12V Industry Members Convicted of Defrauding Distributor

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The Wholesale House

Three industry members have  been convicted of defrauding The Wholesale House based in Hicksville, OH, a distributor of car audio and other products.

The former President and Vice President of The Wholesale House, Marcy Keesbury and Charles “Mick” French, along with Information Technology Director Justin Pennington, age 30, were found guilty of setting up a fake Internet company.  The fake company bought products from The Wholesale House, much on credit, and then resold the goods to retailers and consumers, reported The Florida Times Union

The Internet company was called 3Kings LLC and it purchased nearly $40 million worth of products.

Prosecutors said 3 Kings caused significant financial harm to The Wholesale House by competing with it illegally.  The Wholesale House claimed about $4.8 million in the total net loss from the unpaid 3 Kings debt.

Pennington has been found guilty of conspiracy and 9 counts of wire fraud. He faces up to 20 years in prison for each count.  The three defendants have been ordered to repay about $5 million in total to the Wholesale House. Pennington is due for sentencing the week of August 2.

Keesbury and French reportedly cooperated with authorities to receive a lesser sentence.  According to Wane.com, the fraud became apparent when The Wholesale House began to question French about the 3 Kings ability to repay its debt to the distributor. Hints of the scheme were revealed and the FBI was called in.

Keesbury and French have agreed to pay restitution and face up to 5 years in prison.

The Wholesale House is owned by Steve and Mary Height. Among the brands it carries are American Bass, Audiovox, Bazooka, Blaupunkt, Boss Audio, Boyo, Cadence, Cerwin Vega, Cobra, Dual, DS18, Fusion, Hifonics, Infinity, JBL, Jensen, JVC, MB Quart, MTX, Pioneer, Power Acoustik, Pyle, Soundstream,and Sundown Audio.

President of The Wholesale House Mark Yoder said, “TWH [The Wholesale House] took a BIG hit when this happened, but thanks to the Heights being able to put their own personal money back into the business and get us back on our feet, business is back and very strong.”

Source: The Florida Times Union, wane.com

Photo: The Wholesale House Ohio headquarters

 

 

 

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8 Comments

  1. This set them up for price wars with other online retailers, Lowering the prices below dealer cost I think because they were found guilty of this ther also needs to restitution paid to other legal online retailers and brick and mortar stores as well. I’m game for a class action lawsuit on this issue.
    Finding them guilty is enough evidence to file a claim. Profits from reputable business were lost because of this. Its worse than price fixing. It might have even shut the doors to struggling store’s that in turn upset the market as a whole.

    Manufacturers think selling cases is the answer, its not its going to come back and bite them in the ass.
    If A retailer can’t make a profit he’s going to go out of business then all you have is a bunch of people selling stuff online at or below cost to keep numbers up. No product support and customers won’t buy it after awhile of this. Talk about making somthing Cheap.
    Manufacturers that care have a strict online policy. NO Warranty……… Unless bought from an authorised dealer and they track serial numbers vigorously.
    If we don’t do this we are just cutting our own thoughts. Start looking for a job! because this isn’t going to support you anymore.

  2. Whoa! I remember seeing quite of bit of merchandise on Amazon sold by 3Kings! And Re sirch, is dead on correct. This may have hurt our entire industry.

  3. So the President and VP convince a young rookie to help them out with something…. then when it all blows up – they cut a deal for themselves and the rookie is going to hang for it all?? Marcy & Mick – Shame on You !!! You took advantage of the very company that was providing your living – the living that was helping you provide for your families…. How do you sleep at night?? One can only pray that you do not have children – that have to live through this disgrace – or worse yet turn out like you.

    To Steve & Mary Height – Keep your head held high. You have a strong company and many good employees who really do appreciate their job.

  4. they aided and abetted the damages to pioneer sales through amazon. start interviewing factory reps.

    1. a potential unfair trade practices case here if the manufacturers (who had to have possessed knowledge) blind eye to what was going on. effectively a price ceiling was established by an
      invisible hand. the case is not done…yet.

      1. tolerance of low prices below map in the market is defacto and price fixing and unfair trade practices.

  5. It may have affected Height, but it also screwed other competitors as the fraudsters were pumped merchandise indirectly by fat and happy brands for years because these sales were being subsidized. This boosted Amazon in our industry and shifted a balance in ways that are still felt today. This is merely another story of an industry, and thieves, getting hot and heavy for sales in the short-term, while disregarding the long-term. Many were informed, brands and Height, of what was going on in the early part of this. All ignored it way too long.

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