News and Press Releases

United States Attorney Jenny A. Durkan
Western District of Washington

Brothers Who Defrauded Nordstrom With On-Line Reward Scheme Plead Guilty To Wire Fraud

Defendants Exploited a Computer Error to Trigger $1.4 million in Fraudulent Payments

April 9, 2012

            Two brothers pleaded guilty today to wire fraud in connection with their scheme to defraud Nordstrom of more than $1.4 million in commissions and rebates.  ANDREW S. CHIU, 29, of Anaheim, California and ALLEN J. CHIU, 37, of Dallas, Texas, pleaded guilty today in U.S. District Court in Seattle.  The brothers devised a scheme to defraud Nordstrom after they had already been barred for purchasing any goods from the website.  Because Nordstrom quickly notified law enforcement, the U.S. Attorney’s Office was able to seize more than $970,000 in illegally derived assets which will be applied toward the restitution owed to Nordstrom.  U.S. District Judge Ricardo S. Martinez is scheduled to sentence the CHIU brothers on July 13, 2012.

            According to records filed in the case, in 2008 the CHIU brothers were barred from ordering merchandise from because of excessive claims for refunds based on representations that merchandise had never been delivered.  However, both brothers continued to try to place orders with  Both men belong to FatWallet Inc., a membership based shopping community website that promotes various online retailers by providing coupons and cash back incentives for purchases.  FatWallet paid cash back rewards to the CHIU brothers for purchases made at various on line retailers, including  In January 2010, the brothers discovered they could exploit a computer programming error in Nordstrom’s ordering system by placing orders that would ultimately be blocked by Nordstrom.  No merchandise would ship and nothing would be charged to their credit card.  However, Nordstrom would unknowingly continue to compensate FatWallet for the order, and the brothers would still receive the cash back credit from FatWallet.  Between January 2010 and continuing through October 2011, the CHIU brothers collectively placed more than $23 million in fraudulent orders through  The fraudulent ordering resulted in Nordstrom paying $1.4 million in rebates and commissions, with more than $650,000 in fraudulent cash back payments going directly to the brothers.  The error that permitted the continued payment of rebates in the ordering system has since been fixed.

            Under the terms of the plea agreement, prosecutors will recommend a sentence of no more than 30 months in prison and the brothers can request no less than 24 months in prison.  However, Judge Martinez is not bound by the recommendations and can impose any sentence allowed by law up to the maximum 20 years in prison and a $250,000 fine.

            The case was investigated by the FBI.  The case was prosecuted by Assistant United States Attorneys Katheryn Kim Frierson and Francis Franze-Nakamura. 


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