Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, October 27, 1995 TAG: 9510270080
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: JAN VERTEFEUILLE STAFF WRITER
DATELINE: LENGTH: Long
Walter Eugene Hoffman, owner of the now-defunct Hill Bros. Shoe Co., defrauded his elderly customers of more than $1 million. Thursday, he was sentenced to prison for 16 months and ordered to pay just $519 in restitution - the most the judge could require.
U.S. District Judge James Turk had some harsh words for Hoffman, who has been convicted in two separate fraud cases this year in federal court. Turk said he has received confidential information that Hoffman continues to engage in illegal activity in Ann Arbor, Mich., where he now lives.
"He's getting off mighty light," Turk said. "A person out on the street could look at that and say, 'Well, crime does pay.'"
Over the years, Hoffman has left a trail of failed businesses in his wake. He's filed bankruptcy three times in the past decade. The IRS has attached liens to many of his assets through the years, and he's been convicted of writing bad checks. Still, he continues to work as a financial consultant.
Fran Stephanz, executive director of the Better Business Bureau of Western Virginia, estimates that the loss to thousands of customers in the Hill Bros. case makes it "one of the largest consumer cases ever."
Hoffman bought the respected mail-order company out of bankruptcy in 1988 and began operating the Lynchburg business, which specialized in shoes for elderly women. Customers, many on fixed incomes, soon began complaining that they weren't getting their shoes and couldn't get refunds.
Twice, the U.S. Postal Service tried unsuccessfully to stop delivering Hill Bros.' mail. Finally, in 1992, the postal service forced the company to stop taking new orders, shutting it down.
The Better Business Bureau alone received nearly 20,000 complaints about the company, and Stephanz began blitzing Congress with letters asking someone to intervene.
"He's holding up little old ladies without a gun," Stephanz said. "What's the difference? White-collar crime is one of the worst, because it hurts innocent people financially."
In September 1992, the U.S. Senate's Special Committee on Aging held hearings on Hill Bros., along with three other alleged scams against the elderly. Senators wanted to identify loopholes in federal regulations that allowed the company to operate for so long.
Last November, Hoffman, 60, was indicted on 41 counts of mail, bank and wire fraud and pleaded guilty this summer to the 12 mail fraud charges, for accepting checks in the mail for shoes never shipped. The other 29 counts were dismissed.
The 16 months he received Thursday will be served after he finishes 24 months for his part in a "straw man'' loan scheme involving the late Salem developer Richard Hess and the now-defunct First Security Bank. Hoffman was trying to get in the good graces of the banker involved in the scheme, hoping he could get loans for Hill Bros., prosecutors said. He is appealing that conviction.
Hoffman is not one to get discouraged easily.
"I have nothing but an opportunity to start again," he told one Hill Bros. creditor who sued him, looking for assets. "Well, the only thing I really have of value is my future and the chance to put something together to go forward and perhaps create some things again as I've done in the past. I'll do it."
And he did, moving to Ann Arbor and starting up Buckeye Resource and Management Inc., working as a "financial consultant."
"It doesn't seem he's in much of a position to be advising other people on financial matters," Turk said Thursday. "It concerns the court."
Hoffman declined to comment after his sentencing. His attorney argued that there was no criminal intent in the way he ran Hill Bros. - business just "really got away from him."
That's happened to him before. Two Detroit companies Hoffman owned filed bankruptcy in the mid-1980s, and he personally declared bankruptcy as well.
During his next bankruptcy, in Lynchburg in 1992, Hoffman failed to produce any of his personal bank records, and the bankruptcy trustee was unable to find any. The trustee was forced to ask that the bankruptcy be dismissed, telling the court that "it appears that important records essential to comprehending the debtor's financial affairs are missing."
Having the bankruptcy dismissed allowed Hoffman to file again in 1994, this time in Roanoke. Again, the judge was ready to discharge it for lack of assets to repay creditors. But a company in New Hampshire that processed credit card transactions for Hill Bros. has filed a challenge to the dismissal, alleging fraud.
Hoffman and his shoe company got money from Litle & Co. for fictitious credit card sales and lied to Litle about whether the company actually had shipped shoes to its credit card customers, Litle alleges. Litle says if the court discharges Hoffman's debts, the $187,000 he owes the company should be exempted.
Hearings in the case are set for December and January. Because Hoffman is representing himself in that case, Turk said he could wait until Jan. 15 to report to a federal prison in Michigan rather than being taken into custody after his sentencing Thursday.
Turk ordered Hoffman to pay restitution to the 12 mail-fraud victims - a total of $519.
by CNB