Six indicted in connection with multi-million dollar scheme to bribe Amazon employees and contractors
Consultants to Amazon Marketplace merchants paid over $100,000 in bribes to secure an unfair competitive advantage worth more than $100 million
Seattle - Six people have been indicted by a Grand Jury in the Western District of Washington with conspiring to pay over $100,000 in commercial bribes to Amazon employees and contractors, in exchange for an unfair competitive advantage on the Amazon Marketplace, announced U.S. Attorney Brian T. Moran. EPHRAIM ROSENBERG, 45, of Brooklyn, New York; JOSEPH NILSEN, 31, and KRISTEN LECCESE, 32, of New York, New York; HADIS NUHANOVIC, 30, of Acworth, Georgia; ROHIT KADIMISETTY, 27, of Northridge, California; and NISHAD KUNJU, 31, of Hyderabad, India, are charged with conspiracy to use a communication facility to commit commercial bribery, conspiracy to access a protected computer without authorization, conspiracy to commit wire fraud, and wire fraud. The defendants will make their initial appearances in U.S. District Court in Seattle on October 15, 2020.
“As the world moves increasingly to online commerce, we must ensure that the marketplace is not corrupted with unfair advantages obtained by bribes and kick‑backs,” said U.S. Attorney Brian T. Moran. “The ultimate victim from this criminal conduct is the buying public who get inferior or even dangerous goods that should have been removed from the marketplace. I commend the investigators and cybersecurity experts who have worked to identify and indict those engaged in these illegal schemes.”
“Realizing they could not compete on a level playing field, the subjects turned to bribery and fraud in order to gain the upper hand. What's equally concerning, not only did they attempt to increase sales of their own products, but sought to damage and discredit their competitors,” said Raymond Duda, Special agent in charge, FBI Seattle. “This indictment should send a message that the FBI will not sit on the sidelines while criminals try to cheat their way to the top.”
According to the Indictment, since at least 2017, the defendants have used bribery and fraud to benefit merchant accounts on the Amazon Marketplace, resulting in more than $100 million of competitive benefits to those accounts, harm to competitors, and harm to consumers. More specifically, the Indictment alleges that the defendants served as consultants to so-called third-party (“3P”) sellers on the Amazon Marketplace. Those 3P sellers consisted of individuals and entities who sold a wide range of goods, including household goods, consumer electronics, and dietary supplements on Amazon’s multi-billion-dollar electronic commerce platform. In addition to providing consulting services to these 3P sellers, some of the defendants, including NILSEN, LECCESE, and NUHANOVIC, made their own sales on the Amazon Marketplace through 3P accounts they operated.
In the course of the conspiracy described in the Indictment, the defendants paid bribes to at least ten different Amazon employees and contractors, including KUNJU, who accepted bribes as a seller-support associate in Hyderabad, India, before becoming an outside consultant who recruited and paid bribes to his former colleagues. In exchange for those bribes, the corrupted employees and contractors took the following illicit steps:
- Reinstating suspended merchant accounts and product listings on the Amazon Marketplace: The corrupted employees and contractors helped reinstate products and merchant accounts that Amazon had suspended or blocked entirely from doing business on the Amazon Marketplace. The fraudulently reinstated products included dietary supplements that had been suspended because of customer-safety complaints, household electronics that had been flagged as flammable, consumer goods that had been flagged for intellectual-property violations, and other goods. The fraudulently reinstated accounts included accounts that Amazon had suspended for manipulating product reviews to deceive consumers, making improper contact with consumers, and other violations of Amazon’s seller policies and codes of conduct. The Indictment describes a variety of ways in which corrupted employees and contractors misused their positions to reinstate these accounts, including by manually reinstating product listings, and approving baseless and fraudulent merchant appeals that they themselves helped draft. In total, after their fraudulent reinstatement, the products and merchants earned in excess of $100 million in sales revenue.
- Facilitating attacks against competitors: The corrupted employees and contractors facilitated attacks against competitors’ 3P accounts and product listings, by (a) sharing competitive intelligence about competitors’ revenues, customers, advertising campaigns, and suppliers; (b) using their inside access to Amazon’s network to suspend competitors’ 3P accounts; and (c) providing consultants with information about Amazon’s internal algorithms, which allowed the consultants to flood competitors’ product listings with fictitious negative product reviews.
- Misappropriating Amazon’s highly confidential business information: The corrupted employees and contractors also provided consultants and 3P sellers with unauthorized access to Amazon’s highly confidential standard operating procedures and algorithms. These materials provided an obvious, unfair, competitive benefit to 3P sellers, by giving them coveted insight into the systems that power Amazon’s search engine, Amazon’s product reviews, and Amazon’s enforcement processes. The misappropriated data also included the contact information for Amazon employees and consumers, which the members of the conspiracy misused and shared widely.
- Circumventing Amazon’s internal limits on 3P accounts: The corrupted employees and contractors conveyed exclusive benefits that circumvented Amazon’s rules and regulations. In exchange for bribes, they increased 3P sellers’ storage limits in Amazon’s warehouses, facilitated 3P sellers’ otherwise meritless requests to sell products in restricted categories, and provided 3P sellers with inside knowledge about the most successful advertising campaigns and most profitable product listings.
Conspiracy to use a communication facility in furtherance of commercial bribery, and to gain unauthorized access to a protected computer is punishable by up to five years in prison and a $250,000 fine.
Conspiracy to commit wire fraud, and wire fraud, are punishable by up to 20 years in prison and a $250,000 fine.
The case is being investigated by the Federal Bureau of Investigation (FBI), with assistance from the Internal Revenue Service-Criminal Investigations, and the Department of Justice Office of International Affairs.
The case is being prosecuted by Assistant United States Attorneys Siddharth Velamoor and Steven Masada.