I thought some might find this news story interesting. This scam has a history dating back to the late 1980's.
St. Louis Post-Dispatch (Missouri) February 16, 1990, FRIDAY, FIVE STAR Edition
4 BROTHERS INDICTED IN SWINDLE
Tim Bryant Of the Post-Dispatch Staff
Four brothers and companies they controlled were indicted here Thursday in a multimillion-dollar stereo speaker scam that authorities said operated throughout North America and in Australia. The scheme started slowly in 1982 but ran up more than $24 million in sales during the last 18 months of its operation, authorities said. Proceeds were from cash sales of poor-quality speakers passed off as speakers worth $849 each. Typically, young men recruited as salesmen peddled the speakers from the backs of vans, authorities said. Salesmen falsely told customers they were deliverymen who had been loaded with more speakers than they were supposed to deliver, the indictment said. James G. Martin, the assistant U.S. attorney who brought the indictment, said federal authorities - including Internal Revenue Service agents - began investigating the case July 13. They were helped by some former sales people. ''We have many former employees as witnesses,'' Martin said. Among those indicted were Ray, Gary, Thomas and Robert Sophie, brothers from the Chicago area. Gary Sophie was president of Network Sound Inc., of Schaumburg, Ill., Network Sound is one of five companies charged in the indictment, all in Schaumburg. The indictment identified the other Sophie brothers as executives of the companies. Network Sound began making the speakers in Schaumburg in 1987 and distributed them to other companies it controlled, Martin said. The Sophies, all in their 30s, were expected to surrender soon to federal authorities here. Although the speakers came in large cabinets and were packaged to make them appear expensive, each speaker cost only $35 to build, Martin said. The indictment said the sales scheme worked this way: Salesmen told customers that the speakers normally were available to bars and other commercial establishments only. Phony invoices showed that the speakers sold for $849. The salesmen would then sell customers a pair of speakers, usually for $200 to $500 in cash. The sellers were aggressive, hawking the speakers on parking lots, at gas stations and sometimes in moving traffic. The speakers, known as Acoustic Monitor dbIV and Dynamic Audio 1901, were sold here in the first half of 1988 and last summer, authorities said. The indictment said the defendants operated offices in more than 40 cities in the United States, Canada and Australia. Indicted with the Sophies were: Thomas McGough, Michael O'Hare and Guy Follet Jr., said to be officers or managers of some of the companies charged. McGough is from the Chicago area. No other information was available about O'Hare or Follet. The indictment charged the defendants with mail fraud, wire fraud and money laundering.
