Franchise Fraudster Dennis Mason Gets 3 Years in Prison, Owes $2M Restitution
Dennis Mason, a notorious franchise fraudster who emptied the retirement & savings accounts of 160 victims, will be reporting to federal prison at the age of 75. Following a nearly 7-year campaign by a coalition of victims and the UnhappyFranchisee.Com watchdog site, Dennis Mason was sentenced to three years in prison & was ordered to repay his victims more than $2M in restitution by District Court judge Gerald Pappert. Mr. Mason’s partner in the NY Bagel Franchise Scam, Joseph Smith, will be sentenced for Conspiracy to Commit Wire Fraud and Tax Evasion in June.
(UnhappyFranchisee.Com) Today, the 160 Victims of the NY Bagel Franchise Scam nervously awaited news of the April 13 sentencing hearing of notorious franchise fraudster Dennis Mason.
Mason had pleaded guilty to one count of wire fraud and one count of conspiracy to commit wire fraud on July 30, 2020.
Mason’s sentencing had been deferred during the prosecution of his co-conspirator, Joseph Smith, who pleaded guilty to conspiracy to commit wire fraud and tax evasion on February 11, 2012.
Fearful that the Frenchtown, NJ-based confidence artist, who operated for years using a number of aliases, would once again evade justice, an alliance of fraud victims organized by UnhappyFranchisee.Com publisher & industry watchdog Sean Kelly submitted Victim Impact Statements to Judge Pappert from across the U.S.
Around noon today, all were relieved at the posting of Judge Gerald Pappert’s sentence for Dennis Mason of 3 years incarceration followed by 3 years of supervised release.
Judge Pappert also ordered Dennis Mason to pay restitution of $2,100,450.00 to his victims.
Read: Dennis Mason Judgement by Judge Pappert
“The Victims Refused to Remain Victimized. They Stopped This Scam & Brought About Justice.” NYBSVC Founder Sean Kelly
Sean Kelly, NY Bagel Scam Victims Coalition founder and publisher of NYBagelScam.com and UnhappyFranchisee.Com watchdog sites thanked Judge Jerry Pappert, U.S. Attorney David Ignall and the lead FBI Agent who headed the investigation.
“Stopping the NY Bagel Franchise Scam of Joe Smith & Dennis Mason was a very long, difficult and, at times, frustrating, group effort,” said Kelly, who began documenting victim accounts and submitting complaints to law enforcement agencies in 2013.
“In the end, the FBI agent in charge, prosecutor Ignall and Judge Pappert came through for the victims. The time and effort it took to halt this blatant investment scam and bring the scammers to justice puts a spotlight on the urgent need to fix this blind spot in the legal system.”
The fraudulent scam targeted military veterans, first and second-generation immigrant families and general business opportunity seekers with persuasive ads placed on Craig’s List and other online sites. Dennis Mason & Joseph Smith used fraudulent documents and false earnings representations to sell what they represented as fully-financed and developed franchised bagel shops. Most victims never received the promised services and lost $20,000 – $60,000 to Mason, Smith and their associates. Those who opened with their own financing generally lost $125,000 – $350,000.
Some of the failed stores had been financed with SBA-guaranteed loans which paid back the bank with taxpayer money.
Of the more than 60 NY Bagel Cafe, NYC Bagel & Sandwich Shoppes and Davidovich NYC Bagel Shops opened, fewer than 5 remain open.
Dennis Mason’s Reputation for Fraud Goes Back Decades
According to Kelly, there’s no joy in seeing a 75-year-old have to report to prison.
“I feel bad for his family, as I feel bad for the many victims who lost their dreams, marriages and homes to these predators. I would have rather seen him go to jail when he was 45,” says Kelly. Dennis Mason’s fraud-related lawsuits and judgements go back as far as the 1990s and featured such defunct franchise ventures as Mike Schmidt’s Philadelphia Hoagies, Motorwerks, Amazon Cafe, Petrucci’s, Morrone’s Italian Ice, Horn & Hardart, Java’s Brewin’, Windmill Hot Dogs and others.
Mason operated as an outsourced franchise salesman using a variety of company names (FRANCHISES UNLIMITED, INC., FRANCHISE VENTURES, INC.) and aliases (Brian Scofield, Keith Samuels, David Malin) as online warnings grew.
“These Long-time Scammers Messed With the Wrong Victims”
A growing coalition of victims & Kelly’s online campaign of more than 75 warning posts and dozens of requests for investigations led to successful state enforcement orders being issued again Mason & Smith by the states of Maryland, Virginia and Washington.
Kelly credits Maryland Assistant District attorney Dale Cantone (retired), Virginia State Corporation Commission Senior Investigator Barry Braun and Eric D Palosaari of the Washington State Department of Financial Institutions for providing early investigations.
Ultimately, it was the NY Bagel Scam victims’ unwillingness to go away quietly that will protect future potential victims from Dennis Mason & Joseph Smith.
“Some of the victims who submitted Impact statements lost their money close to a decade ago,” said Kelly. “They refused to let these guys continue to prey on innocent families.”
The founder of the NY Bagel Scam Joe Smith of Fishkill, NY, formerly of Newburgh, NY, is scheduled to be sentenced by Judge Pappert on June 27, 2022 at 10:00 a.m.
For more information and interview requests, contact Sean Kelly at UnhappyFranchisee[at]Gmail[Dot]com.
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TAGS: Dennis Mason, Dennis Mason sentence, Dennis Mason fraud, NY Bagel Scam, Bagel Franchise Scam, NYC Bagel franchise, Joe Smith scam, Joseph Smith Newburgh NY, Bagel scam Trial, US Attorney David Ignall, US Attorney Eric Powers, Judge Gerald Pappert, Judge Jerry Pappert, unhappy Franchisee, Sean Kelly
As I responded to your LinkedIn feed, Sean, the only problem I have with this outcome is that it wasn’t ten years rather than three. This weasel deserved nothing less. As for the restitution, I can’t imagine the total amount he owes to the excruciating number of Franchisees he swindled.
I recall him convincing people to put the initial franchise fee on their credit cards. He drove a Mercedes when I first came to know him (I fired him in under ten days). I later learned he would tell people, “you’ll be driving one of these in less than a year.”
As for you, Sean, well done. You’ve been on him as long as I know you, and the result, although satisfying to some degree, doesn’t account for the number of people injured, gone bankrupt, the heartache, the family issues, or the trauma of having been swindled by this low life. Like you’ve said, one down, one to go. Well done, Sean, well done.
I agree with Kim’s comments.
Although some individual franchisees have had limited success in suing them, this result would not have been possible without Sean collating, cajoling, and presenting a united voice that eventually forced the authorities to act. Nice job!!
I appreciate the thanks and recognition as there’s been precious little of either on the long road to get here (other than from the “non-victims” as I’m going to start calling them, who have always been appreciative and gracious). I know it always sounds like false modesty when I hear someone say it, but it truly takes a group effort to get something like this done.
I was the victims’ champion, and it was needed to have someone from the outside stand up for them. Victims of fraud are already battered, tired, demeaned, some are embarrassed and many have to focus all their energy on digging out of the hole these guys put them in. There is one woman who was too traumatized to even respond to me for a year until she could even talk about it. So there needs to someone to take up the cause and do battle for them.
But the real credit goes to the victims who refused to just let it go… even when they knew their money was likely long-gone. There were some determined from the start to not go away quietly, to not let this happen to another family. Janet from Rhode Island immediately confronted these guys online, filed complaints with gov’t agencies, helped me try to get Craig’s List to block them. It was like 13 years ago Dennis Mason took the money she was going to use to own a business with her son. She submitted a Victim’s Statement and she’s willing to travel 250 miles to attend Joe’s Sentencing hearing. They picked the wrong Non-victims to defraud.
And it took state & federal agencies & law enforcement. I was hard on these guys on time, but they came through including the FBI Agent (Anthony) who took the ball and ran with it, prosecutor Ignall and thank god Judge Pappert. But even before that, newly retired Ass’t DA of Maryland Dale Cantone investigated based on a single unregistered sale, former FBI turned investigator for Virginia Barry Braun who prompted an enforcement order with fines of $700K+, and Washington State Eric D. Palosaari who did a great investigation despite them having only advertised the scam in WA.
Those state investigations gave us the validation needed since Smith & Mason could dismiss my warnings as the rantings of a crazy blogger (fair enough description, actually).
Unfortunately, it takes all three to get even an outright scam like this stopped.
It shouldn’t be this hard. I think we can use this extreme case study to demonstrate the blind spot/bermuda trangle in the legal system that leaves would-be franchise owners vulnerable. I documented all of this for the head of franchising at the FTC in 2015 and fought to get them to take action… nothing. My FOIA requests for complaint logs showed they received complaints earlier than that.
I warned the California Department of Corporations that NY Bagel was advertising their unregistered franchise all the way back in 2013. I have about 22 pages of email correspondence & docs. They could have prevented some of the worst victimizations, yet they are only focused on mobilizing AFTER the damage is done. They are good people, no doubt, but acted on BurgerIM long after the damage was done… and the AAFD gives them an award(!)
Pointing out the truth & calling bullshit on bullshit has not endeared me to many in the franchise industry. Most want to perpetuate the lie that Franchiseville is highly regulated and still a safer path to business ownership. I appreciate those of you who are willing to urge the changes that can actually make that the reality again (if it ever was).
Fantastic work. In a just world, some of that restitution money would go to Unhappy Franchisee.
Thanks, John. I agree! However, I’ll be satisfied with a stiff prison sentences for each of these two and DELIGHTED with any money that might make its way to the victims.
The likelihood of compensation for Unhappyfranchisee.com is only slightly more likely than Two Harbors Mayor Swanson’s proposed underwater (under ice?) hotel in Lake Superior haha.
Perhaps billionaire Mr. O will become benefactor of us both!
Bravo! I need heroes like you: Never give up fighting for what is right. And I am deeply grateful that are able to keep your clear focus through an incredible never-ending snarl of lies, diversions, threats and intimidation attempts. I can’t even properly describe the forces you must be up against. I have not suffered these kind of attacks, but I feel comforted that those hurt are hitting back on the bullies in this country. It is so important!
Thanks for your kind words, Phyllis.