Forgotten Fraud: World Power Systems
In 1977 the Microcomputer was three years old, the Apple II was just about to be released, and with it, the computer revolution we all know and love would kick into full gear. But on a more sinister note, the burgeoning computer community was rocked by its first significant scandal, and while at the time it seemed the name Norman Henry Hunt would live on forever in infamy, 40 years later his crimes have all but been forgotten. So let’s take a stroll down memory lane and revisit World Power Systems and Norman Hunt’s crime against early computer enthusiasts.
The scam started in early 1977 when Hunt, then going by the alias Colonel David Winthrop, started a company named DataSync Corp, based out of Santa Maria, California. Datasync advertised in early computer magazines such as Byte and Creative Computing, offering new hardware at impossibly low prices. Hunt was able to provide those prices because none of the equipment he had for sale even existed. In June of 1977, he was arrested for fraud and sentenced to three years at the Chino State Prison in California.
Hunt was in prison less than six months, utilizing what a police description would call his “forceful personality,” Hunt was able to convince prison officials to transfer him to a minimum security area of the prison where he was able to just walk away one day.
Hunt moved to Tucson, Arizona and changed his name to Jim Anderson, where he also met his soon to be unwitting partner in crime Perry Pollack, and together they launched World Power Systems. It wasn’t long before Norman was up to his old tricks and started advertising hardware for impossibly low prices. Some enthusiasts were getting suspicious as the items advertised had senseless circuit board layouts, some not even having the right pins to power the device! Yet, at the time magazines had long lead times, so others explained it as just mock ups of the products used for the ads to get them out in time.
For awhile World Power Systems worked as a legitimate company, as orders came in they were promptly shipped, but as the orders began to increase the fraud started. World Power Systems would send stalling letters to customers, telling them they couldn’t get their product out in time because suppliers didn’t have enough. At the same time, World Power Systems began to ask their suppliers for equipment on credit.
Because World Power Systems had been such a prompt customer before they usually agreed. Once the supplier agreed to credit World Power Systems, they would place large orders for expensive components using purchase orders telling the suppliers the payments would be made in 30 days.
And while Hunt was loading up on equipment, nothing was going out to his customers, at one point for every 10 orders coming in, only one would actually be shipped out, generally to the customer who complained the most to avoid them going to the police or Better Business Bureau and blowing the scam.
The scam was actually pretty straightforward, and is commonly referred to as a “bust out.” Each time Hunt tried it he followed the same script:
Once it looked like the house of cards was about to collapse, creditors threatening to sue him, and customers calling the police, Hunt would initiate his exit strategy, which was almost the most insidious part of the whole thing. Hunt would start emptying the bank accounts, shift merchandise around to leave an impossible trail for police to follow, and most importantly identify a fall guy to take the whole blame.
Hunt would identify an employee and tell them they were going to be promoted to the president of the company, after a little bit of on-boarding Hunt would claim it was time for a well-needed vacation for himself. He would then rob the business of pretty much anything not nailed down, stealing all the money and merchandise and leave the state. Shortly after the poor “President” of the company would come to work to find the police there waiting to arrest them, and while they were being investigated Hunt would be using that time to flee the state.
This time though Huntcouldn’t pull the whole scam off. John Craig, the editor for Creative Computing, suggested a visit for a possible story, this was a significant problem for Hunt since he had met John during his DataSync days and knew he would be recognized as “Colonel David Winthrop,” and more importantly as an escaped fugitive. It was time for him to flee, and on April 25, 1979, Hunt and his wife left Arizona.
From here, Hunt’s whole plan quickly unraveled. For some reason he decided to bring along two employees, sisters Eva and Joan Both (pseudonyms used in the Kilobaud article), under the pretense of going to a “Computer School” in Florida. While they traveled through Texas, the employees learned that the equipment they had in their van had already been sold to other customers who weren’t going to get it and that Hunt had intended to defraud his customers and suppliers with them as an accomplice.
They were having none of that and Eva snuck away and called her father who sent the local police to place her and her sister under protective custody. Once she was back in Tucson Eva told local authorities everything she knew, most importantly the location of the warehouses storing World Power System’s merchandise. Hunt did manage to elude the Tucson authorities though and was ultimately arrested in May of 1979 in Honolulu, Hawaii and brought to California to face charges for 14 counts of mail fraud, which he eventually pled guilty to.
When it was all said and done Huntscammed about $30,000 ($102,000 in 2018 dollars) in free advertisement and between $100,000 and $250,000 ($342,000 — $856,000 in 2018 dollars) of merchandise, as well as unknown amounts from customers who tried to purchase goods from his “company”.
After being arrested and sentenced Hunt was sent to to Metropolitan Correctional Center, San Diego where he tried to become an informer. That did not go so well for Hunt so they sent him to the Northern Nevada Correctional Facility for protection, while there he somehow managed to set up yet another scam, this time involving a prison guard, selling junk software known as “Word Type” which also supposedly included 100 other programs for $109.95 that he wrote. Anyone who was unfortunate enough to actually purchase the program, if they ever even received a copy, found that the programs didn’t work or were just copies of existing programs rebranded. After that was shutdown Norman was transferred back to MCC, San Diego in 1981 and from there, his trail goes cold.
Forgotten Fraud: World Power Systems
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