The US Department of Justice (DoJ) has laid charges on four individuals for a $19 million fraudulent invoicing scheme targeting Amazons vendor system.
Through the course of the scheme, the four individuals allegedly manipulated Amazon’s vendor system in attempts to fraudulently induce the e-commerce platform to pay for goods that Amazon had not ordered, DoJ said in a statement on Wednesday.
The four individuals — brothers Yoel Abraham, Heshl Abraham, Zishe Abraham, and Shmuel Abraham – were arrested.
In executing the scheme, they allegedly attempted to obtain at least approximately $32 million and successfully obtained at least approximately $19 million.
According to the indictment unsealed on Wednesday in Manhattan federal court, the four individuals purportedly operated wholesale businesses, opened vendor accounts with Amazon to sell the company small quantities of goods.
By accepting a purchase order, they agreed to supply specific goods, at specific prices, in specific quantities.
But they eventually allegedly manipulated Amazon’s vendor system, and then, in the most egregious iteration of the scheme, invoiced the company for substitute goods at grossly inflated prices and excessive quantities.
They allegedly frequently shipped and invoiced for more than 10,000 units of an item when Amazon had requested fewer than 100.
The brothers helped one another evade detection using an encrypted group texting chain on WhatsApp.
Once Amazon detected the pattern of fraudulent overshipping, it suspended the vendor accounts engaged in the fraud.
In response, the four brothers tried to open other vendor accounts and disguise their identities by registering them in fake names.
They used different email addresses and virtual private servers (“VPSs”) to obfuscate their connection to previously suspended accounts and frustrate Amazon’s ability to detect and mitigate their fraudulent activity, according to the charges.
“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,” Acting Manhattan US Attorney Audrey Strauss, said in a statement.