Press Release
Contact:
NILS R. KESSLER
ASSISTANT U.S. ATTORNEY
PHONE: (616) 456-2404
KALAMAZOO MAN SENT TO PRISON FOR “iPOD” SCAM
Tuesday, August 25, 2009 - Grand Rapids, Mich. – Nicholas Arthur Woodhams, 23, of Kalamazoo, Michigan was sentenced today to 13 months in prison, announced U.S. Attorney Donald A. Davis. U.S. District Judge Robert Holmes Bell also ordered Woodhams to pay $648,568 in restitution to Apple Computer, Inc. and $8,066.85 in restitution to the U.S. Postal Service. The sentence was imposed as the result of a guilty plea the defendant entered in April, 2009 to a felony information charging him with mail fraud and money laundering.
According to court records, Woodhams fraudulently obtained “iPod” portable music players from Apple Computer, Inc., and sold them over the internet. Through trial and error, Woodhams was able to guess the serial numbers of iPods still under warranty. He then repeatedly entered these serial numbers into Apple’s web-based warranty return program, pretending each time to be a customer with a broken iPod. Between March 2006 and October 2007, Woodhams caused Apple to ship over 9,000 replacement units to a post-office box through this deception. Woodhams then advertised and sold the units through a website for $49 apiece, a fraction of their retail value. Woodhams attracted the attention of U.S. Postal Inspectors by shipping the stolen merchandise with counterfeit postage, which he had generated with commercially available photo-finishing software. In addition to his mail fraud scheme, Woodhams violated federal money laundering laws by wiring $200,000 of his criminally derived proceeds from a financial institution in Michigan to a brokerage account in Missouri.
As part of the plea agreement, Woodhams forfeited approximately three quarters of a million dollars in ill-gotten gains, including a home in Portage, Michigan, an Audi S4 sedan, an Ariel “Atom 2” racing car, a Honda motorcycle and over $570,000 in U.S. currency.
The Court noted the seriousness of the offense and the need for the sentence imposed to promote respect for the law. “This was not a victimless crime,” said U.S. Attorney Davis, “because the the costs of fraud are borne by both the consumer and the taxpayer, perpetrators of such crimes must be heldaccountable.” U.S. Attorney Davis praised the hard work of the U.S. Postal Inspection Service and the Internal Revenue Service for bringing this case to asuccessful conclusion. The case was prosecuted by Assistant U.S. Attorney Nils R. Kessler.
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