Entrepreneurs in New York honestly sell goods via Amazon.com every day, but four brothers allegedly manipulated the e-commerce giant’s vendor system to scam the company out of $19 million. According to investigators from the Department of Homeland Security and other federal agencies, the men used fraudulent invoices to collect illegitimate payments and tried to hide their activities with sophisticated online privacy tools. Federal authorities have now charged them with conspiracy to commit wire fraud, wire fraud and money laundering. These are serious criminal offenses with the potential to send the men to prison for decades should convictions result.
Inflated prices, substitutions and fake invoices
Investigators allege that the men created multiple vendor accounts at Amazon and initiated contracts to ship small quantities to Amazon. However, when the vendors sent invoices to the online retailer, they apparently swapped in different items in large quantities at very high prices. One invoice cited in their indictment claimed that a contract for a single bottle of perfume valued at $289.78 resulted in an invoice for 927 beard trimmers priced at $289.78 each. This invoice caused Amazon to deposit $268,626 in the account of one of the brothers.
Hiding virtual footprints
As Amazon detected strange activity, the company canceled the brothers’ vendor accounts. According to investigators, the account suspensions motivated the men to open new accounts under fake names. They reportedly employed virtual private servers in an attempt to hide their digital trails that could link them to the other accounts already suspected of fraudulent activity.
Evidence of conspiracy
The indictment against the men brought conspiracy to commit wire fraud charges. Investigators say they found conversations about the Amazon vendor scam within an encrypted text message application.
Federal prosecution for wire fraud
Wire fraud falls under the purview of federal criminal law. The federal government can apply substantial resources to investigating and prosecuting such cases. Should you find yourself linked to a white-collar crime, a federal criminal defense attorney may offer advice about how to respond.