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Published: Thursday, 4/1/2010

2 charged with bilking golf courses

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

For operators of 1,300 small golf courses across the United States, the pitch was too good to pass up.

"The worst that could happen is the course will make money," promoters promised.

Now, the co-owner and an executive of the suburban Toledo company behind the pitch each face one felony charge in U.S. District Court in Toledo in an alleged scheme involving beverage carts and phony advertising revenues.

Daniel W. Sandwisch, of Maumee, and Robin Flaum, of Sylvania were accused yesterday of conspiracy to commit mail and wire fraud. The charge carries a sentence of up to five years in prison.

Robin Flaum of Sylvania was marketing president and Daniel W. Sandwisch, below, of Maumee was co-owner of Royal Links USA Inc. They are accused of conspiracy to commit mail and wire fraud in an alleged scheme involving beverage carts and phony advertising revenue. Robin Flaum of Sylvania was marketing president and Daniel W. Sandwisch, below, of Maumee was co-owner of Royal Links USA Inc. They are accused of conspiracy to commit mail and wire fraud in an alleged scheme involving beverage carts and phony advertising revenue.
NOT BLADE PHOTO Enlarge

Mr. Sandwisch, 43, was co-owner and Mrs. Flaum, 47, marketing president of Royal Links USA Inc. in Springfield Township.

"I deeply regret the actions of Royal Links USA and how they impacted customers and suppliers," Mrs. Flaum said in a written statement relayed through a representative. "I take full responsibility for my actions and in retrospect I wish I would have asked more questions of the owners and understood the dynamics of the entire company."

Neither Mr. Sandwisch nor his attorney, John Teakell, of Dallas, could be reached for comment.

Back in 2004, when - according to papers filed in U.S. Bankruptcy Court - Royal Links took in $12 million, a network of sales representatives fanned out across golf courses nationwide.

The pitch: Buy or lease a beverage cart through our program and we'll reimburse you for the lease payments from revenue generated by advertisements placed on the carts by major firms we've lined up such as Procter & Gamble, Hershey Foods, and Kellogg Co.

Hundreds of golf courses bit, some signing up for multiple carts to sell beer, pop, and other refreshments.

The only problem was that Royal Links signed up no major advertisers, prosecutors allege. The little ad revenue generated was insufficient to cover reimbursement payments.

The only way the firm had to cover the expense was to sign up more and more golf courses.

When the alleged scheme collapsed in late 2004, courses were on the hook for lease payments of up to $16,000 to separate leasing companies that purchased the nonmotorized carts from Royal Links for up to triple the $4,000 construction cost.

Besides revenues from cart sales starting in 2002, the firm also charged fees to golf courses to join its "Royal Links beverage caddy express program."

Court documents do not say how much golf courses lost, but Royal Links listed its debts at $8.1 million in a 2005 filing in U.S. Bankruptcy Court in Toledo.

The firm, which was originally known as Tower Building Services Inc., borrowed its business concept from a firm in Canada that also went belly up, court documents state.

Prosecutors charged Mr. Sandwisch and Mrs. Flaum in a "bill of information," meaning that they gave up their right to have a grand jury decide whether charges were warranted. This move by prosecutors typically means they have reached a plea agreement with defendants.

Mrs. Flaum's attorney acknowledged this week that she is cooperating in the investigation.

It is unclear why prosecutors waited five years to bring the case to court. Court records show that investigators obtained a federal search warrant in 2005. The warrant itself is sealed, so it is unclear what was searched.

Not charged yesterday was Royal Links' co-owner Philip Cargnino, a metro Toledo developer and businessman. Court documents do not mention him directly but state that a co-conspirator identified only by the initials P.C. "essentially directed, supervised, and controlled" the enterprise.

Mr. Cargnino could not be reached for comment.

Both Mr. Cargnino and Mr. Sandwisch have been in the limelight recently because of the failure of a commercial real estate development firm with which both were involved. Mr. Sandwisch was a co-founder of Timberstone Group Inc., of Springfield Township. He listed more than $60 million in debts in a personal bankruptcy petition last year that resulted from the firm's collapse.

Mr. Cargnino invested in several Timberstone investment partnerships.

The Royal Links case was investigated by FBI agents in Youngstown and prosecution is being handled by Robert Patton and Christian Stickan, who are federal prosecutors in Cleveland.

Bill Edwards, a spokesman for U.S. Attorney Steven Dettelbach, of Cleveland, said it isn't uncommon for federal law enforcement officials in different cities in Ohio's northern district to share duties.

The case has been assigned to federal Judge Jack Zouhary, of Toledo.

Contact Gary T. Pakulski at:

gpakulski@theblade.com

or 419-724-6082.



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