Four brothers from New York have been charged with defrauding Amazon of $26m ($US19m) as part of a “new twist” on wire fraud.
The United States Attorney’s Office for the Southern District of New York brought charges against brothers Yoel Abraham, 28, Heshl Abraham, 32, Zishe Abraham, 30, and Shmuel Abraham, 24, last week after uncovering a wire fraud scheme that aimed to pocket $45m ($US32m) from Amazon.
The “sophisticated and layered fraudulent invoicing scheme” involved the brothers billing Amazon for goods that they never provided.
The brothers allegedly created wholesale business and opened vendor accounts with Amazon in order to sell the company small quantities of goods.
When the brothers accepted a purchase order, they agreed to supply “specific goods, at specific prices, in specific quantities” to Amazon, but instead manipulated the system, the Attorney’s Office alleged.
In the “most egregious iteration of the scheme”, the brothers invoiced Amazon for substitute goods at “grossly inflated prices and excessive quantities”, the office said.
In one case, Amazon agreed to buy 12 canisters of a disinfectant spray from the brothers for just over $131 ($US94) per pack.
But the defendants then allegedly manipulated the system to send 7,000 toothbrushes for that price and then invoiced Amazon for more than $900,000 ($US650,000).
According to the charges, the four brothers then repeated this process with different goods over and over until they had defrauded Amazon of $26m ($US19 million).
“The indictment alleges that Yoel, Heshl, Zishe and Shmuel Abraham came up with a new twist on an old trick, but the use of complex technology did not hide the simple fact that the defendants were billing Amazon for goods they never provided,” acting Manhattan United States Attorney Audrey Strauss said.
“The more our economic life moves online, the more we must ensure the integrity of our digital markets, which my office is committed to doing.”
HSI Special Agent-in-Charge Peter C Fitzhugh said that invoice fraud is not a victimless crime.
“Millions of dollars in lost revenue negatively impacts a company’s ability to provide cost-effective services to legitimate customers who use the vendor’s platform,” Fitzhugh said.
The brothers used an encrypted group texting chain on WhatsApp to coordinate the scheme, the indictment alleges, with one defendant messaging the others: “I’m so in the mood to f*ck Amazon.”
In a statement that did not mention that actual fraud that had taken place or the fact the company had been tricked into handing over $US19 million, Amazon said it had supported the lengthy investigation.
“Amazon is grateful to have worked with the United States Attorney’s Office for the Southern District of New York, the Department of Homeland Security, and Homeland Security Investigations on their vigorous prosecution of these individuals,” Amazon Counterfeit Crimes Unit associate general counsel Cristina Posa said.
“While our proactive controls ensure the vast majority of sellers in our store are honest entrepreneurs, fraudsters attempt to violate our policies, victimise our customers, and damage our store, and we look forward to working with law enforcement agencies to hold these bad actors accountable for their illegal activities.”
Amazon had detected the pattern of the brothers’ alleged fraudulent overshipping and suspended their accounts, with the defendants then trying to open other vendor accounts using fake names and emails, and using VPNs, and even joked that the practice may force them to start real businesses.
“This shit is massed [sic] up, looks like will have to build a legit business,” one WhatsApp message read.
The four brothers have all been charged with conspiracy to commit wire fraud, wire fraud and money laundering, with some of the charges coming with a maximum sentence of 20 years in jail.
While wire fraud is certainly not a new crime, there have been growing cases of this taking place in the cyber world. Just last month New South Wales police arrested six men for their alleged involvement in a money laundering syndicate believed to be worth $6 million.
Police will allege in court that the men unlawfully obtained the money through invoice scams, with altered invoices sent to legitimate businesses for payment through an email scam, with the funds then transferred to personal accounts.