Web Auctions Fertile Ground For Criminals

JACLYN O'MALLEY
RENO GAZETTE-JOURNAL
Posted: 1/26/2006
ROSA RODRIGUEZ / RENO GAZETTE-JOURNAL

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An unemployed Reno man jailed last week on fraud charges allegedly made his living from cashing checks mailed by eBay bidders who thought they were purchasing his laptop computers, Reno police said.

But authorities allege David Kazish never sent the bidders the computers, nor did he intend to.

He did cash the checks, police said, which totaled more than $45,000 from at least 60 people nationwide, including San Francisco and Portland, Ore.

As online auction fraud continues to explode each year as one of the top Internet fraud crimes, authorities warn consumers to be cautious of online crooks.

This week, the National Consumers League and the Federal Trade Commission ranked online auction fraud the No. 1 Internet fraud scam in the nation in 2005 and placed Nevada as the third top location in the country where Internet fraud victims live. In Nevada, Internet auctions were the top fraud complaint with 728, the FTC reported Wednesday. Shop-at-home and catalog sales were the second leading Nevada fraud complaint.

NCL said the average loss related to a fraudulent Internet auction was $1,155.

Last year, about 85,000 people nationwide reported to the FTC that they were online auction fraud victims compared with 107 reports taken in 1997.

"This has been the No. 1 Internet fraud since we began tracking it in 1997 and is largely due to the popularity of online auctions and the sheer volume of transactions," said Susan Grant, director of the National Fraud Information Center, operated by NCL. "Most sellers are honest, but some are not."

Police say Kazish's arrest Jan. 17 was one of the few times a suspected online auction fraudster has been caught. Sgt. Chuck Lovitt, who heads the Reno police Financial Crimes Unit, credited assistance from federal authorities and increased reporting for the arrests. He said 18 out-of-state victims made reports to Reno police because Reno is where they sent Kazish's payment.

"It's very rare to make an arrest like this because it's hard to get enough evidence," Lovitt said of the mystery auction sellers. "But they are on our radar screen more than ever. If we didn't have cooperation from outside agencies and some luck, we couldn't catch these suspects.

"The bottom line is that people need to remember they shouldn't bid money they aren't willing to lose."

Grant said there is no guarantee that if you are defrauded, an arrest will be made and your money will be returned.

"There's simply not enough cops on the beat," she said. "Law enforcement usually won't take formal legal action on the basis of one complaint, and instead looks for patterns and high dollar losses. That's where the resources will be put."

"We always tell people that once crooks get your money, it's gone for good," she said.

According to the NCL, more consumers are reporting scams and victims are losing more money. Internet fraud losses more than doubled last year to $1,917, up from $895 in 2004, and those reported scams rose 12 percent in that same time frame.

The FTC said Internet auctions have been one of the hottest phenomenons on the Web since they began in 1995, offering a "virtual flea market."

Complaints to the FTC regarding these auctions include late or no shipment of products, low-quality products shipped, bogus online escrow and payment services and fraudulent dealers who lure bidders from legitimate sites with seemingly better deals. Most complaints involve sellers, but some focus on the buyers.

Grant encouraged bidders to check feedback for online sellers.

Kazish, 33, is accused of auctioning Sony Vaio laptops on eBay under various online names, including SKI4FUN61, to residents across the country and not sending bidders the computer after they sent him cashier's checks and money orders, Lovitt said. Typically, online auction bidders use an escrow or online payment service to purchase their goods.

Grant said paying with a credit card would enable a bidder to dispute a fraudulent charge.

But Lovitt said Kazish asked the bidders to send him cashier's checks or money orders to various postal boxes, a practice he said should have been a warning sign. Kazish then used check-cashing businesses, not banks, to cash bidders' checks, he said.

Since 2004, Reno police had been investigating an unknown auctioneer, the focus of 18 complaints made to the Internet Crime Complaint Center, who asked bidders to send checks or money orders to postal boxes in Reno, Lovitt said. Those bidders never received their laptops and were out the money, usually between $1,300 and $2,300. He said that eBay fraud investigators helped police with their investigation, which resulted in Kazish's arrest.

Lovitt said it was typical for Kazish to open and close mailboxes he rented in various cities, which helped him elude authorities.

But a break in the case occurred when a U.S. Postal Service inspector recently intercepted a cashier's check from a bidder in Texas who sent Kazish a cashier's check to a post office box in a Reno mail delivery store. Detectives waited for Kazish to check his mail, Lovitt said. Employees at the mailbox businesses Kazish used reported he checked his boxes several times a week.

On Jan. 17, when Kazish appeared at the business in the 900 block of Moana Lane, he was arrested. During a search of his apartment in the 3200 block of Plumas Street, police found no computers.

"There was nothing there to indicate he was going to fulfill his obligation to the auction bidders," Lovitt said. "He was basically living off these scams."

After winning bids were made, Lovitt said Kazish e-mailed customers and called, and asked for a check to be mailed to his mailbox. When customers complained they did not receive the computer, he would have an excuse to stall, Lovitt said. When bidders got suspicious, Kazish closed his eBay account.

Kazish, a Russian in the country on an Israeli passport, remained at the Washoe County Jail on four counts of suspicion of obtaining money under false pretenses in lieu of $50,000 cash bail.

"You have to be careful when you're buying something sight unseen from a stranger," Grant said. "People who report these frauds say they've done a lot of transactions without a problem. That's great, but people need to be aware that it's possible to be defrauded and to think up front how to protect yourself."

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