Daniel Greenberg, president of the now-defunct Internet retailer Classic Closeouts, was arrested for wire fraud, having made more than $5 million in inappropriate charges on customer credit cards, according to federal authorities.
“As charged in the complaint, thousands of unsuspecting former customers were victimized by the defendant,” said Loretta E. Lynch, United States Attorney for the Eastern District of New York. “With this arrest and prosecution, the Closeout scheme has now been closed down.”
The complaint against Greenberg alleges that, between June and December 2008, he made over 70,000 erroneous charges on the credit cards of people who had made purchases on Classiccloseouts.com, which sold apparel and related merchandise at prices usually less than $20. Greenberg left the business, which is now closed, in 2009.
When customers complained about the charges, authorities said the Hempstead N.Y., company was often unresponsive and that Greenberg told credit card companies and banks that the customers had joined a “frequent shopper club” that required a one-time charge. Some people who had their credit cards charged were pressured into paying the charges plus late fees and interest, authorities said.
Greenberg, 38, faces a maximum of 20 years in prison if found guilty. His arrest follows an investigation by Postal Inspectors and the Federal Trade Commission.
Assistant United States Attorney Sarah Coyne is the government’s prosecutor on the case.