Four Individuals Charged With $19 Million Fraudulent Invoicing Scheme Targeting Amazon

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Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the indictment and arrest today of YOEL ABRAHAM, HESHL ABRAHAM, ZISHE ABRAHAM, and SHMUEL ABRAHAM, who are brothers, on charges of engaging in a scheme to systematically defraud, LLC, (“Amazon”), an online retailer and ecommerce platform.

Through the course of the scheme, the defendants manipulated Amazon’s vendor system in attempts to fraudulently induce Amazon to pay for goods that Amazon had not ordered.

In executing the scheme, the defendants fraudulently attempted to obtain at least approximately $32 million and successfully obtained at least approximately $19 million.

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.” 

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.”

Details From Indictment

According to the Indictment unsealed in Manhattan federal court, the defendants, who purportedly operated wholesale businesses, 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, they 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.

The defendants 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.

The defendants communicated about the scheme, extended help and advice to one another, and helped one another evade detection using an encrypted group texting chain on WhatsApp, a messaging application.

Examples Of Communications Between Defendants

(Warning Language)

For example, on or about May 1, 2018, YOEL ABRAHAM, the defendant, stated to the group “I’m so in the mood to fuck Amazon,” and asked “Did anyone try to overship and make a million profit in a week?”

ZISHE ABRAHAM, the defendant, asked how YOEL ABRAHAM would do it (“Come in [sic] how to do it?”). SHMUEL ABRAHAM, the defendant, offered his advice on how to carry out such a large fraudulent transaction, noting he “didn’t tried this yet but tried already different things and it worked.”

SHMUEL ABRAHAM cautioned, however, “[j]ust make sure you have another account.  But you can fuck them a lot. When it’s to [sic] big numbers fast they will lock you out.”

ZISHE ABRAHAM, the defendant, also offered his thoughts on how best to perpetrate such a large overshipment.

Amazon Detected The Fraud

Once Amazon detected the pattern of fraudulent overshipping, it suspended the vendor accounts engaged in the fraud; in response, the defendants 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 (“VPSs”) to obfuscate their connection to previously suspended accounts and frustrate Amazon’s ability to detect and mitigate their fraudulent activity.

For instance, on or about November 1, 2018, the defendants discussed that Amazon’s increasing enforcement was going to force them to give up the fraudulent invoicing scheme altogether and go into a legitimate line of business (YOEL ABRAHAM: “This shit is massed up, looks like will have to build a legit business”).

They also discussed new ways to evade detection and how to continue to perpetrate the fraud (YOEL ABRAHAM: “Open account under dummy names and they can go look for no one.”

ZISHE ABRAHAM: “Yup need to do that. . . . The problem the first accounts was under real names.”). A few days later, HESHL ABRAHAM circulated a link to a “VPS company I use now. . . . This is how I know because they linked both of my vendor accounts.”).

YOEL ABRAHAM, 28, of Suffern, New York, HESHL ABRAHAM, 32, of Spring Valley, New York, ZISHE ABRAHAM, 30, of Spring Valley, New York, and SHMUEL ABRAHAM, 24, of Airmont, New York, are each charged with conspiracy to commit wire fraud, wire fraud, and money laundering.

Potential Stiff Penalties

Wire fraud and wire fraud conspiracy carry a maximum sentence of 20 years in prison, and money laundering carries a maximum sentence of 10 years in prison.

Ms. Strauss praised the work of the Department of Homeland Security, Homeland Security Investigations, the New York City Police Department, U.S. Customs and Border Protection, the Rockland County Sheriff’s Department, and the Waterfront Commission of New York Harbor, and thanked Amazon for its cooperation with the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Jilan J. Kamal is in charge of the prosecution.

“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,” Posa Added.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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