An American woman facing civil fraud charges in Massachusetts for selling on auction Web sites at least US$750,000 worth computers that were never delivered has said through her attorney that she intends to pay back everyone who is entitled to a refund.
Massachusetts Attorney General Thomas Reilly yesterday filed suit in Superior Court in Worcester, Mass., against Teresa Smith, alleging that she sold at least $750,000 worth of Apple Computer Inc. Macintosh computers through her companies Smith/Berkeley LLC and Shadow SB but never delivered the merchandise.
The suit calls for Smith to make full restitution and asks for a permanent injunction barring Smith from selling computers both online and off-line in Massachusetts. Smith, who until recently lived in Massachusetts, now resides in Manchester, Conn.
Sources in Reilly's office said the U.S. attorney's office may also look into Smith's online computer businesses.
Smith's attorney, Angelo Catanzaro of Ashland, Mass., would not comment on a widening investigation against his client and said that Smith is working with Reilly to resolve the problem.
Smith allegedly sold computers to at least 260 customers nationwide on the eBay and Auctionworks Web sites and took payments through PayPal, wire transfer or certified check.
While some customers received their computers, most did not.
When customers sent e-mails asking Smith where their computers were, they got an automated response telling them that the machines were on their way. Those who called got voice-mail messages.
Smith sent refund checks to some consumers but many of those checks bounced, according to Sarah Nathan, a spokeswoman for the attorney general's office.
Catanzaro said that Smith's attempts to make refunds show that she mismanaged her business and didn't try to intentionally defraud anyone.
"She intends to reimburse everyone who is entitled to a refund," he said.
But in a statement, Reilly referred to Smith's business as "a scam" and said she was in violation of the state's Consumer Protection Act.
"This individual is accused of selling merchandise that she knew she did not have," Reilly said. "She set delivery dates, told consumers falsely that computers had been shipped and then failed to provide refunds."
A hearing on the preliminary injunction will be held July 12 in Superior Court in Worcester.