United States v. Heller C. Boling A/K/A Connie Boling (88-3130) Thomas A. Lauback (88-3216)

869 F.2d 965, 1989 U.S. App. LEXIS 3024, 1989 WL 21529
CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 15, 1989
Docket88-3130, 88-3216
StatusPublished
Cited by18 cases

This text of 869 F.2d 965 (United States v. Heller C. Boling A/K/A Connie Boling (88-3130) Thomas A. Lauback (88-3216)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Heller C. Boling A/K/A Connie Boling (88-3130) Thomas A. Lauback (88-3216), 869 F.2d 965, 1989 U.S. App. LEXIS 3024, 1989 WL 21529 (6th Cir. 1989).

Opinions

PER CURIAM.

This is a lengthy case involving two defendants charged with conspiracy and a number of counts of mail and wire fraud. The first defendant, Thomas Andrew Lau-back, was president and sole owner of Du-raSeal, Inc., a company organized for the purpose of selling “asphalt sealer” dealerships throughout the country. DuraSeal was established on or about September 1, 1980, and was headquartered in Columbus, Ohio.1

The second defendant, Heller C. “Connie” Boling, worked as a salesperson for DuraSeal from August 1981 until March 1985. Boling met Lauback in the late-1970s when her husband worked for one of Lauback’s other companies. She joined DuraSeal after Lauback asked her to do some marketing research for the company. She lived in Wilmington, North Carolina, and represented DuraSeal at various trade and franchise shows across the country. [967]*967The trial record also indicates that Boling met with individuals interested in purchasing DuraSeal dealerships, signed dealership agreements on behalf of the company, negotiated with a K-Mart representative in an attempt to secure a national contract, and attended and spoke at dealer training programs in Florida. Boling was Dura-Seal’s most successful salesperson, selling approximately half of the company’s dealerships. She worked on a commission and travel expense reimbursement basis.

During the early years of the company, DuraSeal offered dealerships for approximately $10,000. Later, dealerships were sold for as much as $40,000 ($15,000 went directly to DuraSeal; the remainder was paid to an independent leasing agent for a special 550-gallon truck and equipment). A dealer purchased a “package” which was supposed to include a “state-of-the-art” GMC truck modified for seal coating, an exclusive territory, on-site training, “Dura-Seal’s exclusive patented K-10 liquid emulsion additive,” a sales and marketing program, stationery and business cards, uniforms, and truck accessories.

DuraSeal attracted potential dealers by advertising in newspapers and by participating in various trade shows. At the trade shows, the DuraSeal representative would hand out brochures to prospective dealers and answer inquiries. Those interested in DuraSeal would be contacted over the phone by a salesperson, who would usually arrange for a personal interview. Once an agreement was executed, the new dealer would wire a downpayment to Dura-Seal in Columbus.

DuraSeal’s brochure stated:
DuraSeal is the acknowledged leader in the rapidly growing seal coating industry. Our network of dealers includes successful business operators in the U.S. A. and Canada. DuraSeal owners represent people from all walks of life — from lawyers to farmers, from doctors to retailers.

It also indicated that DuraSeal provided training, marketing, and promotional services. DuraSeal represented that net profits might average 90%, that a “return on investment” was “less than one year,” that overhead was low, and that “[no] special skills or experience are needed to operate the DuraSeal equipment or to effectively merchandise your product.” DuraSeal indicated it would provide continuing services, such as “a written tracking report of your business operation and personnel.” The brochure states that the “equipment is a one-man operation so a residential drive can be finished in 15 to 30 minutes; for commercial, the equipment is capable of 1,000,000 square feet per day.” The brochure also contained a “fact sheet” showing average costs and times per job.2

During her sales efforts, Boling would urge prospective customers to buy a dealership promptly in order to avoid a franchising fee. Boling told people that Dura-Seal would be conducting nationwide advertising campaigns as soon as it was franchised, and that dealers might receive asphalt sealing contracts from established accounts in their territory, such as Wendy’s and K-Mart. Potential purchasers were told that while there were successful dealers around the country there were very few failures, and were given various names to contact.3

Despite the fact that more than 100 Du-raSeal dealerships were sold, DuraSeal ceased operations in 1985 due to problems with creditors and dealers and an accumulated debt of $463,000.4 The indictment [968]*968returned in 1986 alleged that the defendants engaged in a scheme and conspiracy to defraud by fraudulently inducing individuals to purchase DuraSeal dealerships, and charged them with twenty-seven mail and wire fraud counts.

The government called fifty-one Dura-Seal dealers as witnesses, virtually all of whom had lost money in their first year, and a majority of whom had gone out of business. Most of the dealers testified that an appeal was made to invest immediately because of anticipated future franchising. Many testified that they never received on-site training, the marketing package, or the special K-10 additive. Others also testified that they never received their truck or equipment or it arrived late or in defective condition. Some dealers claimed that the equipment was used rather than new, and required constant repair. Despite complaints about these circumstances, their money was never refunded. Several dealers further complained that when other dealers encroached on their “exclusive” territory, Lauback made no effort to correct the situation. Most noted that the time and cost estimates contained in the fact sheet were distinctly incorrect and exaggerated. In sum, the dealers testified that once they signed the contract and paid the fee, they were left largely on their own. The company provided little training, and Lauback was almost impossible to contact.

One former DuraSeal salesperson, Gordon Reel, testified that he worked for Lau-back for eight months and sold sixteen dealerships. He stated that when he contacted Lauback with dealer problems or complaints, Lauback usually said that he would take care of them. Boling allegedly told Reel that she was Lauback’s “very close associate.” Finally, Reel testified that he left DuraSeal because he was concerned about Lauback’s disregard of dealer problems, the financial condition of the company, and nonpayment of his commissions and expenses.

During the middle of the trial, Boling requested an in camera conference with the district judge, asking for permission to discharge her attorney, Bob Zitko, on grounds of conflict of interest, failure to represent her interests during trial, and their mutual inability to communicate and agree on her defense. Boling explained to the judge that she had retained Mr. Zitko at the suggestion of Lauback, and that she initially understood that Zitko had represented Lau-back only in an unrelated child support proceeding. During the course of the trial, however, Boling discovered that Zitko also represented Lauback in a related FTC case.5 When the judge asked Zitko about Boling’s allegations, Zitko responded:

I don’t represent Mr. Lauback in any other matters currently while this case has been going on. There was a matter that I represented him in having to do at the very inception, I believe it was way back in December or November, having to do with a domestic relations matter, child support.
THE COURT: Nothing to do with any of the matters involved in this case?
MR. ZITKO: No.

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Cite This Page — Counsel Stack

Bluebook (online)
869 F.2d 965, 1989 U.S. App. LEXIS 3024, 1989 WL 21529, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-heller-c-boling-aka-connie-boling-88-3130-thomas-a-ca6-1989.