FLINT, MI May 25 2013 -- Two men are facing federal charges in Flint after authorities say they headed a retail fraud operation that bilked Home Depot stores in 13 states out of more than $300,000.
In federal complaints unsealed in Flint U.S. District Court Tuesday, May 22, authorities detail a scheme that stretched from Florida to Michigan and involved more than 100 Home Depot stores.
Neither man has been indicted or arraigned on any charges.
An affidavit filed by the Federal Bureau of Investigation with the complaint alleges that the two men operated a scheme that began in February 2011 and included switching UPC codes on expensive items with those of cheaper items in order to purchase the goods for less than the marketed price.
FBI officials declined to comment on the allegations.
Authorities claimed that the men would use UPC codes from cheaper items that matched the general description of the more-expensive item to allay possible concerns of Home Depot employees during checkout.
Federal investigators allege that the men, along with accomplices who have not been charged, would then return the purchased items without receipts in order to receive store credit for the more-expensive original price.
The men would typically target self-checkout registers, according to the complaint.
Authorities claim the scam led to roughly $311,000 in fraudulent transfers.
Home Depot officials declined to comment on the specifics of the case but said that they cooperated extensively with the investigation.
Richard Mellor, vice president of loss prevention for the National Retail Federation, said this case would be considered a large-scale fraud operation.
"Any time you get into six figures, it's considered a large case," Mellor said.
Home Depot store policy requires people making returns without receipts to provide identification along with the return. The two men used more than 150 different forms of identification during the operation, according to the complaint.
The two men are accused of making more than 640 returns. They are also accused of enlisting nearly 20 accomplices to assist them in the fraud.
Authorities say the men used the store credits to purchase major appliances and high-end cabinetry. Some of the store credits are also believed to have been sold to others, according to the complaint.
The merchandise was stored in storage units in Shelby Township and Troy, according to the affidavit.
In one incident, authorities say one of the men traveled to a Northville Home Depot Store April 16, where he purchased $150 in lights for just $17.78 after switching the UPC code.
The man was also accused of purchasing more than $530 worth of lights for roughly $40 on April 30 from a Macomb Township store.
On one instance, the complaint alleges, the two men were approached by a cashier at a Utica Home Depot store April 24 when they had six cases of ceiling tiles on a cart, according to the complaint.
The men told the cashier that they paid for the items but when questioned by the cashier the men said they simply scanned the top box of tiles six times. The men gave their receipt to the cashier.
Authorities say the cashier recognized the tiles rang up at too low a price and needed to be re-scanned. One of the men attempted to have the cashier scan a box of tiles that had the UPC taped to the box, according to the affidavit.
After spotting the UPC code, one of the men allegedly stated to the cashier: "Oh my God. Look at this. This UPC is different. I had no idea. I just scanned the first case six times," according to the complaint.
The men are accused of targeting stores in Metro Detroit, Ypsilanti, Flint, Owosso, Lapeer, Bay City and Midland while operating in Michigan.
Cases like this highlight the growing problem with organized retail fraud nationwide, according to Mellor.
Mellor said return fraud costs retailers $9 billion annually and fraud involving the manipulation of UPC markers is becoming more common with advances in technology.
"That's growing a little bit more prevalent with the evolution of the self-checkout," Mellor said of UPC fraud.
Stephen Holmes, senior manager of corporate communications with the Home Depot, agreed. Holmes added that his company has taken an aggressive stance in cracking down on fraud and working with law enforcement.
"It's an extremely serious problem," Holmes said.
Mellor said as fraud increases, retailers are often forced to put expensive security measures in place, which, combined with the loss, can drive up the price of merchandise or limit the selection available to consumers.
"It's one of those things that the technology retailers use to make it convenient for the customer and efficient for the retailer -- it comes with a cost," Mellor said. "The cost is you have to be more attentive. You have to spend money to put controls in place."
Preliminary exams are scheduled for June 11. Both men were issued $50,000 unsecured bonds.
Source-mlive.com
In federal complaints unsealed in Flint U.S. District Court Tuesday, May 22, authorities detail a scheme that stretched from Florida to Michigan and involved more than 100 Home Depot stores.
Neither man has been indicted or arraigned on any charges.
An affidavit filed by the Federal Bureau of Investigation with the complaint alleges that the two men operated a scheme that began in February 2011 and included switching UPC codes on expensive items with those of cheaper items in order to purchase the goods for less than the marketed price.
FBI officials declined to comment on the allegations.
Authorities claimed that the men would use UPC codes from cheaper items that matched the general description of the more-expensive item to allay possible concerns of Home Depot employees during checkout.
Federal investigators allege that the men, along with accomplices who have not been charged, would then return the purchased items without receipts in order to receive store credit for the more-expensive original price.
The men would typically target self-checkout registers, according to the complaint.
Authorities claim the scam led to roughly $311,000 in fraudulent transfers.
Home Depot officials declined to comment on the specifics of the case but said that they cooperated extensively with the investigation.
Richard Mellor, vice president of loss prevention for the National Retail Federation, said this case would be considered a large-scale fraud operation.
"Any time you get into six figures, it's considered a large case," Mellor said.
Home Depot store policy requires people making returns without receipts to provide identification along with the return. The two men used more than 150 different forms of identification during the operation, according to the complaint.
The two men are accused of making more than 640 returns. They are also accused of enlisting nearly 20 accomplices to assist them in the fraud.
Authorities say the men used the store credits to purchase major appliances and high-end cabinetry. Some of the store credits are also believed to have been sold to others, according to the complaint.
The merchandise was stored in storage units in Shelby Township and Troy, according to the affidavit.
In one incident, authorities say one of the men traveled to a Northville Home Depot Store April 16, where he purchased $150 in lights for just $17.78 after switching the UPC code.
The man was also accused of purchasing more than $530 worth of lights for roughly $40 on April 30 from a Macomb Township store.
On one instance, the complaint alleges, the two men were approached by a cashier at a Utica Home Depot store April 24 when they had six cases of ceiling tiles on a cart, according to the complaint.
The men told the cashier that they paid for the items but when questioned by the cashier the men said they simply scanned the top box of tiles six times. The men gave their receipt to the cashier.
Authorities say the cashier recognized the tiles rang up at too low a price and needed to be re-scanned. One of the men attempted to have the cashier scan a box of tiles that had the UPC taped to the box, according to the affidavit.
After spotting the UPC code, one of the men allegedly stated to the cashier: "Oh my God. Look at this. This UPC is different. I had no idea. I just scanned the first case six times," according to the complaint.
The men are accused of targeting stores in Metro Detroit, Ypsilanti, Flint, Owosso, Lapeer, Bay City and Midland while operating in Michigan.
Cases like this highlight the growing problem with organized retail fraud nationwide, according to Mellor.
Mellor said return fraud costs retailers $9 billion annually and fraud involving the manipulation of UPC markers is becoming more common with advances in technology.
"That's growing a little bit more prevalent with the evolution of the self-checkout," Mellor said of UPC fraud.
Stephen Holmes, senior manager of corporate communications with the Home Depot, agreed. Holmes added that his company has taken an aggressive stance in cracking down on fraud and working with law enforcement.
"It's an extremely serious problem," Holmes said.
Mellor said as fraud increases, retailers are often forced to put expensive security measures in place, which, combined with the loss, can drive up the price of merchandise or limit the selection available to consumers.
"It's one of those things that the technology retailers use to make it convenient for the customer and efficient for the retailer -- it comes with a cost," Mellor said. "The cost is you have to be more attentive. You have to spend money to put controls in place."
Preliminary exams are scheduled for June 11. Both men were issued $50,000 unsecured bonds.
Source-mlive.com