PEARLAND, Texas — A Texas man faces up to 821 years in federal prison for defrauding Cisco Systems, Amazon.com, and others of more than $3 million in a nationwide warranty fraud scheme, according to the U.S. Attorney's Office in the Eastern District of Pennsylvania.
Yesterday, Tuesday, March 31, 2020, 27-year-old Vaughn Simon of Pearland, Texas, was charged in a federal complaint with 22 counts of mail fraud, eight counts of wire fraud, two counts of filing a false tax return, and one count of tax evasion.
According to federal prosecutors, Simon obtained serial numbers to products sold or manufactured by Cisco, Neat, iRobot, APC, Amazon.com, and other companies. He would used fake digital identities to register the serial numbers and submit false warranty support for non-existent defects he knew could not be solved by troubleshooting — requiring the replacement with new products.
The defrauded companies sent Simon and his co-defendants the new, replacement products which they turned and sold on eBay, Amazon, or other online resellers.
Additionally, Simon and his co-defendants defrauded Amazon by further using fake identities to order products which they, in turn, falsely claimed never arrived or arrived broken — inducing Amazon to repeatedly send replacement products which were, again, sold on online reseller sites.
"All told, the Information alleges that the defendant and his co-schemers attempted to obtain more than $5,000,000 worth of products from the victim companies, and successfully obtained more than $3,000,000 worth of Cisco products, as well as products worth thousands of dollars from other victim companies," stated the U.S. Attorney's Office.
Simon, according to the charges, filed false tax returns between 2014 and 2016 in which he under-reported his income by approximately $95,000 and $212,000, respectively, and evaded the payment of any income tax on the income he earned from his fraud for tax year 2015 by, among other things, failing to file a return, storing his fraud proceeds in bank accounts and PayPal accounts in the names of co-schemers, storing cash at his residence, paying his personal living expenses with cash, and using false email addresses, false domain names, prepaid gift cards, and false identities to conceal his involvement in the fraud scheme.
“As alleged, Simon committed a sophisticated warranty fraud scheme in order to steal millions of dollars of merchandise,” stated United States Attorney William M. McSwain. “Consumer warranties are designed to make honest consumers whole, not to provide a means for fraudsters to line their pockets. We will work tirelessly to investigate and punish this kind of disregard for the law.”
Simon, if convicted, faces a maximum sentence of 821 years in federal prison, a five-year period of supervised release, and a fine of $8,250,000.