Longtime Employee of Harford County Manufacturer Sentenced to 42 Months in Federal Prison for a $20 Million Kickback Scheme
Baltimore, Maryland – James Edward Bender, age 35, of Baltimore, Maryland, pleaded guilty today to federal conspiracy and tax fraud charges.
The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge John Eisert of Homeland Security Investigations (HSI) Baltimore.
According to his guilty plea, from 2014 through August 2019, Bender controlled three eBay accounts, in the names of HiddenGemFurniture (HGF), EddiesAffordableGear (EAG), and AffordableGoodies4You (AG). EAG and AG offered sports-related merchandise for sale, including jerseys and shirts. Bender also used, operated, and controlled related PayPal accounts.
Bender admitted that beginning in 2014 he agreed to allow a good friend, SC1, who lived in Texas and Colorado, as well as SC2, a relative of SC1 who lived in Berlin, Maryland, to use Bender’s eBay accounts to sell goods and merchandise after eBay had suspended SC1’s account due to security concerns. From May 2014 through August 2019, Bender and SC1 conspired to engage in transactions to sell goods and merchandise which they knew had been previously stolen, using Bender’s eBay and PayPal accounts.
As detailed in the plea agreement, in furtherance of the fraud scheme, Bender and SC1 repeatedly deceived online platforms such as Amazon, eBay, as well as the manufacturers and distributors, as to the source of the goods and merchandise being sold by Bender and SC1. More than $3 million of these goods and merchandise had been stolen, including more than $125,000 of iPods that had been stolen from a New Mexico school district and intended for underprivileged children. In 2018, SC1 and Bender sold more than $550,000 of goods and merchandise that had been stolen from a Delaware FedEx facility. As part of his participation in the fraud scheme, Bender received more than $10,000 per year from the eBay sales of stolen goods and merchandise.
Bender further admitted that he filed false tax returns for the tax years 2014 through 2018, falsely inflating the gross receipts and cost of goods sold of Bender's businesses. In each of these years, Bender reported as his gross receipts amounts that had actually been generated by SC1's sales through his eBay stores, and reported as his cost of goods sold the difference between gross receipts and the amount SC1 paid him for the use of his eBay stores. As a result, Bender engaged in significant misstatements on his tax returns for each year. Bender also subscribed to additional false information on his tax returns, including overstating his postage expenses. In total, Bender stipulates that he failed to pay the United States an additional $36,518 in taxes due and owing for the tax years 2014 to 2018.
Bender faces a maximum sentence of five years in federal prison for the conspiracy and a maximum of three years in federal prison for tax fraud. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Robert K. Hur commended the IRS-Criminal Investigation and HSI for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Harry M. Gruber and Paul A. Riley, who are prosecuting the case.
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