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January 23, 2008

Former Warwick man pleads guilty in $15 million scam

A former Warwick man pleaded guilty this morning to federal charges in connection with an Internet sales scheme that bilked nearly $15 million from people across the country.

The company claimed to sell electronic supplies and equipment.

One Mixitforme customer likened the Providence company’s sales methods as “a pyramid scheme” in which it appears money coming in to the company one day was used to fill some orders from the day before.

The customer, from Stony Brook, N.Y., said after receiving some small orders from Mixitforme, he ordered 6,000 PSPs and 5,400 PlayStation 2 video-game units, which he never received.

Federal authorities charged Cory Johnson, formerly of 272 Pierce Ave., Warwick, this month with conspiracy to commit wire fraud and money laundering for his role in Mixitforme.com, a defunct Providence Internet retailer. Johnson ran the company with a second man, David Whitaker, who has left the state.

Some former Mixitforme employees said they told federal authorities that Whitaker would regularly sweep the company’s overnight receipts before they could buy products, using the money to pay for clothing, medical bills and other personal expenses.

Johnson faces up to 15 years in prison and fines totaling $500,000 for his part in a 2005 scam that left electronics distributors and others out millions of dollars, according to federal court documents.

Appearing this morning in U.S. District Court in Providence, Johnson responded quietly to questioning by Judge William E. Smith, ultimately agreeing to the federal fraud charges.

His lawyer, William J. Delaney, of Reavis Cianciolo LLC, declined comment this morning.

Johnson has surrendered his passport to federal authorities but remains free on a $50,000 unsecured bond.

As a condition of his release, Johnson must limit his travel to Pennsylvania, where he now lives, and New Jersey, where he must sometimes travel for work. He also will be allowed to return Rhode Island to look after a house he owns in Warwick and to attend further court hearings.

He is scheduled to return to federal court June 20 for sentencing by Smith.

-- Journal staff writer Paul Grimaldi

Posted by Brandie Jefferson  at 6:20 PM | Permalink

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