Former Hawaii residents
sentenced for phone scam

Associated Press

OMAHA, Neb. >> Two former Hawaii residents have been ordered to pay $860,000 to nearly 60 victims of a nationwide telemarketing scam that the couple operated out of Oahu.

James and Kim Novak pleaded guilty to felonies related to their scam, which involved the sale of silver and gold coins over the telephone to senior citizens.

The Novaks, both 53 and originally from Omaha, lived in a beach-front house east of Kahuku while operating the scam from 1995 to 1999. They used runners to operate the business out of Omaha.

Evidence was discovered about two years ago during separate search warrants that Hawaii's U.S. Postal Inspection Service carried out first at the Kahuku house and then a few hours later at another location closer to Honolulu.

Besides paying restitution, James Novak was sentenced Tuesday to three years in prison and Kim Novak was given five years probation and three months home imprisonment.

The couple recently had been living in Malibu, Calif.

About $100,000 in cash and silver coins seized by the U.S. Postal Inspection Service also will be returned to the victims.

U.S. Attorney Mike Heavican said the Novaks purchased the coins for $6 to $7 and sold them for $25 to $30 apiece, promising their victims that the coins' values would increase by 20 percent to 30 percent within six months.

James Novak also induced sales by telling people the coins could be exchanged for cash within 48 hours, but without mentioning it would be done at a loss, court documents said.

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