Former Internet vendor convicted of scheme to defraud customers of $5M
Daniel Greenberg, the president and owner of Classic Closeouts, LLC, a now-defunct Internet seller of discounted clothing and personal items, was convicted Monday by a federal jury on all 13 counts for defrauding thousands of customers through unauthorized use of the credit and debit card numbers they had provided in connection with purchases at an earlier time.
The evidence at trial established that from approximately June 2008 through at least April 2009, Greenberg charged victims’ credit cards or debited their bank accounts on more than 60,000 occasions, without the victims’ authorization and without the victims purchasing merchandise.
Greenberg used credit and debit card information retained by Classic Closeouts from earlier purchases and then fraudulently charged their credit or debit cards, often charging the same card multiple times over the course of several weeks and months.
When victims disputed the unauthorized charges with their credit card companies and banks, Greenberg falsely asserted that the charges were valid because the customers had enrolled in an alleged “frequent shopper club” that he claimed required a one-time charge.
As a result of Greenberg’s false representations, some of the victims’ credit card companies and banks declined to issue credits despite the victims’ protests, and certain victims were pressured into paying the fraudulent charges plus late fees and interest.
“Daniel Greenberg’s Classic Closeouts was a classic scam,” said United States Attorney for the Eastern District Loretta Lynch. “When his business ran into trouble, Greenberg helped himself to his customers’ credit card numbers and then had the audacity to fight them when they tried to have the charges removed.”
Greenberg’s prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.
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