A Wilmington-area man will spend more than seven and a half years in federal prison in connection with a multimillion-dollar scheme involving warranties on nonexistent electronic equipment.
Justin David May, 31, was sentenced to seven years and eight months in prison, five years of supervised release, and ordered to pay more than $4 million in restitution and over $300,000 forfeiture by Philadelphia United States District Judge Joel H. Slomsky.
DelawareOnline (limited page views) in 2018 reported that May was a person of interest to authorities for years. The case that resulted in prison time dates back to 2018.
May had earlier pleaded guilty in two separate cases to 42 counts of mail fraud, 10 counts of money laundering, three counts of interstate transportation of goods obtained by fraud, and two counts of tax evasion.
The convictions stem from separate schemes involving Cisco, Microsoft, Lenovo, and APC by Schneider Electric.
According to federal prosecutors, hundreds of warranty claims sought the advance replacement of more than $5 million worth of computer hardware. While not every false claim was successful, most of the claims did deceive the manufacturers, with May and associates managing to receive more than $3.5 million worth of computer hardware.
May’s schemes involved registering false domain names and creating false e-mail addresses, which were used to submit the false warranty claims.
After first obtaining legitimate serial numbers for Cisco computer hardware, Microsoft Surface tablets, Lenovo Thinkpads, and APC Smart-UPS that he did not own, the defendant contacted the companies, using identities and the email addresses he had created. He claimed to be the owner of a piece of computer hardware that was supposedly broken.
May knew how to explain the supposed problem so that the item in question could not be fixed through troubleshooting and would instead require a replacement. May promised to return the supposedly broken item as soon as he received the advance replacement. He gave false addresses to which the replacement items could be shipped, including many addresses in Philadelphia, South Jersey, and Delaware.
After picking up the hardware, May sold most of it through eBay or various computer equipment resellers.
The primary victim of the defendant’s fraud schemes was Cisco. Concerning Cisco, May personally submitted 267 false warranty claims, while co-schemers based in Texas submitted another 101 false warranty claims. Out of these 368 total false warranty claims, May and his co-schemers were successful on at least 252 occasions.
Between April 12, 2016, and April 3, 2017, May and associates received Cisco hardware worth almost $3.5 million. May laundered the proceeds he obtained from the Cisco scheme by cashing checks he received from the computer equipment resellers at a check-cashing business rather than depositing them in his bank account. He used some of the proceeds to buy a new BMW.
With respect to Microsoft, May and a Singapore-based co-schemer were responsible for submitting 227 false warranty claims to Microsoft. They were successful on 139 of the claims, which led Microsoft to ship to May a total of 139 Microsoft Surface tablets with a retail value of $364,761.
In the case of Lenovo, May personally submitted at least 216 separate false warranty claims, claiming that his Lenovo ThinkPad hard drive had failed. The false warranty claims were successful on 193 occasions, and May caused Lenovo to ship 193 separate “replacement” hard drives, with a retail value of $143,000. May sold all of these hard drives through an eBay store he operated.
With respect to APC, May induced APC to ship at least three of its uninterruptable power supply products, with a retail value of at least $11,400.
While May earned hundreds of thousands of dollars through his scheme, he failed to pay any income tax on that money and instead evaded the payment of at least $52,000 in federal income taxes.
The Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Michael S. Lowe.