Two California brothers and a woman who lived with them were sentenced for masterminding a $27 million Ponzi scheme based on video advertisement screens mounted on ATMs and vending machines. Alan G. Flesher, 65, Wayne D. Flesher, 62, and Nancy Carol Khalial, 65, (the "Trio") received sentences of 210 months, 72 months, and 48 months, respectively. Flesher's sentence was significantly higher than his two co-defendants as he was recognized as the leader of the scheme. Under statutory sentencing guidelines, each of the Trio had faced up to 340 years in federal prison after pleading guilty last year to seventeen counts of mail fraud.
From 2001 to 2005, the Trio operated Unlimited Cash Inc. ("Unlimited Cash") and Douglas Network Enterprises Inc. ("DNE"). Potential investors were promised lucrative returns made possible through the placement of Ad Toppers - video monitors capable of displaying video advertisements - on vending machines and ATMs. The Ad Toppers would show advertisements for popular companies such as Coca-Cola, Gold’s Gym, and Paramount Pictures, taking in a portion of ATM transaction fees and advertisement revenue. Based on these promises, nearly 800 investors invested more than $40 million with the two companies.
However, contrary to their representations, the Trio did not use a majority of the funds raised to place ATMs and Ad Toppers. Rather, investor funds were used for a multitude of unauthorized purposes, including personal salaries, sales commissions and payments to existing investors - a classic hallmark of a Ponzi scheme. In addition to the prison sentences, the court also ordered a total of $27.4 million in restitution - the estimated amount of investor losses.