Toner Pirate Sentenced in Iowa

"Toner pirates or toner hustlers call churches, charities, and small businesses and use deception to trick them into buying copy machine toner or other office supplies that are grossly over-priced," Miller said.

Spencer was sentenced in Polk County District Court in Des Moines to a five-year prison term, with the imprisonment suspended as long as Spencer successfully completes five years of probation. As a term of probation, Spencer is prohibited from engaging in any telemarketing from Iowa or directed to Iowans.

Miller said Spencer owns a company which does business as Tenth District Supply, or TDS, headquartered in Burbank. TDS has a large telemarketing office in nearby Rialto.

"But the business really caught our eye because TDS set up a telemarketing office in Fort Dodge, Iowa," Miller said. "An alert consumer tipped us off that this might be a toner-scam. We investigated, executed a search warrant that shut down the office, and filed criminal charges."

Miller said his office alleged that Spencer operated a classic "toner pirate" scheme, sometimes called "toner hustlers" or "toner phoners." Toner pirates call churches, charities, day-care centers, nursing homes and small businesses and use carefully worded scripts to trick victims into thinking the call is coming from the victim's regular office supply company.

Victims are urged to place an immediate order for copy machine toner, supposedly in order to avoid an impending price increase. In fact, toner pirates typically never have done business with the victim, and the claimed price increase is a fabrication, Miller said.

"But many victims discover the truth too late," he said. "They find themselves billed for toner at exorbitant rates, toner shipped half-way across the country, and toner they previously had bought locally for a fraction of the cost."

"Churches often fall victim to toner pirate schemes," Miller said. "They may be especially vulnerable because they often rely on volunteer office help and may have looser inventory controls. But pulling a toner scam on a synagogue or church is no better than stealing from the collection plate."

The Iowa Connection

The Fort Dodge office was set up by Spencer and one of his California employees, Jay Peters, who wanted to return to Iowa and was the first manager of the Iowa office. About a half-dozen telemarketers operated out of the office, while a much larger operation was based in Rialto, California.

An alert consumer who suspected a scam used his telephone tracing feature to identify the Fort Dodge telemarketing number and notified Miller's office, which undertook an investigation.

Miller's Office executed a search warrant on December 7, 1995, and TDS's telemarket- ing from Iowa stopped at that time. Records seized in the search were the basis for prosecution of the owner and a manager of the Fort Dodge office. Criminal charges were filed in July 1996 as part of a state-federal crackdown on office supply schemes called Operation Copycat.

Margaret Haynes of Fontana, California, who managed the Rialto office at various times and at one point came to Iowa briefly to supervise the Fort Dodge office, also pled guilty last year to a felony charge of conspiracy to commit theft by deception brought by Miller's office.

Another term of Spencer's probation is that he is to pay restitution of $355.95 to Coralville United Methodist Church, one of the known Iowa victims of Spencer's business.

"Iowa businesses, churches, synagogues and others have to be on guard," Miller said. "Office-supply schemes are a perennial threat. We advise people to alert their staff, establish secure purchasing procedures, and know exactly with whom they are doing business."

Miller said his office often goes to bat for businesses. "Our consumer protection laws are there to protect businesses as well as consumers, and small businesses and professional offices often are the target of scams," he said.

"And if you do get cheated, call our Consumer Protection Division," he said. "We will try to get your money back and be sure the perpetrators are punished, especially if they try to operate out of Iowa."