Department of Veterans Affairs Debars Maxi-Aids

by Barbara Pierce

Barbara Pierce

Barbara Pierce

Some stories seem never to come to an end. For years now the Braille Monitor has been reporting on the questionable, even unsavory, business practices of Maxi-Aids. Independent Living Aids (ILA) and one of its principals, Marvin Sandler, eventually sued Maxi-Aids, and we covered the trial of ILA and Marvin Sandler vs. Maxi-Aids and Elliot Zaretsky and his three adult children (Mitchel, Pamela, and Harold) in extensive detail in the March, 1998, issue of the Braille Monitor. Because of the ramifications of the Zaretskys' behavior and business practices on the entire blindness field, we devoted that entire issue to a summary of the trial and its results, in which the jury awarded a decisive $2,400,000.06 verdict against Maxi-Aids and also held the Zaretskys personally liable.

Some stories seem never to come to an end. For years now the Braille Monitor has been reporting on the questionable, even unsavory, business practices of Maxi-Aids. Independent Living Aids (ILA) and one of its principals, Marvin Sandler, eventually sued Maxi-Aids, and we covered the trial of ILA and Marvin Sandler vs. Maxi-Aids and Elliot Zaretsky and his three adult children (Mitchel, Pamela, and Harold) in extensive detail in the March, 1998, issue of the Braille Monitor. Because of the ramifications of the Zaretskys' behavior and business practices on the entire blindness field, we devoted that entire issue to a summary of the trial and its results, in which the jury awarded a decisive $2,400,000.06 verdict against Maxi-Aids and also held the Zaretskys personally liable.

Many of the details of what has happened during the intervening months have been cloaked in secrecy by virtue of court order. When contacted for comment, Marvin Sandler refused comment and so did Elliot Zaretsky, who went on to tell us to contact the VA. These things are known, however. On December 30, 1998, Maxi-Aids and its principals declared bankruptcy under Chapter 11 of the bankruptcy act. There is surely some irony in the spectacle of a company and its principal officers' demonstrating a total lack of concern for the law by engaging in copyright infringement, counterfeiting, customs fraud, false advertising, and fraudulent misrepresentation—all proven at trial—and then racing to find protection from a jury's verdict by using the law as a shield. For some weeks Maxi-Aids's creditors must have lost sleep at night for fear that the Zaretskys would work out a settlement in the bankruptcy court which would enable them to pay back only cents on the dollar, but in the end they seem to have worked things out more or less to the creditors' satisfaction.

We have obtained a number of documents (about six pounds worth) from the Bankruptcy Court of Eastern New York, including a list of Maxi-Aids's creditors. These include large and small vendors of products, but the list also includes the law firm of Ruskin, Moscou, Evans and Faltischek, who represented Maxi-Aids in the lawsuit they lost to ILA. The Zaretskys fired their first law firm and hired a new one while they were considering filing an appeal of the original decision. When they found themselves facing bankruptcy, the Zaretskys of course found a third firm—of bankruptcy attorneys—to conduct that filing. One hopes that all these attorneys have been paid though one is doubtful, remembering Earl Breynton of Brytech's experience as cited in the December, 1994, Braille Monitor, in which Breynton said Maxi-Aids refused to pay an invoice of several thousand dollars because the Zaretskys were unhappy with Breynton's decision to discontinue doing business with the company. Everyone contemplating doing business with Maxi-Aids should certainly keep this history in mind. But be that as it may, Maxi-Aids is continuing to do business, even if the past couple of years have not perhaps been their most satisfying or lucrative.

At the time we were reporting on the outcome of the 1997 trial, the Department of Veterans Affairs was still determining its response to the evidence of misrepresentation on the part of Maxi-Aids uncovered during the VA's investigation. We therefore touched only lightly in the March, ‘98, issue on Maxi-Aids's shenanigans in placing its VA bids. The time has now come to look more carefully at the VA evidence and report on what has happened since the jury's decision.

Early this year the United States Department of Veterans Affairs placed Maxi-Aids and its principals on a list of those debarred from bidding or otherwise doing business with the VA and its medical centers. When a federal agency, not Maxi-Aids's competitors or a publication sitting on the sidelines and reporting the situation, identifies false representations and improper bidding practices, the matter has clearly reached a new level of seriousness.

Maxi-Aids's false representations occurred on two occasions, when bids were submitted to the VA, first claiming that the company was "woman-owned" and later claiming that it was owned by a disadvantaged person. In each case Maxi-Aids sought and was given preference on the bids because of its false representations. The trial transcript in the lawsuit of Independent Living Aids and Marvin Sandler vs. Maxi-Aids and the Zaretskys shows that the jury unanimously found that the false representations were willful and deliberate. (See the March, 1998, issue.)

When the Department of Veterans Affairs asked for documentation that Maxi-Aids was at first woman-owned and was later owned by a disadvantaged person, the Zaretskys tried to cover up Maxi-Aids's false representations by creating and submitting a false document prepared by Elliot Zaretsky and signed by Mitchel and Harold Zaretsky in what appears to have been an attempt to deceive the VA even further.

One attempt at cover-up led to another, and, despite being exposed, the Zaretskys continued to espouse the fiction that they had first been woman-owned and later owned by a disadvantaged person.

Early in the lawsuit Mitchel Zaretsky, the president of Maxi-Aids, submitted a sworn affidavit to the Court stating, among other claims, "Until 1993 my sister Pam owned a substantial interest in Maxi-Aids; Pam sold her shares in 1993." He went on to say, "The Braille paper bid was submitted while Pam still held an interest in Maxi-Aids, and her interest [as a woman] entitled Maxi-Aids to a preference under the bidding guidelines." Referring to his brother Harold, Mitchel wrote, "Harold is legally deaf, and his interest in Maxi-Aids entitled the Company to a preference in the later bid." Mitchel also asserted: "The bids were legitimately submitted, reflecting my sister Pamela's former ownership in the Company and my deaf brother Harold's interest, respectively."

That affidavit, given under oath, would come back to haunt Mitchel and the rest of the Zaretskys at trial and was used extensively by Jack Dweck, ILA's attorney, as a critical piece of evidence.

Before we proceed to the transcript of the trial itself, a clarification of the bidding guidelines referred to by Mitchel in his affidavit will help to clarify the significance of actions taken by the Zaretskys. These guidelines essentially define a woman-owned firm as one that is 51 percent owned and operated by a woman or women. Similarly, the definition of a disadvantaged firm is one that is 51 percent owned by a person or persons who are disadvantaged, with very clear definitions of "disadvantaged" given. Deafness is not included as one of the categories listed in the definitions. Thus Harold's deafness never entitled Maxi-Aids to a preference, no matter how large his interest in the Company might have been. The defenses around the Maxi-Aids charade began disintegrating when ILA subpoenaed Maxi-Aids's tax records and corporate books showing ownership interest in the Company. The tax records, which consisted of K-1 forms submitted as part of Maxi-Aids's income tax returns to the Internal Revenue Service, showed that Pamela had no ownership interest whatsoever at the time the bid claiming woman ownership was submitted to the VA. This evidence was reinforced by the corporate books, which showed that, at least since January, 1988--more than five years before the bid claiming woman ownership had been submitted to the VA—

Pamela had not owned a single share of Maxi-Aids stock. Both the tax forms and corporate books showed that Harold never owned more than one-third of the shares of the Corporation—a far cry from the 51 percent needed to qualify under the bidding guidelines, even if he had been considered disadvantaged (which he was not).

Armed with Mitchel's sworn affidavit and the corporate and tax records, Jack Dweck went to work at trial. Following are extracts of the actual trial testimony given by Mitchel Zaretsky in response to questions from Jack Dweck:

Q: Mr. Zaretsky, you are also a one-third owner of the company, are you not, sir?

A: Correct.

Q: And your brother Harold is also a one-third owner: is that not correct, sir?

A: Yes.

Q: As of the present time your father Elliot Zaretsky, who is in the courtroom, is also a one-third owner: is that right, sir? A: Yes.

Q: And that one-third ownership is reflected by stock certificates in Maxi-Aids that have been issued to you, your brother Harold, and your father: is that correct, sir?

A: That's correct.

Q: And that one-third ownership is also reflected, is it not, in K-1's that were attached to your income tax returns that you filed with the Internal Revenue Service—you file every year: is that not correct?

A: I believe so.

Q: Mr. Zaretsky, you've been a one-third owner of this company from its inception, have you not, sir?

A: That's correct.

Q: And the same holds true with your brother Harold, isn't that right, sir?

A: I believe so.

Q: And at the inception of the company, Mr. Zaretsky, your sister Pamela Stein Zaretsky or Pamela Zaretsky Stein, was also a one-third owner, was she not, sir?

A: To the best of my knowledge, yes, sir.

Q: Mr. Zaretsky, your sister sold out her interest in the company:

isn't that right?

A: I guess so. I'm not sure.

Q: Well, your sister isn't an owner today, is she, sir?

A: No, she's not.

Q: And she hasn't been an owner for several years: isn't that right, sir?

A: That's correct.

Q: At no time from the inception of the company until the time that your sister sold her interest out, did she ever own more than a third of the stock: isn't that right, sir?

A: That's correct.

Having covered the percentage ownership information reflected in the corporate stock books and K-1 forms, Dweck turned his attention to the dates involved, since the Zaretskys had submitted the woman-owned bid in November of 1993 and claimed to be owned by a disadvantaged person in May of 1994. Remember that the word "owned" was defined by the VA to mean at least 51 percent ownership of the company. Here is Jack Dweck questioning Mitchel Zaretsky:

Q: Mr. Zaretsky, I'm showing you now the K-1's, which is an IRS form: isn't that right, sir?

A: Yes, I believe so.

Q: These are the K-1's for your brother Harold for 1992, 1993, and 1994, that's three years in a row: is that right? A: Yes.

Q: Your brother is having a 33.33 percent interest of the shares of Maxi-Aids Incorporated: is that right?

A: Yes.

Q: We agree, do we not, in 1992, 1993, and 1994, your brother Harold owned a third of the company's shares: is that right? A: Absolutely.

Q: Now, your father in 1992, 1993, and 1994 also owned 33.34 percent of the shares, isn't that right?

A: Yes.

Q: We agree?

A: We agree.

Q: Okay. Mr. Zaretsky, you as president in the same three years, ‘92, ‘93, and ‘94, owned 33 and one-third percent of the shares of Maxi-Aids Incorporated: is that right, sir?

A: That is correct.

Q: We agree again?

A: Yes, we do.

Q: Okay. And so for 1992, 1993, and 1994 it was you, your father, and your brother, correct?

A: They owned shares, yes.

Q: And that's 100 percent of the shares Maxi-Aids owned among the three of you: Harold, Mitchel, and Elliot, correct? A: On paper, that's what it says, yes.

Q: And that's the paper that is filed with the Internal Revenue Service with your tax return every year: is that right, sir? A: I believe so.

Jack Dweck had now established the facts through evidence introduced at the trial plus Mitchel's own sworn testimony. False representations had indeed been made to the Department of Veterans Affairs. Pamela Zaretsky Stein had never owned more than one-third of Maxi-Aids's stock and at the time of the woman-owned bid didn't own a single share. Harold Zaretsky had never owned more than one-third of Maxi-Aids's stock, and his deafness did not fall under the VA's definition of "disadvantaged." Dweck now went to work on the cover-up, beginning with Mitchel's affidavit.

Q: Now, Mr. Zaretsky, when this case first started, sir, you submitted some papers before this Court: is that right, sir? A: To the best of my knowledge; we submitted a lot of papers. Q: Okay. And one of those papers you submitted was an affidavit; isn't that right, sir?

A: Correct.

Q: And, sir, I'm going to show you this document and direct your attention to page 29. That's your signature, isn't that right, sir?

A: Yes.

Q: And the Notary Public there is Mark Mulholland, your lawyer, isn't that right?

A: I guess so, yes.

Q: And you swore to the truth of this document on the ninth day of March, 1995: isn't that right?

A: Yes.

Q: And this affidavit was submitted by you to this Court in March of 1995; isn't that right, sir?

A: Yes.

Q: Mr. Zaretsky, I want to read something to you from this affidavit, sir. Starting on page 1 it says, "State of New York, County of Nassau." Do you want to follow with me, sir? A: I would like to.

Q: "State of New York, County of Nassau. Mitchel Zaretsky being duly sworn deposes and says. I am the president of defendant Maxi-Aids, Inc. (Maxi-Aids)." Agreed, am I reading it correctly so far, sir?

A: Correct.

Q: My father, defendant Elliot Zaretsky, is Maxi-Aids founder. Defendant Harold Zaretsky, Maxi-Aids secretary and vice president, is my brother; defendant Pamela Zaretsky Stein, my sister, was formerly a Maxi-Aids shareholder but has owned no interest in the company since 1993." Do you see that, sir?

A: Yes.

Q: That's not correct, is it?

A: No, I don't believe so.

Q: And it is not correct because the K-1's that we have before you show that at least since 1992 Pamela was not a shareholder, agreed?

A: Yes.

Q: And you submitted this affidavit to this Court to rely upon the truth of your statements: isn't that correct, sir? A: That is correct.

Q: And you gave that information to your lawyer, Mr. Mulholland, which he put into this affidavit and submitted to this Court, correct?

A: I gave him a lot of information, yes.

Q: And you gave him this information, did you not, sir? A: I don't recall exactly giving him the date 1993, but I gave him a lot of information, yes.

Q: Mr. Zaretsky, just so we understand the procedure that was followed when this affidavit was prepared, it was typed up in your lawyer's office, agreed?

A: I agree.

Q: Mr. Mulholland gave it back to you to look at before you signed it: isn't that correct, sir?

A: I reviewed it.

Q: And you read it?

A: I read it.

Q: At the time that you read it, Mr. Zaretsky, did you tell Mr. Mulholland that in the very first paragraph that statement about your sister selling her shares in 1993 was false? A: To the best of my knowledge, I believe that she had sold her shares by 1993.

Q: But that's not what you said here, is it? You said "defendant Pamela Zaretsky Stein, my sister, was formerly a Maxi-Aids shareholder but owns no interest in the company since 1993." That's false, isn't it?

A: Again, to the best of my knowledge

At this point a procedural issue involving the Judge interrupted the questioning, but it then continued.

Q: Now, when you saw this affidavit that Mr. Mulholland had prepared and he asked you to sign it, you read it. That's what you told us a few moments ago: is that correct?

A: I did read it, yes.

Q: The answer is yes?

A: Yes.

Q: And did you tell Mr. Mulholland that that statement was incorrect?

A: No, I did not.

Q: Did you ask him to change it?

A: I don't—

Q: Yes or no, sir?

A: No, I did not ask him to change it.

Q: Okay. Now, Mr. Zaretsky, I'll direct your attention, sir, to page 3 of that same affidavit that you submitted to this Court. Do you see paragraph 6?

A: Yes.

Q: Okay. On the third line I want to read this sentence to you sir. And follow me, please. "In 1993 my sister Pam owned a substantial interest in Maxi-Aids. Pam sold her shares in 1993." That was a false statement also, sir, wasn't it?

A: The statement was incorrect.

Q: Did you tell Mr. Mulholland it was incorrect?

A: No.

Q: Did you tell him to change it?

A: No.

Q: But you signed the affidavit nevertheless: is that correct?

A: Yes.

Q: And you swore to it?

A: Yes.

Having shown that Mitchel's sworn affidavit to the Court contained false statements regarding Pamela's ownership, Dweck turned to a document that had been obtained from the VA under the Freedom of Information Act. This document had been submitted to the VA by a representative of Maxi-Aids in order to justify the claims of woman ownership and disadvantaged ownership. (It was never clear who provided the document since Mitchel and Elliot both denied doing so, but certain it is that the VA had possession of it.) The document was a guarantee, dated May 25, 1993, insuring payment of an amount of money (the amount had been blanked out for confidentiality reasons) for Pamela to relinquish her majority stock ownership, and indicating that Harold would then become the majority shareholder.

A: Now, Mr. Zaretsky, I want to show you, sir, another document and ask you, sir, is that your signature on the second page? A: It looks like it.

Q: And that's the signature of your brother Harold also, isn't that right, sir?

A: Could be.

Q: Don't you recognize your brother's signature?

A: Looks like it, but I wasn't there when he signed it. Q: Okay. Mr. Zaretsky, did you give a guarantee in 1993 to the Veterans Administration in connection with your sister's ownership of stock in Maxi-Aids?

A: No.

Q: I want to show you the top page of this document on which you've identified the signature on the second page. Do you see where it says "guarantee" sir?

A: Yes.

Q: That's part of the same document that you signed: is that right, sir?

A: That's correct.

Q: And your signature is on the second page where it says "31st day of May, 1993." You see that, don't you, sir? A: Correct.

Q: I would like to read this to you, Mr. Zaretsky. "Guarantee, May 25, On the retirement of Elliot Zaretsky as of May 31, 1993, and in order to induce Pamela Stein to relinquish her majority in Maxi-Aids, Inc. by April 30, 1994, the sum of blank dollars will be paid to her (payee) and as of May 1, 1994, Harold Zaretsky will become the majority stockholder." Did you sign that statement, sir?

A: Yes, I believe I did.

Q: And that statement was false when you signed it in May of 1993, wasn't it, sir?

A: To the best of my knowledge, I signed the document. I don't recall it being false.

Q: Who prepared this document, Mr. Zaretsky?

A: It wasn't me.

Q: Did you read it before you signed it?

A: Not necessarily.

Q: But that's your handwriting where you filled in the date, isn't it, sir?

A: That's correct.

Q: Mr. Zaretsky, it is not true, is it, sir, that as of May 1, 1994, Harold Zaretsky was the majority stockholder: isn't that right, sir?

A: Can I see that please?

Q: By all means. (Handing.)

A: On paper, it is not true.

Q: Mr. Zaretsky, you signed a guarantee on paper, didn't you sir?

A: Yes.

Q: And these K-1's that you submitted to the Internal Revenue Service are on paper, are they not, sir?

A: True.

Q: And you submitted those papers to the Internal Revenue Service under penalty of perjury, did you not, sir, along with your tax return?

A: To the IRS, yes.

Q: Okay. And that's on paper also, isn't it sir?

A: Yes.

Q: But in 1994, Mr. Zaretsky, your brother Harold only owned a one-third interest in Maxi-Aids: is that right, sir? A: Yes.

Q: And you would agree with me, would you not, sir, that a one-third interest in Maxi-Aids is not a majority share? A: On paper, no.

Q: Mr. Zaretsky, you would agree with me that at least 50.1 percent would be a majority, would that not be correct, sir? A: Over 50 percent, yes.

Q: And your brother Harold to this day has never owned more than 33.3 Percent of the shares of Maxi-Aids, correct? A: To the best of my knowledge.

Q: And that's on paper, isn't it, sir?

A: Yes.

Mitchel continued to deny that he had given the guarantee document to the Department of Veterans Affairs and stated that it had been prepared as an internal document, but he never satisfactorily explained the reason why it had been drawn up. When asked what the purpose of the document was, he gave the vague answer, "For the purpose as stated. When Elliot retires, Pamela, I don't recall exactly what it says, but there was a shift in shares from one person to the other." It should be noted that the document stated that Elliot was to retire in May of 1993, and Harold was to become the majority stockholder by May of 1994. As of the date of the trial, in November and December of 1997, there had been no shift in shares, and Mitchel, Elliot, and Harold still owned one-third each. Documents furnished to the Braille Monitor by the United States Bankruptcy Court show that, as of the end of 1998, when Maxi-Aids filed for bankruptcy, the ownership remained the same.

Dweck next moved on to the submissions of the bids by Maxi-Aids in which the claims of woman ownership and disadvantaged ownership had been made. Here are a few of the questions asked and the answers they elicited.

Q: Do you see on this form that the X shows the company [Maxi-Aids] is asking for a business qualification as a small business and woman-owned?

A: Business classification, woman-owned and small business. Q: Mr. Zaretsky, you are familiar, sir, with the regulations of the bidding agencies as to what classifies a company as woman-owned, are you not, sir?

A: Today I am, yes.

Q: Mr. Zaretsky, when that form was submitted to the Veterans Administration on November 5, 1993, that classification box with the X filled in by your company was incorrect, isn't that right, sir?

A: That is incorrect.

Q: That was false, is that right, sir?

A: I don't know false, but it was incorrect.

Q: Did you ever notify the Veterans that the classification made by Maxi-Aids was incorrect?

A: To this day, no.

Dweck next brought up the bid on which the claim of disadvantaged ownership had been made.

Q: Now, sir, Mr. Zaretsky, your company also submitted bids to governmental agencies claiming that it was disadvantaged, did it not, sir?

A: One bid.

Q: And which one was that sir?

A: I believe it was in April or May of ‘94.

Q: Mr. Zaretsky, you signed a bid submitted to the federal government that your company was a small, disadvantaged concern: is that right, sir?

A: At that time, I believe so, yes.

Q: Mr. Zaretsky, would you agree with me, sir, that the checking off of "disadvantaged" on that front page to the submission to the Veterans Administration was false?

A: At the time I believed it was true, but today that is not correct.

Q: It is not correct. It's false.

A: As I understand it today, yes.

Q: Did you ever tell the Veterans Administration either in writing or verbally that that classification that was checked off was false.

A: No.

Having established that Mitchel was aware that his submissions were "incorrect" (to use his words) or "false" (to use Dweck's), the questioning moved on to penalties.

Q: Are you telling this jury and Court, sir, that, if you submitted a false statement when you submitted this bid, sir, you did not know you ran the risk of debarment from any bidding with a governmental agency?

A: I understood, if I gave false information, there might be penalties.

Q: And one of the penalties is debarment: is that right, sir?

A: As I read it today, yes.

Q: And debarment would mean you would be totally disqualified from the entire bid?

A: Subject to the Veterans Administration, yes—no, excuse me.

Debarment would be from future bids.

Q: And you also knew, did you not, that you ran the risk of imprisonment for submitting a false statement on a bid: isn't that correct, sir?

A: I believe so.

Q: You also knew that, if a false bid was submitted, you ran the risk of a fine?

A: I believe, again, there were penalties, yes.

All of the testimony above took place on November 13. Four days later, on the 17th, Mitchell was on the witness stand again, and Dweck reviewed some of the points raised in previous testimony. However, some of the new testimony was not consistent with statements made by Mitchel only four days earlier, and the rest covered areas that laid the groundwork for questioning of Pamela and Elliot, who were to testify shortly afterward. Dweck had previously asked Mitchel about the guaranty that ILA had obtained from the VA under the Freedom of Information Act, and Mitchel had indicated that he was familiar with it. He had claimed that it had been prepared for internal purposes and gave a rather vague explanation of those purposes (see above). The story had changed by the 17th, and Mitchel claimed to know nothing about the document, other than the fact that he had signed it.

Q: Did someone from your company submit this guaranty to the Veterans Administration? A: I did not, no.

Q: Mr. Zaretsky, you signed this guaranty, did you not, sir?

A: It has my signature on it, yes.

Q: And you signed this guaranty for a governmental agency: is that correct?

A: No.

Q: Who did you sign this guaranty for, Mr. Zaretsky?

A: I don't recall for whom, but it wasn't a governmental agency. Q: Did you not submit this to Thomas Valery of the investigative unit of the Veterans Administration?

A: No.

Q: Isn't it a fact that this guaranty was delivered by your father Elliot Zaretsky to special Investigative Agent Thomas Valery of the Veterans Administration?

A: I don't know what my father did.

Q: You are telling us that you as president and a one-third owner signed the guaranty and you don't know what it was for: is that what you are telling us?

A: Yes.

Q: Wasn't this guaranty in connection with a representation by you to the Veterans Administration, sir, that your sister, Pamela Stein, was to relinquish her majority interest in Maxi-Aids by April 30, 1994?

A: No. I never met with a representative from the Veterans Administration.

Q: You signed this statement, sir, which says that in order to induce your sister Pamela Stein to relinquish her majority in Maxi-Aids by April 30, 1994, a certain sum was to be paid to her: isn't that correct?

A: I don't recall what is on that statement.

Q: Let me read the first paragraph, sir. On retirement of Elliot Zaretsky on May 31, 1993, and in order to induce Pamela Stein to relinquish her majority in Maxi-Aids by April 30, 1994, the sum of blank dollars will be paid to her, payee, and as of May 1, 1994, Harold Zaretsky will become the majority stockholder; that's your statement, is it not, sir, in the first paragraph? A: I am not familiar with this document.

Q: You are not familiar with it, but you signed it?

A: I sign tons of things.

Q: Did you read this document before you signed it, sir?

A: I don't recall.

Q: Do you normally sign a document entitled "guaranty" without reading it?

A: I sign a lot of things without reading it.

Q: A guaranty, sir?

A: Even guaranties, yes.

Q: And who asked you to sign it?

A: I don't recall when it was signed.

Q: It is dated May 25, 1993. Do you see that, sir?

A: It has a date on it, yes.

Q: According to the documents we have in evidence, your sister didn't even own one share of Maxi-Aids as of the date of this guaranty: isn't that correct, sir?

A: I am not sure.

Q: Do we have to go through the K-1's again for ‘91, ‘92, ‘93, ‘94 that we brought in evidence?

A: On the K-1's, yes.

Q: Your sister didn't own one share?

A: The K-1's show that just Harold, Elliot, and myself own shares, yes.

Q: Mr. Zaretsky, what was this document signed for if your sister didn't even own one share as of May 25, 1993?

A: As I stated, I don't recall that document.

In later testimony Dweck got Mitchel to admit that Pamela had sold her shares in Maxi-Aids and had been paid out with a series of monthly checks, each in the amount of $833.33, (which totaled $10,000 a year). Over twenty checks were introduced into evidence, each in the identical amount. One check was of particular interest, since the words "Stock Sale" were written right on it, leaving no doubt as to its purpose.

Q: Mr. Zaretsky, isn't it a fact that your sister sold her shares in the company, and the company paid her out?

A: She sold shares and she was paid.

Q: Your sister received $833.33 on a monthly basis over a number of years: isn't that right, sir?

A: I don't recall the exact number, but she received, yes. Q: And that was the monthly basis that she was paid out: is that correct?

A: She was paid, I am not sure of the timing, yes.

Mitchel was then shown a number of the checks, and Dweck focused special attention on the one marked "Stock Sale."

Q:And then we have one in January, ‘92, 833.33, correct?

A: Yes.

Q: And that check is marked "stock sale"?

A: Yes.

Q: Pamela Stein?

A: Yes.

Q: Does that refresh your recollection that your sister sold her shares at least, and as of at least January of ‘92 she was being paid out at the rate of 833.33 every month?

A: Yes, it says "stock," yes.

With Mitchel's testimony and grudging admissions it was clear that Maxi-Aids representations to the Department of Veterans Affairs were false and that the company was neither woman-owned nor disadvantaged at the time the bids were submitted. However, Dweck was not about to let the rest of the Zaretskys off the hook. Pamela was the next family member to testify. Although Mitchel had already testified that Pamela had sold her stock and had been paid out with checks of $833.33 per month, she came to the witness stand defiant and unresponsive. Her testimony was given in 1997, yet she claimed not to recall whether or not she had owned stock in 1996 (Mitchel had already testified that, as far back as 1992, she had not).

Q: Mrs. Stein, did you own stock in Maxi-Aids in 1996?

A: I don't recollect that.

Q: Was that a yes or a no?

A: I can't answer yes or no.

Q: How about for 1995, were you an owner of stock in Maxi-Aids?

A: That's not a yes or no answer.

The same evasiveness persisted as Dweck asked about ownership on a year-by-year basis. Then he turned to the question of the sale of stock. Remember Mitchel's testimony that "She sold shares, and she was paid?"

Q: Well, Mrs. Stein, have you ever received checks for the sale of stock that you owned in Maxi-Aids?

A: Not to my knowledge.

Q: Mrs. Stein, I'm going to show you these documents, which have been marked as Plaintiff's Exhibit 112. These are checks made out to you, are they not?

A: That's correct, yes.

Q: Did you receive these checks?

A: Yes I did.

Q: Do you know what these checks were for, Mrs. Stein?

A: My belief was that they were salary checks.

Q: Mrs. Stein, I show you this check from this same Exhibit 112, and the check number is 14023. That's made out to you, isn't it? A: Yes, it is.

Q: Do you see it says "stock sale"?

A: Yes, I see it. Yes.

Q: Were these checks for the sale of your stock? A: To my knowledge, it was for the work that I've done. I was not told otherwise.

Q: Did you ever sell stock in Maxi-Aids for which you received these checks.

A: That was for salary.

Q: So whoever wrote "stock sale" on the check, according to what your testimony is, made a mistake?

Q: You have to ask them. I can only tell you what I know.

Later Dweck asked the question "Did you ever get paid for the sale of your stock in Maxi-Aids?", to which Pamela answered "Not to my knowledge." He also asked "Mrs. Stein, are you a shareholder today?" to which she responded "I don't know." All of this directly contradicted the testimony given just a few days before by Mitchel and was shown to be untrue by the checks paid to her, as well as by the corporate books and K-1 forms filed with Maxi-Aids's income tax returns. She made Jack Dweck work hard that day, but the final verdict demonstrated that Pamela's arrogance on the witness stand had clearly hurt the Zaretskys in the minds of the jury.

The last Zaretsky to testify was Elliot, the founder of Maxi-Aids and the father of Mitchel and Pamela. Elliot was as evasive as Pamela, trying to defend a number of indefensible positions, even when Dweck pinned him down. The corporate books and stock certificates showed that the original corporate ownership, dating from May 15, 1986, was divided as one-third each for Mitchel, Pamela, and Harold. Pamela's stock certificate was later cancelled, and a new certificate, dated January 1, 1988, was issued to Elliot. This, plus the checks paid to Pamela, made it irrefutable that her shares had been sold, that Elliot then became the owner of the same number of shares, and that Pamela had owned no shares since January 1, 1988. However, Elliot dodged and twisted and made Dweck work hard for each admission.

Q: Mr. Zaretsky, you're one of the owners of Maxi-Aids, are you not, sir?

A: That's correct.

Q: And you've been an owner of Maxi-Aids's stock since January 1, 1988, correct?

A: I believe so.

Q: And you got your stock from your daughter Pamela, correct?

A: No.

And they were off and running. At this point Dweck brought in a copy of the Maxi-Aids books and stock certificates. He showed them to Elliot and asked if he saw them. The responses were "One moment, Mr. Dweck." And "I'm trying to recollect this, Mr. Dweck." Since all he had been asked was whether he saw the documents spread out on the table before him, Dweck complained to the Judge, who instructed Elliot to answer the questions with a simple "yes" or "no" or "I don't know" and to leave out explanations. Dweck then had to go through a detailed examination of each stock certificate with Elliot before finally getting him to admit that he had taken over Pamela's shares—something he had denied a few minutes earlier.

Q: And then Pamela's shares were cancelled, and you got the 33 and a third shares that Pamela used to have... from her original issue of May 15, 1986, you took over her shares as of January 1, 1988, correct?

A: That's what is written, yes.

Q: Okay. Can we agree then, Mr. Zaretsky, that from January 1, 1988, until the present time, you and Harold and Mitchel were each one-third owners of the stock of Maxi-Aids as it is shown on the corporate records?

A: On paper, yes.

Q: Mr. Zaretsky, when you acquired Pamela's shares in January of 1988, you've held those shares from ‘88 right until up to now, correct?

A: Honestly, I did not remember that.

Q: Well, now that we've refreshed you with the documents, we agree. You've owned one-third of the shares of Maxi-Aids from January 1, 1988, right up until today, correct? A: The papers say that. That's correct, Mr. Dweck.

Having finally gotten Elliot to admit that he acquired Pamela's stock in 1988, Dweck continued questioning the dates of Pamela's ownership.

Q: Mr. Zaretsky, will you agree with me, sir, that, from the time you took over Pamela's shares in 1988, Pamela has not been an owner of the company?

A: On paper, sir.

Q: On paper. Agreed, yes?

A: On paper, yes.

Q: Mr. Zaretsky, that would mean on paper, as far as the federal government was concerned, Pamela did not have any ownership in the company from the time you got her stock on January 1, 1988: is that right, sir A: That's correct.

Q: And from 1988 right until now, as far as the federal government was concerned, whether it is for income tax purposes or any other purposes, Pamela was not an owner. Agreed?

A: Agreed.

Dweck next moved on to the guaranty document, which had first been introduced during Mitchel's testimony.

Q: Mr. Zaretsky, I want to show you a document, sir, which is Plaintiff's [exhibit] 110 in evidence. Did you prepare that document and hand it to your son Mitchel to sign? A: Yes. It's an internal document that I made Mitchel and Harold sign.

Maxi Aids logo
Maxi Aids logo

Q: Mr. Zaretsky, am I correct, sir, that you gave this document to Special Investigative Agent Thomas Valery from the Veterans Administration?

A: Honestly, I do not remember who I gave it to.

Moments later Dweck questioned Elliot again about Pamela's ownership. He got the same denial that had characterized his earlier question regarding transfer of Pamela's shares back in January, 1988. Keep in mind that Elliot had testified only minutes before that Pamela had had no ownership in the company since he (Elliot) had gotten her stock on January 1, 1988 (see above).

Q: Mr. Zaretsky, when you prepared this document, Plaintiff's Exhibit 110, you knew, sir, that your daughter Pamela hadn't owned stock in Maxi-Aids since 1988: isn't that right, sir? A: No, sir, you're wrong.

Dweck then moved on to the question of Harold's majority ownership.

Q: Mr. Zaretsky, has your son Harold ever become a majority stockholder in Maxi-Aids?

A: As far as I'm concerned, yes.

Q: Mr. Zaretsky, from the documents that you produced of your corporate minutes, you haven't seen anything reflecting any more than a one-third interest owned by your son Harold, isn't that right, sir?

A: From on the papers, yes.

Q: And on the papers, as you put it, Mr. Zaretsky, your daughter Pamela hasn't owned any stock in Maxi-Aids since December 31, 1987, isn't that correct, sir?

A: On paper, yes.

Q: Mr. Zaretsky, when you wrote the statement here "in order to induce Pamela Stein to relinquish her majority interest in Maxi-Aids by April 30, 1994," that statement was not true, was it, sir? Yes or no, sir?

A: The statement is true, sir.

Q: Mr. Zaretsky, on paper, as you put it, from the corporate records that you produced in this lawsuit, that statement was not true, was it, sir?

A: Yes and no.

Q: Mr. Zaretsky, did your daughter Pamela ever own a majority interest in Maxi-Aids? Yes or no, sir?

A: On paper, no.

Q: Did your daughter on paper ever own more than a third interest in the stock in Maxi-Aids?

A: On paper, no.

Q: Did your daughter transfer her one-third interest in Maxi-Aids on paper as of December 31, 1987?

A: Would you repeat this question, please?

Q: Sure. My question is, on paper, sir, from the record that you have produced in this lawsuit, did your daughter Pamela transfer her one-third interest of the stock in Maxi-Aids to you as of December 31, 1987?

A: I do not believe so.

Q: Mr. Zaretsky, do you want me to show you, sir, the corporate papers, again, which show the transfer of your daughter's interest as of December 31, 1987, and your acquiring her one-third interest as of January 1, 1988? Are you denying that's what the papers say? A: I do not recollect this, Mr. Dweck.

Q: Mr. Zaretsky, your daughter Pamela didn't own any shares on paper since January 1, 1988, when you took over her shares, correct?

A: On paper, yes. I agree with you on that, sir. Q: So when you wrote the statement here "in order to induce Pamela Stein to relinquish her majority in Maxi-Aids by April 30, 1994," that was incorrect, is that right, on paper?

A: On paper, it was not correct, yes.

Q: Mr. Zaretsky, on paper, Harold Zaretsky was never a majority stockholder of Maxi-Aids, was he, sir?

A: On paper, no.

Q: Mr. Zaretsky, you asked Mitchel and Harold to sign this paper on May 31, 1993, didn't you, sir?

A: That's correct.

There you have the sworn testimony at trial of the Zaretskys:

Mitchell at first submitting an affidavit under oath regarding Pamela and Harold, next signing a document attesting to a non-existent transfer of stock, and then struck by a loss of memory when confronted with the facts. Pamela claiming that a check labeled "stock sale" was for work performed, and then arrogantly telling Jack Dweck to ask the person who signed the check why that notation was on the check. Finally Elliot, denying that Pamela's stock had been transferred to him, claiming that Harold had become the majority stockholder "as far as I'm concerned," and only admitting that the representations on the guaranty which had been received by the Department of Veterans Affairs were false "on paper."

The Zaretskys' references to "paper" and their apparent belief that "paper" has no meaning to them and their business provide an interesting commentary to a Maxi-Aids catalog published while the lawsuit was in progress. The 1996-1997 edition of the Maxi-Aids catalog contains a bold statement (on paper) on page 46 that "Maxi-Aids is the leader in innovation, quality, honesty, service, and professionalism." After reading the transcript of the Zaretskys' testimony at trial, one has reason to doubt their claims of leadership in anything but innovation, except that is, on paper.

The Department of Veterans Affairs has apparently decided that the paper is more valid than the statements, representations, and claims made by the Zaretskys and has debarred Maxi-Aids and the individual Zaretskys from future business.

It is worth pointing out here that twenty minutes or so after Elliot Zaretsky told the Braille Monitor that he had no comment for attribution in this story, he called back to "Make a statement." He refused to wait long enough for the Editor to get to a place on her computer where the statement could be written because, as he said, the statement was short. He then said that, if the Braille Monitor wrote a story saying that the VA had disbarred—that was his term—Maxi-Aids, the statement would be defamatory and the Braille Monitor would be liable. But we have no choice but to stand on the facts as they have been revealed and let the chips fall where they may.

Several states, including Minnesota, Arizona, and Texas, have followed the VA's lead. Minnesota and Arizona have recently tendered bids including a clause prohibiting anyone suspended or debarred by any federal agency from submitting bids to them. Our Texas affiliate tells us that the State of Texas has advised that it will honor one existing contract with Maxi-Aids but will not permit the company to participate in any future bids. Since every state depends on federal money to fund almost four fifths of its rehabilitation programs, one hopes they will all soon stop doing business with Maxi-Aids because it has been debarred by the VA and with any other companies owned by the Zaretskys because they too have been debarred. The Braille Monitor is aware of at least two other companies, See More Vision Aiding Products and Hear More, which are part of the Zaretsky empire. Another name used is Reizen, which appears on watches and magnifiers distributed by Maxi-Aids and See More and sold at retail to consumers and also at wholesale to other distributors. According to those who follow the Association for Education and Rehabilitation of the Blind and Visually Impaired (AER) listserv, a banner advertisement for a company called New Maxi (and apparently selling adaptive aids) appeared out of the blue on that list. The Monitor does not have information about the ownership of this Company, but the name appears to be astonishingly similar to that of Maxi-Aids. It has been reported that the Zarekskys have created a number of companies in an attempt to procure products and do business which they might not have been able to do through the Maxi-Aids Company. Hence, this New Maxi bares scrutiny.

As we were about to go to press, the Rehabilitation Services Administration published a memorandum which bears reprinting. Here is the text:

UNITED STATES DEPARTMENT OF EDUCATION OFFICE OF SPECIAL EDUCATION AND

REHABILITATIVE SERVICES REHABILITATION SERVICES ADMINISTRATION WASHINGTON, D.C.POLICY DIRECTIVE RSA-PD-00-01

DATE: November 22, 1999

                        ADDRESSEES: STATE VOCATIONAL REHABILITATION AGENCIES                          (GENERAL)

STATE VOCATIONAL REHABILITATION AGENCIES (BLIND)

STATE REHABILITATION ADVISORY COUNCILS

CLIENT ASSISTANCE PROGRAMS

REGIONAL REHABILITATION CONTINUING EDUCATION PROGRAMS

RSA SENIOR MANAGEMENT TEAM

SUBJECT: Notice of Vendor on List of Parties Excluded from Federal Procurement and Non-procurement Programs

The purpose of this memorandum is to advise State Vocational Rehabilitation (VR) agencies and other relevant entities as to the procurement status of Maxi-Aids, a private distributor of specialty products primarily for use by blind and visually impaired persons.

Recently a District Court found Maxi-Aids to be in violation of copyright and trademark laws as well as to have conducted deceptive and unfair business practices. As a result the U.S. Department of Veterans Affairs placed Maxi-Aids on the List of Parties Excluded from Federal Procurement and Non-procurement Programs. This list can be found at <http://www.arnet.gov/epls/>.

The purpose of this notice is to alert the above-referenced VR agencies and other entities that they cannot do business with Maxi-Aids as a contractor or subcontractor if the contract or subcontract is greater than or equal to $100,000. While transactions below this amount are not prohibited, entities should carefully monitor any relationship entered into with Maxi-Aids below $100,000 to ensure that Maxi-Aids carries out its obligations under the terms of the transaction.

You may contact Mr. Joe Cordova, Director of the Division for the Blind and Visually Impaired of RSA for further information regarding this matter at (202) 205-9902.

CITATION: 34 CFR 74.13 and 85.110

Fredric K. Schroeder

Commissioner, RSA

There you have the RSA memorandum, and it certainly speaks for itself. Beginning with the December, 1994, issue of the Braille Monitor, the National Federation of the Blind has taken a strong stand against Maxi-Aids's behavior, which we believe has violated the canons of good business ethics in any field, but which we found especially reprehensible in dealings with blind and multiply handicapped people. We reported in that 1994 story that we had stopped buying anything at all from Maxi-Aids, even if its price was the lowest to be had, because we did not like its behavior or dealings. We now consider ourselves vindicated by the decision of the Department of Veterans Affairs, by the action of the states that have let Maxi-Aids and the Zaretskys know that conduct like theirs will no longer be tolerated in our field, and by the Rehabilitation Services Administration directive.

There is no better way to end this article than to repeat the words of Dr. Kenneth Jernigan, who concluded the December, 1994, investigative report on Maxi-Aids with the following: "All of us in the blindness field (consumer organizations, service providers, and manufacturers and vendors of appliances) have a trust and an obligation. In the struggle of the blind to move from second-class status to first-class membership in society, there are roadblocks enough without having to deal with questionable behavior from within. We who are blind seek not only the rights and privileges but also the responsibilities of citizenship. An important part of those responsibilities is self-policing and scrupulous conduct."