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Press Release

Two New Jersey Men Charged with Theft of $6 Million in Postage for Online E-Commerce Business

For Immediate Release
U.S. Attorney's Office, District of New Jersey

NEWARK, N.J. – Two New Jersey men were charged with theft of government property and fraudulently altering United States Postal Service (USPS) postage stamps, U.S. Attorney Craig Carpenito announced today.

Jack Koch a/k/a/ “Ismail Yilmaz,”44, of Elmwood Park, New Jersey, and Steven Koch, a/k/a “Selim Memis,” 43, of Pompton Lakes, New Jersey, are each charged by complaint with one count of theft of government funds and one count of postage stamp fraud. Both defendants are scheduled to appear by videoconference this afternoon before U.S. Magistrate Judge Michael A. Hammer.

According to the documents filed in this case and statements made in court:

Jack Koch and Stephen Koch, owners of a high volume e-commerce Amazon seller, Fresh N Clear LLC (Fresh N Clear), altered postage labels in a manner designed to benefit their business, causing losses in revenue to USPS in excess of $6 million.

The defendants purchased Flat Rate Envelope postage labels meant for USPS-produced compact envelopes, and altered those labels to send their merchandise in larger boxes at discounted flat rates. The Kochs were able to perpetrate the fraud by removing the required USPS visual endorsement “FLAT RATE ENV” from the postage label. Unlike other mail pieces, whose labels need not show the postage paid in a readable format, USPS policy requires the visual endorsement “FLAT RATE ENV” to appear on all mail pieces sent using the “Flat Rate Envelope” discounted rate, allowing USPS employees to determine whether the appropriate postage was, in fact, paid, and that each mail piece sent using that discounted rate does, in fact, weigh 70 pounds or less and fit into the special USPS compact envelope.

Between January 2020 and September 2020, the Kochs caused Fresh N Clear to purchase 240,471 USPS Priority Mail postage labels – almost all for Flat Rate Envelopes. They altered the postage labels in order to send large household items that would not ordinarily fit into a Flat Rate Envelope (such as cases of bottled water, laundry detergent, and cases of soda) at the discounted flat rate. 

Theft of government property carries a maximum penalty of 10 years; postage stamp fraud carries a maximum of five years. Both offenses also carry a maximum fine $250,000, or twice the gain derived from the offense or loss caused by the offense, whichever is greater.

U.S. Attorney Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Raimundo Marrero, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Perry Farhat of the Government Fraud Unit of the U.S. Attorney’s Office’s Criminal Division in Newark.

The charges and allegations in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Updated December 1, 2020

Financial Fraud
Press Release Number: 20-444