How Exploiting a Software Bug Can Lead to Federal Fraud Charges
Fraud describes a number of criminal offenses where a person uses deception or trickery to obtain the property of another. This can include situations where a person deceives by lying about the nature of a proposed bargain. What matters is whether the person accused of fraud intended to deceive the other person.
In addition, many fraud cases are prosecuted at the federal rather than state level. This is due to the expansive definition of “wire fraud” contained in 18 U.S.C. § 1343. Wire fraud is when a person uses any form of interstate communication–such as the telephone or the Internet–as part of a scheme to defraud. The maximum penalty for wire fraud is 20 years in federal prison.
Atlanta Defendant Faces Trial Over Alleged iPhone Trade-in Scheme
While many people tend to think of wire fraud as something involving elaborate multi-million dollar schemes, the reality is often far more mundane. Many federal wire fraud cases revolve around smaller schemes that may not sound all that bad to the average person. But federal prosecutors still take it quite seriously.
An ongoing federal prosecution here in Atlanta, United States v. Shemtov, provides a case in point. In April 2021, a federal grand jury indicted the defendant on eight counts of wire fraud. The indictment alleges the defendant carried out a scheme to defraud a Georgia dealer that specializes in handling trade-ins of Apple iPhones. Apple contracted the dealer to handle its trade-in process. An Apple customer uses the dealer’s website to arrange a trade-in.
The customer must provide their personal contact information, iPhone model, and the condition of their device. The dealer then processes that information and sends the customer a box to ship their device to a separate facility in Texas. The dealer then inspects the device to ensure it is “unlocked.” If it is not unlocked, the dealer contacts the customer and asks them to remotely unlock the device using their iCloud account.
The indictment alleges that the defendant concocted a scheme to submit approximately 1,400 fraudulent iPhone trade requests to the dealer. Specifically, prosecutors believe that the defendant exploited a flaw in the dealer’s website software to initiate trade-ins for “newer, higher-valued” iPhones. But when the defendant received the dealer’s shipping boxes, he sent back “less valuable devices.” And due to the software bug, the dealer still paid out the original, higher trade-in value.
For example, the indictment alleges the defendant submitted about 900 trade-in requests for iPhone XS Max devices with a trade-in value of $545 each. But the defendant actually sent the dealer various iPhone 6 devices, which only had a trade-in value of $30 each.
This case remains pending and awaiting trial before a federal judge in Atlanta. The judge overseeing the case recently denied the defendant’s motion to dismiss. The defendant argued the indictment failed to allege a scheme to defraud. The judge disagreed, noting that according to the indictment, the defendant allegedly “lied about the nature of the bargain” between himself and the dealer. That was sufficient to establish a scheme to defraud.
Contact Hawkins Spizman Trial Lawyers Today
If you are facing state or federal charges involving criminal fraud, you must be prepared to defend yourself in court. Our qualified Georgia criminal defense attorneys can help. Contact Hawkins Spizman Trial Lawyers today to schedule a free consultation. We serve clients throughout Georgia including Atlanta, Dunwoody, Alpharetta, Cobb County, Fulton County, Gwinnett County, Johns Creek and Sandy Springs.
Source:
scholar.google.com/scholar_case?case=17597146602005689883
