Auctionbytes-NewsFlash, Number 556 - June 13, 2003 - ISSN 1539-5065
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eBay PowerSeller Arrested in Utah
By Ina Steiner
AuctionBytes.com
An eBay PowerSeller arrested Sunday in Salt Lake City, Utah, may be facing Federal fraud charges after allegedly ripping off buyers to the tune of over $1 million dollars. Russell Dana Smith, selling under the eBay ID "LiquidationUniverse," is being held on federal charges including misuse of a social security number.
Liquidation Universe operated out of a strip mall in Salt Lake City, Utah, and sold laptop computers on eBay, often with starting bids of 99 cents. Ironically, the business was located 12 miles from eBay's Fraud Claims Administration Department in Draper, Utah.
After getting complaints from buyers, eBay suspended Liquidation Universe on May 16 and contacted the police in South Salt Lake. Police began watching the business and obtained a search warrant on May 22 when they observed employees packing up and leaving, according to Detective Sweeten of the South Salt Lake police department. He said police seized a small quantity of merchandise from the building and began interviewing employees, but Smith was not found until June 8.
Detective Sweeten said Tuesday that about 1,000 victims have come forward with claims totaling $1 million, but he expects those numbers to rise as word gets out about the arrest. Sweeten said Smith stole the identity of John Leary and used it to run the business. A Federal Magistrate reviewed Smith's criminal history and denied bail at a hearing on Wednesday, declaring Smith a flight risk. Experts from Utah's Cyber Crimes Task Force and the FBI are helping with the investigation.
Users began posting negative feedback for Liquidation Universe in April. A review of the postings highlights some of the problems with eBay's Feedback System: when Liquidation Universe told customers they could not deliver product, they apparently offered people $50 or $100 rewards to leave positive feedback for the company. Many customers left "positive" feedback, but wrote in the comment fields that they had never received their items.
When one customer left a negative feedback and wrote that the company was offering a rebate for good feedback, Liquidation Universe responded by saying the rebate was offered as a customer service gesture.
Shortly after eBay suspended the seller in mid-May, victims began chatting about the case in discussion boards. Rumors abounded that Smith had been involved in fraud in the past, possibly on eBay itself, which has been criticized by victims in other cases for not doing enough to prevent fraud. eBay is proactive in this case and sent a senior investigator to Utah to help authorities with the investigation.
The Utah Cyber Crimes Task Force recommends victims file an online fraud report at http://www.ifccfbi.gov . For more information about online auction fraud, visit the AuctionBytes Fraud Resource Center at http://www.auctionbytes.com/cab/pages/fraud
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http://www.auctionbytes.com/pages/abn/y03/m05/i25/s03
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