Inventor Scam Statistics





Predators are everywhere.  “Unethical and legally protected predators are everywhere, poised to pounce upon new products and processes for their own profit.” 

Richard Pachter
“Guidebooks for inventors prove both amusing and helpful,”
Knight Ridder/Tribune News Service, November 29, 2001

Number of Inventors Scammed

25,000 inventors conned per year.  “Both CNN and "48 Hours" have done reports on invention development companies. Both advised their viewers to steer clear of these companies, and so do I.  Sen. Joseph I. Lieberman (D-CT) has introduced legislation that would conceivably wipe out these types of companies.  The act is titled The 1995 Inventors Protection Act.  His office estimates that about 25,000 inventors are conned by these companies each year to the tune of tens of millions of dollars.”  Inventor scam complaints.  (Tomima Edmark, Entrepreneur, “Know-it-alls: product development companies make getting your invention to market a cinch,” December 1, 1997)

34,000 victims in invention promotion scam.  “United States Attorney Donald K. Stern, Kenneth Jones, Postal Inspector in Charge of the U.S. Postal Inspection Service in New England, and Michael Lahey, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, New England Region, announced today that Ronald Boulerice, John Samson, and John Hoime pled guilty today before U.S. District Court Judge Michael A. Ponsor to charges relating to their involvement in a $60 million mail fraud scheme that defrauded over 34,000 victims while operating in Westfield, Massachusetts from 1981 through 1996.”  Negative reports on invention company.  (PR Newswire, “Ringleader and Top Managers of $60 Million Invention Promotion Scam Plead Guilty, Reports U.S. Attorney,” Springfield, Mass., May 14, 2001)


$ Size of Invention Scams

$200 million.  Amount invention promotion scams cost inventors annually.  “Every year invention promotion scams cost U.S. inventors an estimated $200 million.”  (U.S. Patent and Trademark Office (USPTO) press release, “USPTO Launches Media Campaign To Counter Patent Scams,” #02-02, January 10, 2002)

$200 million.  Amount inventors lose each year to invention scam companies.  “Every year, as much as $200 million flows from the wallets of American inventors into the hands of scurrilous promoters and hardly a penny flows back to the unsuspecting inventor.”  (Don Kelly, UIA President and founding director of the U.S. Patent and Trademark Office's inventor resource programs quoted in New York State Consumer Protection Board press release, “While TV puts a new spotlight on 'basement' inventors, promotion and patent scams lurk in the shadows,” May 22, 2006)

$60 million.  “United States Attorney Donald K. Stern, Kenneth Jones, Postal Inspector in Charge of the U.S. Postal Inspection Service in New England, and Michael Lahey, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, New England Region, announced today that Ronald Boulerice, John Samson, and John Hoime pled guilty today before U.S. District Court Judge Michael A. Ponsor to charges relating to their involvement in a $60 million mail fraud scheme that defrauded over 34,000 victims while operating in Westfield, Massachusetts from 1981 through 1996.”  (PR Newswire, “Ringleader and Top Managers of $60 Million Invention Promotion Scam Plead Guilty, Reports U.S. Attorney,” Springfield, Mass., May 14, 2001)

$10,000 to $20,000.  Typical amount inventors lose on scam services that don’t pan out.  “The problem, [says Richard Maulsby, director of public affairs for the U.S. Patent & Trademark Office], is companies that prey on inventors and would-be entrepreneurs, collecting thousands of dollars from them up-front for all sorts of inflated -- sometimes impossible -- promises. Typically, inventors spend between $10,000 and $20,000 on such services, only to wind up with disappointing results.” (Karen E. Klein, Smart Answers, “Avoiding the Inventor's Lament,” Business Week, November 10, 2005)

$800 to $12,000.  Range of fees paid by inventors to Davison & Associates to promote inventions.  “Dozens of invention promotion companies are out there, and it's difficult to tell the good guys from the bad.  ‘This outfit [Pittsburgh-based Davison & Associates Inc.] is typical of invention promotion scams.  They touted their ability to run inventors' ideas into profitable products, but fewer than one percent of the customers who invested in their services got royalties from their patents that amounted to more than they paid the promoters.’  Inventors paid fees ranging from $800 to $12,000 for the ‘service.’" “Lydia Parnes, director of the FTC's Bureau of Consumer Protection, quoted in Kevin DeMarrais, “A caveat emptor to every inventor,” Hackensack, NJ, The Record, April 30, 2006)

Fines and Settlement Costs for Invention Scam Cases

$60 million. Amount operators of the Patent & Trademark Institute were ordered to pay for defrauding 17,000 inventors.  “[U.S. District Court Judge Gerald Bruce Lee] ordered the operators of multiple questionable invention promotion firms to pay $60 million in connection with a scheme that defrauded 17,000 inventors.  The judge ruled this month that Julian Gumpel, Darrell Mormando, Michael Fleisher and Greg Wilson violated a 1998 court order that barred them from misrepresenting the services they offered to amateur inventors. He described their most recent venture, the Patent & Trademark Institute, as a ‘grand con game to take money away from consumers.’  PTI operated through several corporate entities, including Azure Communications Inc. and London Communications Inc., United Licensing Corp., International Patent Advisors Inc., Datatech Consulting Inc., International Product Marketing Inc., and Unicorp Consulting Inc.” (Asa Aarons, “Firm invented 60M scam, say feds,” New York Daily News, Thursday, September 27th 2007) An online search for “Patent & Trademark Institute” chronicles the stories of many inventors who say they were scammed by PTI.  The FTC has established a phone number for consumers to file grievances involving PTI. See also Office of Public Affairs, Federal Trade Commission press release, “Invention Promotion Swindlers Ordered to Pay $60 Million in Scheme that Defrauded 17,000 Consumers,” Federal Trade Commission, September 6, 2007

$26 million.  Amount Pennsylvania judge ordered Davison & Associates to pay for bogus invention operations.  “Two weeks ago, a U.S. district judge in Pennsylvania ordered Pittsburgh-based Davison & Associates Inc. and its principals to pay $26 million in consumer redress for operating a bogus invention promotion company.  Judge Gary Lancaster minced no words in accusing the defendants of using ‘blatant, varied and repeated misrepresentations’ in recruiting customers.  The Federal Trade Commission brought charges against the company after finding that it used Internet and classified ads to lure inventors across the country to sign up for their services.”  (Kevin DeMarrais, “A caveat emptor to every inventor,” Hackensack, NJ, The Record, April 30, 2006)

$2.28 million.  “A top executive of a former Westfield company which preyed on amateur inventors was sentenced to three years in prison yesterday, and ordered to pay up to $2.28 million to aid the company's victims.  John L. Samson, 62, of Hatfield, vice president of the former American Inventors Corp., was sentenced in U.S. District by Judge Michael A. Ponsor. Samson pleaded guilty last year to counts of mail fraud, money laundering and filing a false tax return, and is one of more than two dozen American Inventors employees to plead guilty to crimes.” (“Executive sentenced in inventor scam,” Union-News, Springfield, MA, April 2, 2002)

$1.2 million.  “Invention Submission Corp., one of the world's largest invention promotion companies, two years ago paid $1.2 million to the FTC to settle a case involving scores of customers who claimed to have fallen victim to scam artists.” (Tim Lemke, “Invention + market savvy = successful product”, The Washington Post, April 16, 2001)

Length of Prison Sentences for Invention Scams

8 years.  “[Ronald] Boulerice, age 62, a resident of 400 Woodland Way, Russell, Massachusetts, pled guilty to conspiracy to commit mail fraud, mail fraud, money laundering, and tax fraud. According to the plea agreement, the government will recommend to the Court that Boulerice receive a term of imprisonment of 8 years and must forfeit all of his assets traceable directly or indirectly to his mail fraud scheme. Those assets include: his personal residence in Russell, Massachusetts; his ski chalet at "The Highlands at Mount Snow in Dover", Vermont; real property located at St. Dennis Street, Westfield, Massachusetts; a French Creek Black Six Crypt Walk-in Mausoleum and plot at the Pine Hill Cemetery; and all funds contained in BankBoston (formerly BayBank) accounts held in the name of Boulerice.” (PR Newswire, “Ringleader and Top Managers of $60 Million Invention Promotion Scam Plead Guilty, Reports U.S. Attorney,” Springfield, Mass., May 14, 2001)

Between 5 and 6 ½ years.  “[John Samson], age 61, a resident of 173 Linseed Road, West Hatfield, Massachusetts, pled guilty to conspiracy to commit mail fraud, money laundering, and tax fraud. According to the plea agreement, the government will recommend to the Court that Samson receive a term of imprisonment of between 5 and 6 1/2 years and must forfeit his 50% interest in his personal residence. Samson started as a salesperson at American Inventors Corporation ("AIC") in 1981 and eventually became a vice-president of AIC. Samson was also the nominee owner and president of American Institute for Research and Development ("AIRD"). (PR Newswire, “Ringleader and Top Managers of $60 Million Invention Promotion Scam Plead Guilty, Reports U.S. Attorney,” Springfield, Mass., May 14, 2001)

3 years.  “A top executive of a former Westfield company which preyed on amateur inventors was sentenced to three years in prison yesterday, and ordered to pay up to $2.28 million to aid the company's victims.  John L. Samson, 62, of Hatfield, vice president of the former American Inventors Corp., was sentenced in U.S. District by Judge Michael A. Ponsor. Samson pleaded guilty last year to counts of mail fraud, money laundering and filing a false tax return, and is one of more than two dozen American Inventors employees to plead guilty to crimes.” (“Executive sentenced in inventor scam,” Union-News, Springfield, MA, April 2, 2002)

1.5 years.  “[John Hoime], age 51, a resident of 25 Tannery Road, No. 9, Westfield, Massachusetts, admitted his involvement in the conspiracy to commit mail fraud and pled guilty to misprision of a felony. According to the plea agreement, the government will recommend to the Court that Hoime receive a term of imprisonment of 1 1/2 years and must serve an additional 6 months of house arrest under electronic monitoring upon his release from prison. Hoime started as a salesperson at AIC in December, 1989 and eventually became the manager of AIC's Sales Department from May, 1992 through October, 1994.” Invention scams. (PR Newswire, “Ringleader and Top Managers of $60 Million Invention Promotion Scam Plead Guilty, Reports U.S. Attorney,” Springfield, Mass., May 14, 2001)