 57, has also been sentenced to the maximum three years of probation and is prohibited from engaging in any form of telemarketing for 10 years.

Fromstein, the founder and former president of DataCom Marketing Inc., pleaded guilty in the Ontario Superior Court of Justice to five criminal charges under the deceptive telemarketing provisions of the Competition Act.

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 Competition Bureau said in a Monday release.

The telemarketers implied that the businesses had ordered a listing in the past and that someone in the company had already authorized an order.

Customers later received a business directory, which they ordered based on the fraudulent representation.

Others face legal action

The bureau said 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 act.

"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, the deputy commissioner of competition. "Our commitment is clear: We will continue to take action against those who engage in this type of criminal behaviour."

Proceedings are pending against others charged in connection with this scheme, including: Judy Neinstein, 65, of Toronto, and James Sharo, 59, and George Pavlopoulos, 38, both of St-Hubert, Que., 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.