An indecent (business) proposal

Lea Thompson Chief consumer correspondent • Profile

ATLANTIC CITY, N.J. - In a town where the slot machines never stop, somebody, somewhere is always trying their luck. 

Optometrist Kenneth Berger works in Atlantic City, not far from the casinos’ gaudy lights, but he says he’s no gambler. When he decided to make some money on the side, he was convinced he would be a winner.    

"In my wildest dreams, I didn’t think this thing would backfire the way it did," he says. His investment was a terrible mistake Berger says and a costly one. 

"I was up at 2 a.m., 4 a.m., 6 a.m. I couldn’t sleep," he says of the insomnia that came with a failed business venture.  "And yet I have to see patients every day. "

It all began in the fall of 2003 when a fax arrived out of the blue.Kenneth Berger was intrigued. And he was enticed by an ad he saw on  TV.

Now you can be a part of the multibillion dollar film distribution business.  Earning huge income by being the first in America to place these revolutionary new movie rental machines in your area... Get all the facts and be a part of the $50 movie industry with the box office express. Call now.

It sounded easy and lucrative— a vending machine that rents movies anywhere, anytime, spitting out DVDs the way an ATM machine dispenses cash.

Berger did call. He says he was promised he’d get a machine, technical support, and help finding profitable locations for his business. The company brochure came with lots of documents, including one showing the company was “a member in good standing” of the Better Business Bureau— which it was.

American Entertainment Distributors Kenneth Berger thought a DVD-vending machine like this would gain him $28,000 in six months.

Berger says that in the beginning, there were no red flags that warned him that the investment was less than real. He says he investigated in every way he knew how.  He learned from his research that the video vending machine industry is growing.  In all of his phone calls, he could find nothing negative about this company. It sounded like he only had to keep the machine stocked with DVDs, monitor the rentals, and watch the money roll in.  

He was told that the machine should pay itself off in about six months. “I was willing to be conservative and estimated 12 months,” he adds, estimating a profit of $28,000.

Berger was so positive this was a good investment that he decided one machine wasn’t enough— he bought three. He says he wired more than $80,000 to the company.

A majority of the money, he says, came from home equity loans. “I borrowed on the value of my home. And some was savings.”

But according to Berger, as soon as he put the first machine in service, people would put their credit card in make a selection of a title, and not get their video back for 30 minutes. “And they were charged five times the amount they should have been charged.”

Berger says he spent hours on the phone with the technical support people, trying to get his machines to work properly, but he got the runaround.

He says he was told that technical support’s priority is to deliver new machines. “You are not our priority. And when we get around to fixing your machine, we will,”  Berger says was the response he got.

The other two machines? More than a year later, Berger says, they are sitting in a garage, looking just as they did the day they were delivered: scratched and chipped and missing vital parts, even though Berger says the company promised it would come and fix them.

Berger is not only out thousands of dollars, he’s stuck with three giant vending machines that need an overhaul to work— about $85,000 worth of his money, gathering dust.

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