Former Internet Vendor Convicted Of Scheme To Defraud Customers Of $5 Million

Daniel Greenberg, the president and owner of Classic Closeouts, LLC, a now-defunct Internet seller of discounted clothing and personal items, was convicted today by a federal jury in Central Islip on all thirteen counts for defrauding thousands of customers through unauthorized use of the credit and debit card numbers they had provided in connection with a purchase at an earlier time. The jury’s verdict followed a two-week trial in United States District Court before the Honorable Arthur D. Spatt. Greenberg was convicted of eight counts of wire fraud, one count of access device fraud, one count of aggravated identity theft, and three counts of money laundering.

The verdict was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Postal Inspector-in-Charge, United States Postal Inspection Service, New York Division.

“Daniel Greenberg’s Classic Closeouts was a classic scam. 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,” stated United States Attorney Lynch. “We will tirelessly pursue justice for consumers who trust online merchants only to have that trust betrayed.” Ms. Lynch extended her grateful appreciation to the Postal Inspection Service and the Federal Trade Commission for their assistance in the investigation. The FTC brought this matter to the attention of the U.S. Attorney’s Office after having filed a parallel civil action.

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 over 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.

When sentenced Greenberg faces up to 20 years’ imprisonment for each of the eight counts of wire fraud, 15 years’ imprisonment on the access device fraud charge, up to 10 years’ imprisonment for the money laundering charges, and two years’ mandatory imprisonment on the aggravated identity theft charge to run consecutively to sentences imposed on the other charges.

The government’s case was prosecuted by Assistant United States Attorneys Walter Norkin and Charles Rose.

This 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. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets, and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.

The Defendant:

DANIEL GREENBERG

Age: 40

Lawrence, New York