United States Attorney Josh Minkler announced on Monday that three individuals who were previously charged with defrauding online retailer Amazon of $1.2 million in consumer electronics received prison sentences of nearly 6 years.
U.S. District Court Judge Tanya Walton Pratt sentenced Erin Finan, 38, and Leah Finan, 38, husband and wife from the Muncie-Anderson area (Indiana), on federal mail fraud and money laundering charges, with a term of 71 months and 68 months in prison, respectively. Both plead guilty to these charges.
Danijel Glumac, 29, of Indianapolis, Indiana pleaded guilty to money laundering and to fencing the items the Finans stole – that is, buying and selling stolen property across state lines – and was sentenced to 24 months in prison.
“Consumer fraud not only unjustly enriches the perpetrator, it causes all of us to pay higher retail prices. To those who seek to exploit the convenience of online shopping through fraud, remember this case. You will be caught. You will be prosecuted. And you will go to federal prison for a long time.”
United States Attorney Josh Minkler
Between 2014 and 2016, the Finans and Glumac stole and sold over 2,700 consumer electronics items such as GoPro digital cameras, Microsoft Xboxes, Samsung smartwatches, Microsoft Surface tablets, Apple Macbooks, and other consumer electronics.
Their fraud involved exploiting Amazon’s customer service policy by repeatedly falsely claiming that the electronics they ordered were damaged or not working, and then requesting and receiving replacements from Amazon at no charge.
In total, the Finans stole, and Glumac sold, over $1.2 million in consumer electronics. For the Finans, fraud had become a way of life, it had become their “job.”
The couple placed thousands of Amazon orders, creating hundreds of false identities, retrieving their stolen goods from retail shipping stores all over Indiana, and then selling them to their fence, Glumac.
In just over two years, they made roughly $750,000 from their scheme, which went on a nearly daily basis.
Their prison sentences reflected their willingness to commit other frauds too. The couple bounced checks and rented cars and houses, but never paid for them.
And they even committed another online fraud involving stealing high-end rental softball equipment and selling it on Facebook groups to parents.
Glumac, for his part, pleaded guilty to buying the over 2,000 electronics items from the Finans and selling them to a buyer in New York.
He purchased the items from the Finans in person, often in parking lots around Indianapolis, before selling them at a higher price and shipping them off to the New York buyer.
The buyer would then sell them to the public, often on Amazon. In total, after laundering the proceeds through bank accounts associated with a clothing business, Glumac made nearly $500,000 from the scheme.
This case was investigated by the IRS (Internal Revenue Service), the United States Postal Inspection Service, and the Indiana State Police.
Assistant United States Attorney Nick Linder, who prosecuted the case for the federal government, said that the three defendants were also ordered to pay full restitution of $1,218,504 in addition to their prison sentences.
Small Victory in a Large Battle
Almost any seller engaged in online sales for more than a couple of years has experienced some form of online fraud.
Certainly, this story will bring a little bit of joy to a few sellers who had to absorb a bad credit card or dealt with returns that clearly were abusive and fraudulent.
“Shopping online has changed the way we think of retail. Many of those purchases are shipped to consumers using the U.S. Mail,” said Inspector in Charge Patricia Armstrong, of the Detroit Division, U.S. Postal Inspection Service.
But that also brings up the suggestion that occasionally some sellers may want to report obvious fraudulent activities to the U.S. Postal Inspection Service.
If using carriers such as UPS and FedEx, they have their own fraud departments which can investigate systemic fraud.
The U.S. Postal Inspection Service generally does not investigate fraud that involves parcel delivery services except if the final delivery was made by the USPS.
For those shippers that use FedEx SmartPost or UPS SurePost to send packages, those deliveries can be investigated by the U.S. Postal Inspection Service as the final-mile delivery involved the USPS.
The key point here for sellers to consider is how these people defrauded Amazon. The Finans set up fake accounts to hide their real identities.
With Amazon gift cards or Amazon Cash reloads, it is likely easier to hide a real identity as Amazon doesn’t really enforce a proper identity check (yet).
And while there is no mention of third-party marketplace sellers getting caught up, if some did get defrauded, they wouldn’t know this was part of a large scheme because of the large number of accounts the couple used.
This is why it is important for sellers to report fraud to authorities, shippers and the marketplace, so if there is a wider pattern, the criminals might get found out.
Have you been defrauded and did you ever report this fraud to authorities? Head over to our Facebook Discussion Group or use the comments section below.
Connect with us: Head over to our Facebook Group for Small Business Sellers and interact with other small business owners.
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