01:00 AM EDT on Wednesday, April 5, 2006

BY PAUL GRIMALDI
Journal Staff Writer

When a Web-based Rhode Island company imploded last month, the fallout spread across the country, leaving people in a number of states wondering whether they'll ever see their money again.

Mixitforme.com, the Providence online merchandiser, took orders from people who spend a lot of time on the Web doing business -- buying and selling goods and services with people they've never met who live in places they may never have visited.

Customers learned about Mixitforme, which had offices at 275 Westminster St., from other people who do business the same way, scouring the Web for bulk deals on goods they can flip for a profit to other wholesalers or individuals.

They try to sniff out online scams in much the same way, by calling sellers to get a sense of how they do business. They order an item to learn whether they can trust the people on the other end of the Internet to complete a deal.

"You kind of sense if someone is trying to pull a fraudulent transaction," said Brandon Sbarro, of Trenton, N.J. "In the beginning, I think they were legitimate."

On March 22, Bank Rhode Island pushed Mixitforme into state receivership, seeking about $900,000 the bank says it's owed by the company. Bank Rhode Island refuses to comment on the case.

Then last week, federal, state and city law-enforcement agencies seized company financial records and computers.

Mixitforme, along with Biggles Toys, a related business also located at 275 Westminster St., are closed.

Tom Powers, of the U.S. Secret Service, said last week the investigation into the two businesses, and two men connected with their operation, is just beginning.

Sbarro, who works for Sovereign Bank, buys Xboxes, iPods and other items and then resells them on eBay and in other Web-based business forums, he said. His purchases regularly run to $20,000 or more.

His largest purchase was for 25,000 iPods. He paid $4.6 million for them.

"I want to get as high on the food chain as I can," Sbarro said. "I was looking for people to come to me to buy 50 units here, 100 units there."

He uses credit cards and online escrow accounts to pay for the goods, he said.

Sbarro bought 10 Motorola Razr cell phones from Mixitforme in a deal completed in December.

Satisfied that he could trust the Rhode Island company, he ordered an additional 200 Razrs, wiring $23,000 to Rhode Island.

At $114 each, Sbarro expected he would make a healthy profit on the cell phones, selling them for $160 a piece.

He never got them.

"Fraud is a common garden snake in this type of transaction," said Tom Swift, a New Bedford lawyer who represents Silver Platter LLC, a start-up company based in Venice, Calif., that develops content for Sony PSPs -- handheld video game players.

Silver Platter wanted to use PSPs as promotional products for its media software. By selling the devices loaded with its software, Silver Platter hoped to drive sales of its own products.

Blaine Graboyes, Silver Platter's founder, said he came across Mixitforme.com through a series of Web links he found on a wholesalers directory.

He liked the look of Mixitforme's Web site and thought he could trust a company that actually had customer-service people answering its phones.

"By the scrawny standards we have, it looked pretty legitimate," Graboyes said. "I don't know what more we would have been able to do in such a short amount of time."

About two weeks ago, he said he sent Mixitforme $27,000 for 145 PSPs that he never saw.

On March 22, he said, he was certain he was getting the goods. That's the same day Bank Rhode Island pushed Mixitforme into state receivership.

The state attorney general's office had received only two complaints about Mixitforme before January, said Michael Healey, a spokesman for Attorney General Patrick Lynch. By late last month it had received 26 from people who said Mixitforme owed them nearly $2.3 million in all.

Healey said the total could reach $15 million.

"Initially, the company cooperated on resolving complaints," Healey said.

But that assistance stopped at some point.

The man listed as Mixitforme's owner on state incorporation papers, Cory Johnson, of Warwick, may have left the state. He's also listed as the owner of Biggles Toys, of 275 Westminster St.

Reached on his cell phone last week, Johnson declined to say where he was. He didn't return phone messages yesterday.

But not everyone who dealt with Johnson or Mixitforme lost money.

Johnson paid Belvoir Properties, which owns 275 Westminster St., six months rent -- in advance -- for 7,500 square feet of office space on the fourth floor of the building, said David Winoker, of Belvoir, although he declined to say exactly how much he was paid.

Rents in the building are about $15 a square foot, Winoker said. By that gauge, Johnson put up about $675,000 -- $112,500 a month -- for the office.

"Typically, people don't pay us six months in advance," Winoker said.

Once he assured himself the check was good, Winoker said he never inquired about Johnson's business.

"He signed a lease and he gave us a check that was good," Winoker said. "Our conversation really went no further than 'The check is in.' "

But soon after the next rent check was due, Mixitforme was out of business.

Others caught up in the case said they hold out little hope of getting their money back.

Michael Cooke, of Baltimore, said he lost $47,000 to Mixitforme.

Cooke said he has made a business from buying and selling consumer electronics over the Web and learned about Mixitforme from a friend.

Cooke said he made a small purchase from Mixitforme early this year that "worked like clockwork."

On Feb. 10, he ordered 260 Apple iPods from the Rhode Island business, wiring $47,000 from his account at Wachovia Corp., to Mixitforme's account at Bank Rhode Island.

Cooke said he never received the goods.

He said he had never met anyone at Mixitforme and had only dealt with the company through e-mails and phone calls, contacts that proved fruitless when he tried to get the order filled.

Cooke said his bank is seeking a refund from Bank Rhode Island.

pgrimald@projo.com / (401)-277-7356