Vacuum seller, Ponzi schemer sentenced to 11 years in prison
Johnny 'Mickey' Brown, the Tigard-based door-to-door vacuum cleaner salesman turned Ponzi-schemer, was sentenced by a judge Dec. 21 to 11 years in federal prison and ordered to turn himself in the next afternoon.
On May 11, 2011, a federal jury in Portland convicted Brown, then 56, on 14 counts, including evading income taxes from 1993 through 1995, seven counts of wire fraud and six counts of making false statements to a bank.
Prosecutors had asked that Brown be sentenced to prison for 25 years, but U.S. District Judge Garr King issued the shorter sentence in front of a crowd of victims and friends who packed the Portland courtroom to hear the sentencing.
'I truly hope this brings some inner peace to some of the elderly in the Tigard/King City area who are embarrassed by what happened,' said a woman who has been closely following the six-year-long case, but who asked not to be identified. 'It was very hard watching some of the victims testify about what has happened to them and how they are still dealing with the ramifications of the Browns' fraud years later.'
According to prosecutors, between 2001 and 2003 Brown defrauded 114 investors out of $5 million and cost US Bank $4 million.
Brown sold Kirby vacuum cleaners out of at least two offices in King City and Tigard while also persuading customers to let him charge their credit cards to the limit so he could purchase more vacuum cleaners. In exchange, Brown would pay interest on loans and make the minimum credit card payments.
About 10 percent of the money he collected did go to purchase more vacuum cleaners, but the rest was pocketed and used to cover ever-growing debt payments, according to prosecutors.
They alleged he ran the investors' credit cards through a US Bank merchant point-of-sale terminal, disguising each transaction to the bank as a sale of goods.
Brown had to continue to bring in new investors to cover the interest and credit card payments, and over the three-year period, he used a total of 628 credit cards from the 114 investors. One couple alone lost $105,000 to Brown.
US Bank eventually shut down Brown's business account, at which point Brown tried to refund money to creditors, putting back $1 million in a single day until his company's credit card machine broke. He also faxed fake credit slips to creditors to help credit card companies dispute the debts on the cards, which contributed to US Bank's loses.
As for evading income taxes, prosecutors said Brown owed three years' worth of taxes totaling $130,000 and avoided paying them by placing business assets and his home under other people's names.
His wife, Lili Brown, was sentenced in 2009 to four months in prison for tax evasion.
Brown was originally scheduled to go on trial in 2009, but the trial was delayed several times due to changes in his legal representation.
- Geoff Pursinger contributed to this story.