United States Attorney for the Eastern District of Pennsylvania Announces Participation in National Money Mule Initiative; Obtains Three Civil Injunctions Against Alleged Money Mules Involved in Lottery Scams
PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Justin David May, 31, of Wilmington, DE was sentenced today to seven years and eight months in prison, five years of supervised release, ordered to pay more than $4 Million in restitution and over $300,000 forfeiture by United States District Judge Joel H. Slomsky, following his guilty pleas in two separate cases to 42 counts of mail fraud, 10 counts of money laundering, three counts of interstate transportation of goods obtained by fraud, and two counts of tax evasion.
The defendant’s convictions stem from from separate schemes he perpetrated in order to defraud Cisco Systems Inc. (“Cisco”), Microsoft Corporation (“Microsoft”), Lenovo Group Ltd. (“Lenovo”), and APC by Schneider Electric (“APC”) out of computer hardware, by submitting to these manufacturers hundreds of false warranty claims seeking the advance replacement of more than $5 million worth of computer hardware. While not every false claim was successful, most of the claims did deceive the manufacturers, and May successfully defrauded them into shipping more than $3.5 million worth of computer hardware to him and several co-schemers.
May’s fraud schemes involved the registration of false domain names and the creation of false e-mail addresses, which were used to submit the false warranty claims. After first obtaining legitimate serial numbers for Cisco computer hardware, Microsoft Surface tablets, Lenovo Thinkpads, and APC Smart-UPS that he did not own, the defendant contacted the companies, using false identities and the false email addresses he had created, and claimed to be the owner of a piece of computer hardware that was supposedly broken. May knew how to explain the supposed problem in such a way that the item in question could not be fixed through trouble shooting and would instead require a replacement. May promised to return the supposedly broken item as soon as he received the advance replacement, and he gave false addresses to which the replacement items could be shipped, including many addresses in Philadelphia, South Jersey, and Delaware. After picking up the hardware, May sold most of it through eBay or to various computer equipment resellers, and he never returned any of the supposedly broken items, because he never owned them in the first place.
The primary victim of the defendant’s fraud schemes was Cisco. With respect to Cisco, May personally submitted 267 false warranty claims, while co-schemers based in Texas submitted another 101 false warranty claims. Out of these 368 total false warranty claims, May and his co-schemers were successful on at least 252 occasions, and between April 12, 2016 and April 3, 2017, May and his co-schemers deceived Cisco into shipping Cisco hardware worth almost $3.5 million. May laundered the proceeds he obtained from the Cisco scheme by cashing checks he received from the computer equipment resellers at a check cashing business rather than depositing them in his bank account, and he used some of the proceeds to buy a new BMW.
With respect to Microsoft, May and a Singapore-based co-schemer were responsible for the submission of 227 false warranty claims to Microsoft, and they were successful on 139 of these false claims, which induced Microsoft into shipping to May a total of 139 Microsoft Surface tablets with a retail value of $364,761.
With respect to Lenovo, May personally submitted at least 216 separate false warranty claims, and as to each he claimed that his Lenovo ThinkPad hard drive had failed. These false warranty claims were successful on 193 occasions, and May caused Lenovo to ship to him 193 separate “replacement” hard drives, with a retail value of $143,000. May sold all of these hard drives through an eBay store he operated.
With respect to APC, May induced APC to ship at least three of its uninterruptable power supply products, with a retail value of at least $11,400 through the submission of false warranty claims.
While May earned hundreds of thousands of dollars through his illegal fraud scheme, he failed to pay any income tax on that money, and instead he evaded the payment of at least $52,000 in federal income taxes.
“Warranties are designed to make consumers whole by replacing faulty products, not to be exploited by scammers looking to turn an illegal profit,” said Acting U.S. Attorney Williams. “Warranty fraud is not a victimless crime, rather, companies which support employment for thousands of workers stand to lose millions of dollars, which was the case here. The defendant’s scheme caused real harm, which is why he will now spend many years behind bars as punishment for his actions. I would like to thank the FBI and IRS for their dedication and partnership in this matter.”
“May and his co-conspirators undermined the warranty process which exists to support honest consumers. They profited from this complex scheme while defrauding these companies and the federal government,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “Through the hard work and collaborative efforts of the FBI and IRS, this sentencing sends the message to those who seek to make a profit through fraud and deception, that this conduct bears significant consequences.”
“IRS Criminal Investigation will painstakingly investigate cases when individuals have taken property that belongs to others,” Thomas Fattorusso, Special Agent in Charge of IRS Criminal Investigation. “We will continue to be persistent in our mission to take apart these illicit schemes and bring the criminals who run them to justice.”
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
UNITED STATES ATTORNEY’S OFFICE
EASTERN DISTRICT OF PENNSYLVANIA
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
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