Internet Sleaze King?
Tad Cook
Irate Internet Clients Claim Florida Business Cast Worldwide Web of Deceit
By James McNair, The Miami Herald
Knight-Ridder/Tribune Business News
FORT LAUDERDALE, Fla. -- Aug. 15 -- Steven West duped 50 FBI agents --
and thousands of others -- into paying $99 each for a plug in bogus
Who's Who directories. He confessed, but didn't spend a single night
in jail.
House arrest, a federal judge in New York decreed last year.
Prosecutors were flabbergasted. West was the ringleader of a $14
million scam and now he could sleep in his own bed.
So West, 55, whose real name is Steven Samuel Watstein, went back to
Florida -- to a $350,000 house in Weston Hills Country Club. Back to
the home with the maid and the wife's leased Jaguar. Back to a routine
in which his chauffeur drove him to work, to restaurants and, on
Saturdays, to his psychiatrist.
"I drove him all over the place," said Ronald Roth-Watts, the chauffeur.
Even before he went to court, West had assumed a new career. The man
who penned "How to Live Like a Millionaire on an Ordinary Income" in
1977 was on to a new way to make big money -- on the Internet.
Through a succession of Fort Lauderdale-based companies, West has
offered a full package of Internet services to get business people up
and running on the World Wide Web. He conducts seminars and expos. He
sells videotapes. He designs Web sites.
For a while, money poured in, sometimes more than $200,000 a week. In
his company's current Web site (http://www.internetworldwide.com),
users are welcomed to the "nation's largest conglomerate of Internet
services."
But a lot of people believe that West's lifestyle came at their
expense. In interviews with 34 suppliers, customers and former
employees, West is consistently described as a con man extraordinaire.
Creditors and government agencies have hit West's companies with a
stream of lawsuits, default judgments and tax liens. Some don't even
bother suing, believing that it would be a waste of time.
"There's a lot of flim-flammers down here, but he makes them all look
like pikers," said Chuck Meyer, who claims that West owes him $12,000
for public-relations work. "I look at him as the plague."
Had people seen West's rap sheet, they might have spared themselves
the grief. West pleaded guilty to fraud and income-tax evasion in the
Who's Who directory scam that ran from 1988 to 1991. His 38-year-old
wife Sherri, who fronted for West, pleaded guilty to income tax
evasion.
Facing U.S. District Judge Jacob Mishler in Uniondale, N.Y., West
cited his work for charities and pleaded for leniency. Mishler
responded with six months of house arrest, three years of probation
and a $50,000 fine. Federal agents who cracked the case were outraged.
It wasn't West's first brush with controversy.
In 1992, after the Who's Who scam collapsed, West's brand-new,
19,800-square-foot mansion in posh Mill Neck, N.Y., burned
down. Authorities called it arson. No one was charged, but the
government seized West's $1.3 million in insurance proceeds on the
grounds that the house had been bought with dirty Who's Who money.
In the '70s, several West-owned stores in Detroit burned under
suspicious circumstances, according to Newsday. West said he passed a
lie detector test. He was not charged.
In 1977, West made the front page of {The Wall Street Journal}, which
called him an "illusionist, merchant and slow payer of bills." To this
day, his critics note his uncanny ability to excite people on a "work
now, get paid later" basis.
"We gave him a check for 13 grand, and they did absolutely nothing,"
said Robert Soleau, president of Diversified Group Brokerage, a
Marlborough, Conn., health insurance company. It won a $12,900
judgment against West's Internet Marketing Corp. last December, but
hasn't collected.
West made his move on the Internet in early 1995, when he ran a
company called West Adams Christopher & Associates.
The Internet, a network of computers around the world, was attracting
businesses like flies. Companies were scrambling to establish a
presence on the World Wide Web. To do that, they needed someone to
create Web "pages" that would attract potential customers.
West went into high gear. He obtained mailing lists and hired sales
people to pursue prospects for seminars, videotapes and creative
work. He contracted out the Web site design work, the videotape
production and all of the printing, mailing, faxing and public
relations vital to a marketing campaign. He booked meeting rooms in
hotels around the country.
The public loved it. The $99 seminars often drew more than a hundred a
pop, while the $99 videotape, a poor rendering of the seminar, sold by
the thousands. Companies like Bloomingdale's, Weight Watchers and
Drake Beam Morin paid to have Web sites done. Some companies paid $500
for a Web address (as in www.xyzcorp.com), even though that was far
above the going rate.
One of West's crowning moments came last December, when he drew 10,000
people to a three-day Internet expo at the Broward County (Fla.)
Convention Center. Visitors paid $7.50 each. Nearly 120 vendors set
up booths.
But the mood wasn't celebratory at the office. West's employees were
upset because they weren't being paid in full.
"Nobody knew where the money was going," said Pat Grady, a former
Internet Marketing Corp. employee. "We dealt with hundreds of calls a
day from unhappy customers."
"We were getting thousands of video orders, and we weren't sending
them out," said Frank Rocco, a salesman from October to July. "The
excuse was that we were overwhelmed with orders, or that they had to
be sent back to the factory."
When customers did receive a Web site, the work didn't live up to its
billing.
Bob Sterling of Drake Beam Morin, a big consulting firm in New York,
said he "wasn't terribly impressed" with West's preliminary work, so
the firm dropped him. Peter Sardella, a vice president for Prometheus
Information in King of Prussia, Pa., described the quality of West's
Web sites as "weekend-beginner level."
When West delivered Web sites, they would be "hosted" on computers run
by Internet service providers, which sell telephonic access to the
Internet. West made victims of ISPs, as well.
Said Jim Rennie, president of Internet Gateway Connections in Fort
Lauderdale: "This guy (West) all of a sudden doesn't pay his bill,
he's got five or ten customers on our server, we shut it off, and they
don't have Web sites anymore."
Federal probation guidelines require defendants to tell third parties
of their criminal records. In West's case, clients and creditors say
they never heard a word about it. And if West was on house arrest last
year, hardly anyone noticed.
Then there were the acts of charity West spoke of in court. Right
about that time, West was creating a free Web site for Goodwill
Industries of Broward County.
Actually, West recruited a Fort Lauderdale company called Proclus to
do the work, said Proclus President Susan Wallach. She did a needs
analysis, a site flow chart and a Web site for Goodwill, she said --
and West still owes her $2,700.
"I'm assuming that if the court assigns you to do pro bono work,
you're not supposed to hire someone else to do it for you," Wallach
said. "That would be like having someone serve your prison sentence
for you, wouldn't it?"
Some of the bigger claims against Internet Marketing come from
companies that printed, mailed and faxed its sales materials.
Innovative Marketing Technologies of Pompano Beach, Fla., said it is
owed $35,000 for printing and mailing services. M.O.R. Printing of
Davie wants $20,000 for a job that ended in March. Sandy Gilmore,
owner of Gilmore Associates in Davie, said she's out $10,000 for
mailing out tens of thousands of letters to companies nationwide.
West, in an interview by fax, said he will honor all valid judgments,
but said nothing about all other debts. He said he has no reservations
about courting new customers and vendors in the meantime.
"Just like the Chrysler Corp. had its low ebb, this company continues
to do this in an effort not only to serve new customers, but to
discharge all valid obligations," he said.
West doesn't deny having problems. But he takes issue with accusations
that he's reneging on his debts at Internet Marketing Corp.
West said he formed his new company, Internet World Wide, in an
attempt to rebound from massive employee evacuations, poor management,
a decrease in seminar attendance, greater competition and the theft of
$50,000 worth of equipment at Internet Marketing.
Unfortunately for West's creditors, judges don't enforce default
judgments. Creditors can wave a judgment in a deadbeat's face and
still not collect.
"A judgment is kind of like a fishing license, and a lot of times you
go fishing without catching anything," said Herbert Dell, a Plantation
lawyer who won a $10,148 case last November for a California company
that did advertising work. "If you can't find any assets, you go back
empty-handed."
Larry Farber, owner of the Farber Lewis & Paul collection agency in
Coral Springs, said he stops at nothing when trying to collect unpaid
debts. Shrewd debtors, however, run up smaller debts that aren't worth
the cost of lawsuits or collection, he said.
"He'll laugh at you and say, 'Come and get me,"' Farber said.
West's financial dealings are not lost on the Internal Revenue
Service. It already alleges that West Adams Christopher & Associates
owes $29,534.51 in payroll withholdings from 1992 and 1993 -- a debt
that West said he will pay.
But West could be in big trouble -- much sooner -- from his federal
probation officer.
"If he's scammed people while he's on probation, he's certainly
violated his probation," said Seth Marvin, the federal prosecutor in
the Who's Who case in New York.
"If you're on probation, a probation officer can get a warrant for
your arrest, and you can go to jail."