Amazon assists prosecution of $19 million fraud case

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Amazon assists prosecution of $19 million fraud case

By Dan Berthiaume - 08/20/2020

Four individuals accused of defrauding Amazon of millions of dollars are facing federal charges, in part due to actions taken by the e-tailer.

The Southern District of New York is bringing up brothers Yoel, Heshl, Zishe, and Shmuel Abraham on charges of engaging in a scheme to systematically defraud Amazon. Through the course of the scheme, the defendants allegedly manipulated Amazon’s vendor system in attempts to fraudulently induce Amazon to pay for goods that the e-tailer had not ordered.  

In executing the scheme, the defendants are accused of fraudulently attempting to obtain at least approximately $32 million and successfully obtaining at least approximately $19 million. The defendants opened vendor accounts with Amazon to sell the company small quantities of goods. By accepting a purchase order, the defendants agreed to supply specific goods, at specific prices, in specific quantities.  

Instead, the Abraham brothers are accused of manipulating Amazon’s vendor system and invoicing the company for substitute goods at inflated prices and excessive quantities.  The defendants are said to have frequently shipped and invoiced for more than 10,000 units of an item when Amazon had requested, and the defendants had agreed to ship, fewer than 100.

Once Amazon detected the pattern of fraudulent overshipping, it suspended the vendor accounts suspected of engaging in fraud. In response, the defendants allegedly tried to open other vendor accounts and disguise their identities by registering them in fake names, using different email addresses, and using virtual private servers. 

Federal prosecutors say they have possession of incriminating messages discussing the scheme the brothers sent each other on the What’s App messaging platform. The Abraham brothers were arrested, presented and arraigned Thursday, Aug. 20.

Amazon has recently engaged in a number of efforts to prevent and punish sellers of counterfeit goods on its site, including teaming up KF Beauty in a product infringement lawsuit. The e-tailer has also filed joint lawsuit against a New York-based counterfeiter with Valentino and supporting 3M legal action against Amazon sellers who allegedly sold counterfeit N95 respirators.

“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,” said Cristina Posa, associate general counsel and director of the Amazon Counterfeit Crimes Unit. “While our proactive controls ensure the vast majority of sellers in our store are honest entrepreneurs, fraudsters attempt to violate our policies, victimize 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.”