By Matt Grossman 

A federal grand jury in Washington state has indicted six people on charges of bribing Inc. employees to gain advantages for third-party sellers on the e-retailer's online storefront, where its business practices have drawn increased regulatory scrutiny.

Since at least 2017, the defendants were part of groups that acted as consultants to vendors on Amazon's marketplace, the U.S. attorney's office for the Western District of Washington alleged. In that role, the defendants paid more than $100,000 in bribes to Amazon employees to give some third-party sellers a leg up over competitors, according to the charges.

The indictment gives a window into some of the behind-the-scenes tactics that have been used to manipulate Amazon's marketplace for third-party sellers and undermine trust in the accuracy and quality of its listings. Amazon has struggled to contain the sale of faulty products on its site, including listings for thousands of products that had been deemed unsafe by federal agencies, The Wall Street Journal reported last year.

The six people charged -- including two former Amazon workers -- allegedly bribed Amazon employees to reinstate sales of products that were deemed substandard or dangerous, such as suspect dietary supplements and inflammable household electronics.

The alleged conspirators also worked to attack clients' competitors by using inside access to suspend accounts and share proprietary details about Amazon's algorithms for listings, the U.S. attorney's office said.

The conspiracy allegedly unfolded as the group used insider information to contact and recruit Amazon employees and contractors who would take bribes in exchange for manipulating accounts on Amazon Marketplace, according to the U.S. attorney's office. In exchange for bribes, Amazon insiders provided the group access to proprietary Amazon data, which they used to the advantage of their third-party seller clients. In some cases, the defendants gained credentialed access to the company's systems even though they didn't work for Amazon, prosecutors said.

Amazon said in a statement that the company supported the investigation and had worked with the federal agencies involved in the criminal probe.

"Bad actors like those in this case detract from the flourishing community of honest entrepreneurs that make up the vast majority of our sellers," the company said.

Two defendants, Joseph Nilsen and Kristen Leccese of New York City, provided consulting services for third-party sellers through a company called Digital Checkmate Inc., according to the U.S. attorney's office. Another New York City man, Ephraim Rosenberg, led a similar operation called Amazon Sellers Group TG. A fourth defendant, Hadis Nuhanovic of Acworth, Ga., also provided fee-based consulting for third-party sellers in addition to running his own third-party seller accounts.

The other two people charged in the scheme, Rohit Kadimisetty and Nishad Kunju, are former Amazon employees, both of whom worked for the company in Hyderabad, India. Later, the two men became consultants to third-party sellers. Mr. Kadimisetty now lives in Northridge, Calif., according to the U.S. attorney's office.

Including Mr. Kunju, at least 10 Amazon employees and contractors accepted bribes in the scheme that had been under way since at least 2017, the charges allege. An Amazon spokesman declined to offer details about other Amazon employees who may have been involved in the alleged bribery.

Amazon has previously drawn attention for its practices around third-party sellers who use the company's website to sell products. The Wall Street Journal reported in April that the company, the world's largest retailer, was using data on third-party sales to launch its own competing products. The revelations sparked a congressional investigation that contributed to rising federal scrutiny of tech giants this year.

Attempts to contact the defendants directly were unsuccessful.

"We are in the midst of reviewing the indictment," Sara Shulevitz and Mindy Meyer, lawyers who are representing Mr. Nilsen, said in a statement. They added that they will comment further after fully reviewing the charges.

"We don't believe that the allegations...are fair or accurate," said Jess Johnson, a lawyer representing Mr. Nuhanovic.

"We are studying the indictment and will vigorously respond to these charges in court," Peter Offenbecher, a lawyer for Mr. Rosenberg, said in an emailed statement.

The wire-fraud and wire-fraud-conspiracy charges against the group can bring up to 20 years in prison plus fines, the U.S. attorney's office said. Another charge, conspiracy to use a communication facility in furtherance of commercial bribery, is punishable by up to five years in prison plus fines.

The defendants are scheduled to appear in U.S. District Court in Seattle on Oct. 15.

Allison Prang contributed to this article.

Write to Matt Grossman at


(END) Dow Jones Newswires

September 18, 2020 16:34 ET (20:34 GMT)

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