E-bay Fraudster Sentenced to 12.5 Years in Prison
Reno, Nev. – Former Incline Village resident, Darin French, 40, was sentenced today by U.S. District Judge Larry R. Hicks to 12.5 years in prison, three years of supervised release, and ordered to pay $1.5 million in restitution for defrauding over 250 persons in an internet fraud scheme involving high-end appliances, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
"Investigating, prosecuting and preventing financial fraud is a top priority of the Department of Justice," said U.S. Attorney Bogden. "Persons who commit crimes such as credit card fraud, mortgage fraud, and internet fraud, will be targeted by federal investigators, and when convicted, face long prison sentences."
French was convicted by a jury on February 18, 2011, of 22 counts of mail fraud, 11 counts of wire fraud and three counts of money laundering. His wife, Jennifer French, 38, was also convicted of similar charges for her role in the fraud scheme, and will be sentenced on July 11, 2011.
The sentence was also imposed consecutively to an unrelated 30-month sentence which Darin French received in 2009 for submitting false claims to Maytag for warranty work he never performed.
During 2003 to 2004, Darin and Jennifer French resided in Incline Village, Nevada. They established a website called "Look What We Got" (LWWG), and advertised high-end kitchen appliances such as Thermador, Sub Zero, Viking, and Wolf, for sale on E-Bay. The defendants represented that they were dealers of the appliances and that LWWG carried full lines of high end appliances at discount prices. In fact, the defendants were never authorized dealers of the appliances and they did not have contracts with the manufacturers or distributors to distribute such merchandise.
To effect the fraud scheme, Darin and Jennifer French established false customer feedback records on E-Bay by selling low-cost merchandise. They also used a tactic known as "shill feedback" in which they established multiple user ids and left positive feedback for themselves in the guise of other legitimate buyers and sellers. When customers found items they wished to purchase, they were sent an e-mail asking them to call LWWG directly for price quotes. Customers thought they were purchasing products through E-Bay and were still protected by E-Bays consumer protection policies, when in-fact, they were off-site purchases.
Customers sent payment to the defendants, via credit card, cashier's check, or personal check. After providing merchandise to a few initial customers, the defendants thereafter failed to deliver any other merchandise to individuals who had ordered and paid for the appliances. The defendants cashed the checks or charged the customer's credit card, but did not deliver the merchandise. Customers who questioned the defendants about not receiving their merchandise, were advised by "Jennifer" at LWWG that a new supplier had increased their prices, and that in order to satisfy the client they were cancelling the order and issuing a refund. Instead of refunding clients' money, the defendants transferred money in large increments out of the LWWG bank account to their personal account and purchased luxury items, including a $50,880 Bayliner boat and a Ford F250 pickup truck, and diverted approximately $40,000 to an E-Trade stock trading account. The defendants also used their clients' money to purchase another business that they continued to run after they closed LWWG.
As a result of the scheme, over 250 victims were defrauded of approximately $1.5 million. The credit card companies refunded approximately $1.2 million to the individual victims. The victims who mailed personal checks or cashier's checks to the defendants lost approximately $336,000.
The investigation is sponsored by President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.
The case was investigated by the United States Postal Inspection Service and the FBI, and prosecuted by Assistant United States Attorneys Megan Rachow and Bill Reed.