Disclaimer: the charges in this indictment, made on August 19, 2020, remain accusations, and the defendants are presumed “innocent until proven guilty.”
Or innocent until U.S. Homeland Security investigators scroll through your WhatsApp group chat and find:
Yoel: “I’m so in the mood to fuck Amazon.”
New York brothers, Heshl (32), Zishe (30), Yoel (28), and Shmuel (24) Abrahams, have been accused of defrauding the massive online retailer out of US$19 million (AU$26 million).
The defendants, listed above, allegedly engaged in an “overshipping” scam between 2017 – 2019, billing Amazon for a truckload of goods they never actually ordered.
The story starts in the same place where every good story ends up… the boy’s group chat.
How the Amazon overshipping scam went down
To sell wholesale goods on Amazon, you must apply to be a ‘vendor’ and register a vendor account. When Amazon buys goods from its vendors, they issue a purchase order, containing:
- The product identification number – Amazon Standard Identifier Number (ASIN)
- The number of units
- The price per unit
Vendors must agree to supply the exact same product, at the identical price and quantity stated on the purchase order, before the transaction proceeds.
Instead, the indictment alleges “The defendants shipped, invoiced and received payment for goods that [Online-Retailer-1] had not agreed to purchase, or for prices and quantities to which [it] had not agreed.”
How did they pull it off?
After confirming the purchase order, the brothers switched the ASIN number using alternative products they held in their inventory. Thus billing the retailer for substitute goods at highly inflated prices in excessive quantities.
Prosecutors allege the defendants repeatedly “invoiced for substitute goods at grossly inflated prices and excessive quantities.” They frequently billed the retailer for 10,000 product units, when the parties agreed to fewer than 100 units.
Some examples listed in the indictment, include:
August 2018: The retailer confirmed a purchase order of one case of disinfectant spray, for US$94.03 per case. The brothers instead shipped and invoiced 7,000 toothbrushes at $94.03 each, based on the ASIN for the disinfectant spray, and invoiced Amazon for US$658,210.
July 2018: The retailer confirmed a purchase order for one unit of perfume, for US$289.78. The brothers instead shipped and invoiced 927 plastic beard trimmers at $289.78 each, based on the ASIN for the perfume, and invoiced Amazon for US$268,626.
May-August 2018: Across 13 purchase orders, the retailer confirmed one unit of 14 different items, but the brothers instead shipped 53,892 units of items.
How the brothers dodged detection
The group hatched the entire scheme in their WhatsApp family group chat where they put shit on each other, as well as the platform…
Yoel: “Did anyone try to overship and make a million profit in a week?” WhatsApp, May 2018.
The Amazon system will dismiss a single incident of a vendor shipping excess goods as a system error. However, if a pattern of “overshipping” is detected, the system will block the vendor account and investigate the transaction.
The brothers shared tips and links to easily evade detection; like opening new accounts under fake names using different emails and virtual private servers (“VPS’s”)
The WhatsApp transcript chronologically captured their growing momentum and frustrations:
Yoel: “I’m so in the mood to fuck Amazon.”
Ziche: “Just make sure you have another account. But you can fuck them a lot.”
Yoel: “Open account under dummy names and they can go look for no one,”
Zishe: “Yup need to do that… the problem the first accounts was under real names.”
A big problem indeed. By November 5, the banter amongst the brothers reflected that the scheme was going south.
Yoel: “Guys don’t open more the one vendor on your computer they are linking accounts big time;”
Yoel: “This shit is messed up, looks like will have to build a legit business.”
David doesn’t always win against Goliath
Especially when your mark is Jeff Bezos, the biggest tech giant of our time. Scams can be spectacular – they don’t call them con artists for no reason. But the hubris to openly orchestrate it in the family WhatsApp errs on the side of pure laziness, or stupidity.
Amazon eventually linked the trail of fraudulent invoices paid out to bank accounts held in the names of each one of the Abrahams brothers.
Upon further investigation, the confiscated chat group transcript not only contained a clear play-by-play of the scam, but the group was named after their parent’s home address, the same address plastered across their invoices. Rookie stuff.
The scam did not impress acting Manhattan U.S. Attorney Audrey Strauss, who stated it was simply a “new twist on an old trick.” Online or offline, invoice fraud carries seriously harsh consequences in the United States.
Federal prosecutors are charging the brothers with conspiracy to commit wire fraud, wire fraud and money laundering. If you combine the maximum sentences for each of the charges facing them; the Abrahams brothers are each looking at thirty years behind bars.
Luckily, Amazon delivers to prison.