A father-son team of home fuel oil salesmen who got caught scamming customers in 2014 has been accused of continuing the shorting scheme under a new company.
The office of the state attorney general accused Champion Fuel & Service Corp., David DeSilva Sr., David DeSilva Jr. and Patrick Terminello of fraud, in a March 9 petition filed in state Supreme Court in White Plains.
A previous attempt to rein in the DeSilvas failed to deter them, Sandra Giorno-Tocco, an assistant attorney general, said in a court filing. Even as their Nu Way Fuel & Service Corp. was under investigation in 2013, they “were already devising their next scheme of fraud through the creation of Champion.”
Phone numbers for the DeSilvas and Terminello were not in service and they have not yet responded in court to the allegations.
In 2015, however, Terminello filed for Chapter 7 bankruptcy and claimed that DeSilva Sr. had defrauded him. He testified in a bankruptcy hearing that he was unaware of the shorting scheme until customers began complaining.
He confronted the DeSilvas, he said, but did not notify law enforcement.
“So I’m not going to lie,” he testified. “I tried to cover as much as I could to try to ride the ship out, to get this straight to get everybody their oil so that I could eventually get out of this.”
The scheme began around 2009, when Nu Way, based in Peekskill, sold home heating oil contracts that required customers to pay in advance for deliveries to be made during the heating season. But when customers called for oil, Nu Way delivered as few as 15 gallons, a fraction of what had been paid for, or none at all.
Nu Way also sold service contracts for annual inspections, tune-ups and cleaning, but did not fulfill its obligations.
Nearly 100 customers filed complaints with the state attorney general, Westchester Department of Consumer Protection and Peekskill City Court claiming they lost more than $100,000 for fuel and services they never received.
Attorney General Eric T. Schneiderman filed a civil case in state Supreme Court in White Plains in 2013. The court ordered Nu Way and the DeSilvas to pay $692,879 in restitution, damages and penalties. They were banned from the home fuel oil delivery and repairs business unless they posted a $200,000 performance bond guaranteeing compliance with the court order and providing funds for any customers defrauded in the future.
The DeSilvas, who live in Hopewell Junction, paid only $49,499 of the $692,879 judgment, according to the attorney general’s new case, and never posted a $200,000 performance bond.
Even before the original court order was issued, they allegedly concocted a second home oil shorting scheme designed to circumvent the order.
Terminello, of Wappingers Falls, had worked as a service technician at Nu Way for three years. He incorporated Champion at Nu Way’s address in Peekskill and declared himself as the sole owner.
He actually owned 15 percent and DeSilva Sr. owned 85 percent, according to a confidential partnership agreement. Terminello put up $2,000 for the initial capital and DeSilva Sr. put in $150,000.
DeSilva Jr. was active in day-to-day operations, he testified in the bankruptcy court hearing. He knew “he was in trouble,” and “he wasn’t allowed to own the business.”
They allegedly used the same scheme: selling fuel oil and service contracts, collecting payments in advance and delivering little or no oil or services.
The lure was low prices. Champion advertised a “guaranteed lowest price,” “senior citizen discounts” and “volume discounts” in a Penny Saver newspaper and on local radio and the internet. When the average annual price per gallon for residential fuel oil was $3.78, they offered prices as low as $2.25 per gallon.
More than 100 customers claimed $80,000 in losses in complaints to the attorney general, state police, Better Business Bureau and Wappinger Town Court.
A customer identified as Leon Chen, for instance, paid $1,416 for 500 gallons at $2.75 a gallon plus taxes. When he asked for delivery, “his request fell on deaf ears,” Giorno-Tocco said in an affidavit, and he never got a refund.
A customer identified as Shawn Marinello hired Champion to install air conditioning for $20,000 and paid with a cashier’s check. Champion started the work but never completed it, the affidavit says, and Marinello hired another company to finish the job for $4,500.
All of the funds deposited in Champion’s bank accounts have been spent or transferred to personal accounts, the attorney general says.
The defendants are also accused of failing to pay $27,000 in state business taxes.
The attorney general is asking the court to order Champion and its owners to turn over records of all customers who pre-paid for services. The state wants the DeSilvas and Terminello permanently banned from the home heating oil and repair business. It is asking for a $5,000 penalty for each incidence of fraud, deceptive practices and false advertising.