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Alan and Elliot Benlolo were living a good life with their mansions, flashy vehicles and a seemingly endless supply of money. But yesterday, the brothers were forced to exchange their palatial homes for cells in a federal penitentiary, for running two scams that netted them about $4-million.

They were also ordered to pay $2.3-million in fines and restitution.

With hugs all around and a last wave to their tearful wives, the brothers were led away from a downtown Toronto courtroom, still believing, as Madam Justice Anne Molloy had noted just minutes earlier, that they had done nothing wrong.

Breaches of the Competition Act normally result in fines. The Benlolos' lawyer, Lorne Sabsay, said he believes this is the first time penitentiary time has been given out for a conviction under the act. Calling the sentences "out of line for this kind of crime," he said he will advise his clients to appeal.

The Ontario Superior Court judge sentenced each brother to 42 months in prison for a stock-swap fraud and to three years for their latest venture, a phony telephone invoice venture. They will serve the two sentences concurrently and be eligible for parole after 14 months.

Judge Molloy also ordered the brothers to pay $1,498,761 in restitution for the stock-swap fraud. They pleaded guilty to that offence in July. The amount is half what 77 investors in their scam lost, Crown prosecutor Robert Goldstein told the judge. Each brother was fined $400,000 for the phone-bill scheme.

The brothers say they are broke. Alan filed for bankruptcy in 2002, citing assets of $1,500 and liabilities of $3.1-million, bankruptcy records show. The bankruptcy has not been discharged.

The brothers took a step toward full restitution by agreeing to immediately pay $920,000. It was to be paid to the court yesterday. Judge Molloy gave the Benlolos six years to pay the rest.

Mr. Goldstein said the initial payment was in a trust account for this purpose. To come up with it, their mother, Marilyn Benlolo, took out a $1.2-million mortgage in August on one of the two mansions she owns on Parr Street in Thornhill, Ont., near the Uplands Golf and Ski Centre, which abuts the Thornhill Golf and Country Club.

Her name is on the deeds of both properties, which she purchased in 2002. The brothers live in the two houses with their families.

In May of 2003, she took out a $700,000 mortgage on the other property. The combined monthly mortgage payment is more than $10,000, according to mortgage documents.

Mr. Sabsay said the family is now broke and he doesn't know how the brothers will pay the remainder of the court order.

In contrast to their sons, Mrs. Benlolo, a former teacher, and her husband Carlos, a retired barber, live in a modest suburban home in Thornhill.

The brothers' lavish lifestyle included leased vehicles worth hundreds of thousands of dollars, most leased under Mrs. Benlolo's name, a lien search shows. They include a 2003 Yukon Denali, a 2003 Ferrari 360 Spyder, four Mercedes Benzes, a 2004 Cadillac CTS, and a 1998 Lamborghini.

Judge Molloy noted that the brothers most regret leaving their lavish lifestyle and cars behind, but not their crimes.

"They don't see themselves as criminals," she commented, saying they view their phone-invoice scam as merely misleading ads.

The stock swap offered investors around the world stock in non-existent microchip companies in 1999 and 2000. The brothers had pleaded guilty in July to being part of a fraudulent international scheme.

For their phone-invoice scheme, they enlisted their younger brother Simon and a friend, Victor Serfaty. They mailed out thousands of phony invoices in 2000, telling small businesses they owed $25.52 for advertising on their yellow-page Internet directory.

Only those reading the fine print would realize the invoice was not real.

The four men, all in their 30s, pleaded not guilty, but a jury convicted them. Judge Molloy sentenced Simon Benlolo to a conditional term of nine months, with three months of that to be served under house arrest. He must also pay a $100,000 fine.

Yesterday, after his brothers left to begin their sentences, Simon, 32, was bitter, telling a reporter that he netted only $374 from the scheme and now has to pay out $100,000. "That's unjust," he said.

Mr. Serfaty received an 18-month conditional sentence, with the first six months under house arrest.

He must also perform 100 hours of community service and pay a $15,000 fine.

Alan served six months in a United States jail in 1999 for mail fraud. The U.S. government is still trying to collect a $1-million judgment from a civil lawsuit.

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