One man arrested, another indicted in eBay fraud schemes

Federal authorities have arrested one Southern California man and indicted another in connection with two separate fraud schemes on eBay.

George Arthur Cruz of Artesia, Calif., was arrested Tuesday morning and charged with 13 counts of mail fraud and one count of money laundering, FBI officials said. Cruz--also know as Richard Cortez--is accused of defrauding some 40 eBay members out of about $76,000 by auctioning items such as laptop computers and camera equipment on eBay but never delivering them to bidders.

Last week, federal officials indicted Hen Ben Haim of Encino, Calif., in a similar case. Haim--also know as Shay Albaz--is accused of defrauding more than 200 eBay members out of about $32,000. He faces up to 75 years in prison if convicted.

As with Cruz, federal officials charge that Haim offered computers and other items for sale on eBay and charged bidders for them, but never sent the items. Unlike Cruz, Haim is still at large, officials said.

An Israeli citizen whose visa has expired, Haim faces charges on eight counts of mail fraud. He faces up to 40 years in prison if convicted.

The FBI, the U.S. Postal Inspection Service and the U.S. Attorney's Office worked together in investigating both cases. The Los Angeles Police Department Computer Crimes Unit is also involved in the Haim investigation.

Although the amounts involved in the cases are not large, the government is concerned that cases such as these could dissuade consumers from using e-commerce, said FBI spokeswoman Laura Bosley.

"We are vigorously pursuing these investigations to protect commerce on the Internet," she said.

Online fraud is a growing problem for enforcement officials and e-commerce companies alike. Earlier this year, the Federal Trade Commission reported that complaints regarding online auction transactions had jumped from little more than 100 in 1997 to 11,000 last year.

As the leading online auction company, eBay has been at the center of the storm. In April, for instance, a group of sports collectors sued eBay, charging that the auction giant knew about auctions of fake sports memorabilia but did little to stop them. Last year, another Southern California man was sentenced to 14 months in prison for defrauding 31 eBay bidders out of about $36,000.

Federal authorities contacted eBay about Cruz in October of last year, eBay spokesman Kevin Pursglove said. The San Jose, Calif.-based online auction company suspended Cruz's account and cooperated with the federal investigation, turning over Cruz's trading history to authorities, Pursglove said.

"By that time, several other complaints were already filed about his trading on eBay and several other sites as well," Pursglove said.

Cruz received more than $38,000 from eBay bidders for items he didn't ship, federal authorities said. U.S. postal inspectors intercepted another $34,000 in checks sent to Cruz, authorities said.

eBay investigated Haim's alleged scheme in March, but Pursglove said he didn't have any new information about that case.

Haim allegedly asked bidders to send checks to an office he rented in North Hills, Calif. When bidders tried to find out about their missing items, Haim did not return their calls, they said at the time.

eBay provides insurance for bidders who have been defrauded on its service. However, the insurance reimburses bidders only up to $200 of losses, minus a $25 deductible.

eBay has taken steps to reduce fraud on its system, requiring members to register with a credit card to prove their identities and credit worthiness, Pursglove said. He added that bidders can minimize the risk of being defrauded by using the company's feedback system and escrow services from outside companies. In addition, customers who use eBay's Billpoint payment system are not liable for fraudulent charges, he said.

But few customers use escrow services, and some 80 percent of eBay transactions are still conducted via paper checks, Pursglove said. Unscrupulous sellers also have learned to exploit the company's feedback system to embellish their reputations while scamming bidders.

Still, Pursglove said that fraud on eBay happens rarely, occurring in fewer than one-tenth of 1 percent of all transactions.

The low percentage is "something any merchant in the offline world would be very, very thrilled with," he said.

ebay Fraud - $4,500 7/8/05

Hello,
I purchased 2 Mac computers from an ebay auction 7/7/05 the seller was 'whyspendretail'. on 7/8/05 I deposited by personal check the funds $4,500 into a legimite bank account with a well known bank, just so happens to be the bank I bank with. The overnight transfer made the funds available to the seller on the 9th. On Monday morning the 11th the bank in question Fraud and Loss Mitigation rang me to question the payment as the account the check was paid into was ?very suspicious?, unfortunately as it was the same bank transfer, I couldn?t stop payment on the check. On the 11th July the seller 'whyspendretail' post this on my ebay feedback BUYERS BEWARE!! BID AND DIDNT PAY!!!! BAD BUSINESS!!! EBAY LIBILITY!!! I contacted him immediately and he said it was a mistake meant for someone else, they had spoken to ebay and it was being removed ...yeah right....I contacted ebay and they said they hadn't heard from 'whyspendretail' told them about the $4,500 purchase and they would investigate - thus 'whyspendretail' account was suspended. On investigation of their account on ebay it seems they were working with the person whose account I deposited the check to on buying and selling and leaving positive feedback for each other. I contact the seller daily = having to leave messages all the time. The seller keeps calling daily that the product is coming, all these stalling problems, mainly that they have problems with their shipping department. Keeps telling me it's shipping 'tomorrow'. Yesterday the person representing 'whyspendretail' ( same person but with 3 different names) calls and tells me the computers have shipped from Lakewood Colorado, (along with 30 other clients computers) gives me the UPS Ground shipping number, and you guessed it....bogus number......so I am out $4,500. Are there any suggestions of where I go from here in making complaints?
Thank you
Jenny McGrath

[jackyklchung]

Lost USD10,600 in Ebay fraud

I tried to buy a patek philippe watch and wire transferred USD10,600 to the account (account name : Cassandra Miller) at Commerce Bank NY of the seller 'watchscollector' in ebay but received only a damaged car catalogue posted from canada. Ebay confirmed this seller ID was taken over by an authorised person ie. hijacked. Later I found there are at least four victims who wire transferred money to the same account at Commerce Bank NY but received no watches. And I found there are at least 7 other sellers ID who also pretended to sell watches on ebay using the same trick that duped me. Just in the past two weeks, I found another two new victims who totally paid over USD20,000- for watches on ebay but received nothing. Now I am trying to recover my money. And the local police, New York police and FBI are acting very slowly, if not none at all.