News  Telemarketing Operation Paid $850,000 to Settle Investigation of Misleading Sales Practices Targeting Cities and Towns across Commonwealth

BOSTON – Two New York-based companies and their owners and presidents have paid $850,000 to settle allegations that their high-pressure, misleading telemarketing operation victimized cities and towns across the Commonwealth. Under the legal agreement reached with Attorney General Maura Healey and Inspector General Glenn Cunha, the companies are also banned from doing business in the state for one year. 

In an assurance of discontinuance filed in Suffolk Superior Court, the Commonwealth alleged that over the last ten years Pioneer Products Inc., Noble Industrial Supply Corp. and their owners and presidents, Richard Weber and Benno Schubert, used high-pressure techniques and misleading statements to induce municipalities to spend large amounts on supplies that they did not want or need.  Pioneer and Noble sell cleaning supplies, specialty products for fire departments and other chemical products through telephone sales calls.

As alleged in the assurance of discontinuance, an investigation by the Office of the Inspector General (OIG) found that the companies misled cities and towns, getting them to pay for products they did not want or need. The companies started with a cold sales call to a potential municipal customer.  During that call a Pioneer or Noble salesperson would persuade a municipal employee to place an order.  At a later date, Pioneer’s and Noble’s salespeople would call back and say that they were sending the next order, even though the municipality had not placed another order.  If a customer disputed the order, the Pioneer or Noble employee engaged in misleading and high-pressure sales tactics to get the municipality to agree to the next shipment. 

The companies misled cities and towns, falsely saying that they had agreed to purchase the product in an earlier sales call. They also told municipalities they would be subject to retroactive price increases if they did not pay for the next order. Pioneer and Noble even threatened to take legal action and refer cities and towns to debt collectors. These high-pressure sales calls caused municipalities to pay for more merchandise.

Weber and Schubert directed all operations of the companies and even personally communicated with cities and towns in the Commonwealth. 

“These companies engaged in a scheme to swindle hundreds of thousands of dollars from our cities and towns for supplies they didn’t need,” AG Healey said. “Companies who do business with our public agencies must conduct themselves with honesty and integrity, and we work to hold those who don’t accountable.”

Massachusetts Inspector General Glenn A. Cunha said, “Pioneer and Noble intimidated and misled local government agencies – including school districts, libraries, and police, fire and public works departments – into paying for products they didn’t want or need. Now, more than ever, we must ensure that taxpayers’ dollars are spent responsibly and for the benefit of our communities.  This settlement shows that we will hold accountable anyone who tries to take advantage of our cities and towns.”

The OIG and Attorney General’s Office (AGO) will return nearly $400,000 to 43 cities and towns misled by Pioneer and Noble. The municipalities will also be able to keep all merchandise that Pioneer and Noble shipped. The OIG is in the process of notifying the 43 communities that are receiving funds from the settlement. A total of $385,000 will be allocated to the state’s general fund.  The assurance of discontinuance also bans the companies from doing business in Massachusetts for one year and requires Pioneer and Noble to implement new policies and practices and retrain their employees.

Pioneer, Noble, Weber and Schubert denied the Commonwealth’s allegations, make no admissions of wrongdoing and deny all liability arising from the Commonwealth’s allegations.  Pioneer, Noble, Weber and Schubert cooperated with the investigation.

The OIG’s Civil Recovery Unit (CRU) undertook the investigation and recovery.  The CRU, in collaboration with the AGO’s False Claims Division, pursues civil actions to recover funds lost due to fraud, false claims and other wrongful conduct.  It works closely with the OIG’s other investigative units as well as other state agencies and local governments. The OIG operates a hotline for reporting fraud involving public funds or property at 800-322-1323 or IGO-FightFraud@state.ma.us.

The False Claims Division was created by AG Healey in 2015 to safeguard public funds by enforcing high standards of integrity against companies and individuals that make false statements to obtain government contracts or funds. Anyone with information about suspected fraud or abuse relating to state or municipal contracts or funds is urged to contact the False Claims Division’s tip line at 617-963-2600.

William Durkin, Lead Counsel of the CRU, and Meghan MacKenzie, Associate Counsel, led the investigation, negotiation and recovery of the funds. The OIG’s Audit, Oversight and Investigations Division, including Ryan Miller, OIG Investigator/Coordinator, and Elijah Jenkins, OIG Investigator, also worked on the investigation. Amy Crafts, Chief of Attorney General Healey’s False Claims Division, worked closely with the OIG during the investigation and recovery. 

Assurance of Discontinuance between the OIG, AGO, Pioneer Products Inc., Noble Industrial Supply Corp., Richard L. Weber and Benno T. Schubert, June 2020