By Matt Grossman
A federal grand jury in Washington state has indicted six people
on charges of bribing Amazon.com Inc. employees to gain advantages
for third-party sellers on the e-retailer's online storefront,
where its business practices have drawn increased regulatory
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
"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 firstname.lastname@example.org
(END) Dow Jones Newswires
September 18, 2020 16:34 ET (20:34 GMT)
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