News and Press Releases

Internet Clothing Vendor Charged with Wire Fraud for Scheme to Defraud Customers of $5 Million

FOR IMMEDIATE RELEASE
September 2, 2011

The president and owner of Classic Closeouts, LLC, a now-defunct Internet seller of discounted clothing and personal items, has been arrested on wire fraud charges arising from his scheme to defraud victims of more than $5 million.1 Daniel Greenberg’s initial appearance is scheduled later today before United States Magistrate Judge Marilyn D. Go, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges and arrest were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Ronald Verrochio, Postal Inspector-in-Charge, United States Postal Inspection Service, New York Division.

According to the criminal complaint, from approximately June 2008 through at least December 2008, Greenberg, through Classic Closeouts, charged victims’ credit cards or debited their bank accounts on over 70,000 occasions, without the victims’ authorization and without the victims purchasing merchandise. Unbeknownst to the victims, Greenberg had retained their credit and debit card information from earlier purchases from Classic Closeouts and then fraudulently charged their credit or debit cards, often charging the same card multiple times over the course of several weeks and months. When victims disputed the unauthorized charges with their credit card companies and banks, Greenberg falsely asserted that the charges were valid because the customers had enrolled in an alleged “frequent shopper club,” that he claimed required a one-time charge. As a result of Greenberg’s false representations, some of the victims’ credit card companies and banks declined to issue credits despite the victims’ protests, and certain victims were pressured into paying the fraudulent charges plus late fees and interest.

“As charged in the complaint, thousands of unsuspecting former customers were victimized by the defendant,” stated United States Attorney Lynch. “With this arrest and prosecution, the Closeout scheme has now been closed down.” Ms. Lynch expressed her appreciation to the Federal Trade Commission for its assistance in the investigation. The FTC brought this matter to the attention of the U.S. Attorney’s Office after having filed a parallel civil action.

Postal Inspector-in-Charge Verrochio said, “The arrest today of Mr. Greenberg is the result of an 18-month-long investigation by Postal Inspectors and the Federal Trade Commission. Postal Inspectors will continue to investigate cases involving fraud against consumers and vigorously pursue those individuals who use the mail in furtherance of their criminal schemes. I would like to thank our law enforcement partners, and our partners at the U.S. Attorney’s Office in Brooklyn, for their work in prosecuting this case.”

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment on the wire fraud charges.

The government’s case is being prosecuted by Assistant United States Attorney Sarah Coyne.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established this interagency 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.

The Defendant:

DANIEL GREENBERG
Age: 38

 

 

_____________________________

1 The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.



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