Baltimore, Maryland – U.S. District Judge Catherine C. Blake sentenced James Bender, age 36, of Baltimore, Maryland to one year and one day in federal prison, six months of home detention, and three years of supervised release, for federal conspiracy and tax fraud charges.
The sentence was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge James R. Mancuso 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 and co-defendant, Saurabh Chawla, and a relative of Chawla’s, SC2, to sell goods and merchandise through Bender’s eBay accounts. Chawla’s eBay account had previously been suspended due to security concerns. From May 2014 through August 2019, Bender and Chawla conspired so Chawla could use Bender’s eBay and PayPal accounts to sell stolen goods and merchandise.
As detailed in the plea agreement, in furtherance of the fraud scheme, Bender and Chawla 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 Chawla. 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, Chawla 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, which falsely inflated 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 Chawla's sales through his eBay stores, and reported as his cost of goods sold the difference between gross receipts and the amount Chawla 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.
As part of the conspiracy to defraud, Chawla purchased stolen Apple products from Kristy Stock from 2012 to 2018. Stock was a New Mexico public school employee responsible for overseeing a program to provide Apple iPods to school children with the intent to benefit underprivileged Native American children in New Mexico. Stock stole more than 3,000 iPods purchased by the school district and sold them to Chawla. Chawla initially purchased the iPods from Stock on eBay, and they later dealt directly with each other, in emails, texts, and phone calls. Stock admitted that she received more than $800,000 in illegal proceeds from selling stolen iPods worth more than $1 million. In 2019, Chawla purchased Apple products that he believed had been stolen by a different person working at another school district in New Mexico, including 25 iPads for $5,000 in May 2019. After his relative received the stolen goods, Chawla listed them for sale online through eBay at a substantial markup.
Co-defendants Saurabh Chawla, age 36, of Aurora, Colorado and Joseph Kukta, age 45 of Laurel, Delaware, were sentenced to 66 months and 42 months in federal prison; respectively. Additionally, Chawla was sentenced to pay restitution to the Internal Revenue Service in the amount of $713,619, and to sign an order of forfeiture requiring him to forfeit a 2013 Tesla Model S, $2,308,062.61 from accounts held in his name, and the sale of property in Aurora, Colorado. Kukta was ordered to pay $1,101,743.91 in restitution and forfeiture of $1,880,000.
Co-defendant Kristy Stock, age 46, of Waterflow, New Mexico is scheduled to be sentenced in 2022.
United States Attorney Erek L. Barron commended the IRS-Criminal Investigation and HSI for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorneys Harry M. Gruber and Paul A. Riley, who prosecuted the case.
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