Man Who Made Millions Overcharging for Printer Toner Is Going to Prison

A man who overcharged customers for printer toner has been sentenced to four years in federal prison. It may sound outlandish to send someone to prison for four years over overpriced printing supplies, but Gilbert Michaels ran a scheme that defrauded more than 50,000 people over several decades and earned him hundreds of millions of dollars. In one six year period alone, Michaels earned $126 million from his business.

According to a press release from the Department of Justice, Michaels owned and operated IDC Servco and Mytel International. Michaels’ scheme involved a toner seller attached to several high pressure call centers. Michaels would sell toner to the call centers at or above retail prices and then push the workers to sell the toner to business and individuals at inflated prices. It’s unclear why the scheme worked, but perhaps it had something to do with the legendarily high prices of printer ink and toner in general—many printer manufacturers notoriously sell printers as loss leaders, then make most of their profits on ink sales. A Consumer Reports investigation has found that retail prices for printer inks make them some of the most expensive liquids on Earth.

“Michaels provided price catalogs to the boiler rooms to use in making sales that listed the price of the toner at up to five to 10 times the retail price,” the press release said. “Many of the victims already were receiving toner at no additional charge pursuant to their contracts for their copiers and printers.”

The call centers would reach out to victims, which included charities, tell them that the price of toner had increased but that they had a chance to purchase toner in bulk to lock in a lower price. “Believing that they were dealing with their regular supplier of toner, employees at the victim businesses and organizations signed order confirmation forms, which prompted IDC to ship toner to victims and send invoices that demanded payment at the inflated prices,” Justice said.

If the victims called to complain, Michaels’ companies would threaten to sue the victim if they didn’t pay for the toner. If a small business or charity did manage to force Michaels to take the toner back, his company would charge an exorbitant restocking fee.

Michaels first ran afoul of the Justice Department in 1988 and his companies were then admonished for making false statements and forced to get an independent sales company to move printer toner. “Michaels violated these court orders by working with and providing financing to the supposedly independent boiler rooms that were engaged in deceptive and fraudulent practices, even though IDC received hundreds of thousands of complaints from victims claiming they had been defrauded,” the Justice Department said.

A jury found Michaels guilty of one count of conspiracy to commit mail fraud, 10 counts of mail fraud, and five counts of money laundering. Six other defendants have also been found guilty. 

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