2 Accused of Running $10-Million Prize Scam

Two women were arrested Friday on charges of operating a $10-million telemarketing scam and conspiring with a longtime postal inspector to destroy boxes of evidence before law enforcement officials could conduct a search of the operation.

Five other people were also named in the federal grand jury indictment unsealed Friday, following criminal charges that were lodged against the postal inspector, Charles M. Yarton, earlier this year.

Yarton, who according to defense lawyers was one of the original investigators in the case, earlier pleaded guilty to a new federal law making it a crime to alert investigative targets to an impending search.

Prizes Promised

Jan Rado, 42, of Malibu and Holly Miles, 35, of Encino are accused of running a boiler room operation in which customers were told they had won one of five grand prizes, including a Caribbean cruise, a fishing boat or a Lincoln town car.

Customers were told, however, that they had to put up $399, and later $563, to purchase “premiums” in order to avoid gift taxes on the grand prizes.

According to the indictment, the Lincoln town car and the Caribbean cruise never materialized. On the rare occasions when a boat was awarded, it was not the “Boston Whaler-type” boat that had been promised, but an inflatable raft.

Such “boiler room” scams have become prevalent in Southern California. Almost 200 telemarketing fraud operators have been convicted in the region since January, 1986. What is unusual, however, is the complicity of a longtime Postal Service inspector.

A pair of secret wiretaps in November, 1987, revealed that Yarton, an 18-year veteran of the U.S. Postal Service, had repeatedly given Rado details of the Postal Service’s investigation of her company, according to the indictment.

“He would learn confidential law enforcement things about the investigation, and he’d turn around and run to a phone and tell her,” said Assistant U.S. Atty. David A. Katz, who heads a regionwide task force on telemarketing schemes.

‘See What I Can Find Out’

According to the indictment, Yarton told Rado on Nov. 15 that he had checked to make sure no complaints were pending against her business and agreed to “very carefully . . . nose around tomorrow and see what I can find out.”

The next day he told her that two witnesses had been subpoenaed in an investigation of her company, and Rado then ordered an employee to dispose of large quantities of records, according to the indictment.

A day later, Yarton telephoned the office again and directed Rado to immediately “get rid of” any documents pertaining to her company, prompting her to call in a moving company to haul records to the dump.

In fact, Katz said, postal inspectors descended on the office a day earlier than Yarton had expected, and most of the records--but not all--were recovered.

Anthony Brooklier, Rado’s lawyer, said she has denied any illegality in connection with her company, Santa Monica-based Transworld Marketing Group, which was preceded by American Business Industries and Executive Suppliers.

He said Yarton had met Rado about a year ago when he was investigating her company. “He started off investigating her, and eventually a friendship developed,” Brooklier said.

Katz said it did not appear that Yarton had taken any money from the alleged scam but had cooperated in the conspiracy “for personal reasons.”

Also named in the indictment are Mitchell Eisenberg, 41, of Woodland Hills; Leslie Williams, 27, of North Hollywood; Charles Weixelbaum, 29, of Van Nuys; Paul O’Connor, 36, of Los Angeles, and Patty Salazar, 35, of Marysville, Wash.