Four men have been arrested on charges of an invoice fraud scheme that allegedly enabled them to steal $19m from e-commerce giant Amazon.
Audrey Strauss, the acting US Attorney for the Southern District of New York, and Peter Fitzhugh, special agent-in-charge of the New York Field Office of Homeland Security Investigations (“HSI”), confirmed the indictment and arrest today of Yoel Abraham, Heshl Abraham, Zishe Abraham, and Shmuel Abraham.
The four brothers supposedly manipulated Amazon’s vendor system with the goal of fraudulently inducing Amazon to pay for goods they had not ordered. Through this scheme, the defendants attempted to get around $32m and successfully got $19m, it is claimed.
Acting Manhattan U.S. Attorney Audrey Strauss said, “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 bilking Amazon for goods they never provided. 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.”
The report claims the group had operated as a wholesale business opened vendor accounts with Amazon to sell the company small quantities of goods. In accepting a purchase order, the defendants agreed to supply specific goods, in an agreed price and amount.
Instead, it is believed they abused the system, invoicing Amazon for substitute goods at “grossly inflated prices and excessive quantities.”
An example offered is that the group would ship and invoice over 10,000 units, when Amazon had only ordered less than 100.
HSI Special Agent-in-Charge Peter C. Fitzhugh said, “The four charged today allegedly attempted to defraud Amazon out of tens of millions of dollars though a sophisticated and layered fraudulent invoicing scheme. 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. HSI works closely with our private partners to ensure that this type of fraud is mitigated, and those criminals are prosecuted for their actions.”
Amazon Counterfeit Crimes Unit associate general counsel and director Cristina Posa said, “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.
“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.”
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