EBay Fraudster Sentenced to Federal Prison

DENVER—Derrick Lee Swantz, age 57, of Lakewood, Colorado, was sentenced today by Chief U.S. District Court Judge Wiley Y. Daniel to serve 52 months (over 4 years) in federal prison, followed by three years of supervised release, for mail and wire fraud.  Swantz was previously convicted by a jury of implementing two schemes to defraud people, using eBay and AutoTrader.com, and the other using Xerox copiers. Chief Judge Daniel also ordered Swantz to pay $252,349 in restitution to the victims of his crimes. The defendant, who appeared in custody, was remanded.

Derrick Lee Swantz was indicted by a federal grand jury in Denver on October 25, 2007. On January 16, 2009, following a 4-day jury trial, he was found guilty of one count of mail fraud, and 27 counts of wire fraud. He was sentenced today, Friday, April 24, 2009.

According to the facts presented during the trial, and as also presented to the court in the Government’s Sentencing Statement, during the time of the crimes, defendant Derrick Swantz resided in Lakewood, Colorado. He was convicted of implementing two separate criminal schemes to defraud, the Internet Car Fraud, and the Xerox Machine Fraud.

Regarding the Internet Car Fraud, the evidence showed that from November 2003 through October 2005, Swantz offered luxury automobiles he did not possess or own for sale by means of eBay and Autotrader.com.  Among the vehicles the defendant listed for sale, were a 1970 Mercedes-Benz 280SE, a 2001 Mercedes-Benz S500, a 2002 Mercedes-Benz S500, and a 1997 Infiniti Q45.

Users of eBay and Autotrader.com responded to Swantz’s advertisements and began communicating with him by telephone or email to learn more about the cars and negotiate a price. Swantz directed his victims to make payment by sending a cashier’s check to his address, or to send money wire transfers to his bank accounts. Once Swantz received the victims’ payments, he did not deliver the collector or luxury car. Some victims filed claims under eBay’s insurance and received most of their money back. Some persisted in trying to get the car or refund from Swantz, obtaining promissory notes for repayment, and in some cases partial or even full refunds. The Internet Car Fraud victims’ total payments to Swantz exceeded $121,750. Swantz spent the victims’ money on purchasing stocks, travel, and cash withdrawals.

Regarding the Xerox Machine Fraud, the evidence showed that from May 2004 through July 2005, Swantz carried out a scheme to defraud involving Xerox machines. He represented to persons from whom he was soliciting money that he was knowledgeable about business copier machines, and that he was able to purchase used copier machines for low prices and then sell them at substantial profits. Swantz would then ask such persons to front substantial sums to purchase particular machines, which he would claim that he would repair, maintain, store, and sell for profits that he would then later split with the investors.  He would direct victims to write him a check for their contribution to the copiers’ purchases and/or make wire transfers into one of Swantz’s bank accounts.

Victims of the Xerox machine fraud also persisted in trying to get Swantz to fulfill his promises or refund their money, but none received a refund or the promised profits. Bank records reflect that these victims paid more than $137,500 to Swantz. He again spent the money on stocks, travel, and cash withdrawals.

“Cybercrime is a priority of the Department of Justice,” said Acting U.S. Attorney David Gaouette. “Those who defraud others using a computer will be found and prosecuted.”

“No one should feel safe sitting at their key board and committing a crime,” said FBI Special Agent in Charge James Davis. “The FBI, along with all of our law enforcement partners, will track you down. I would like to encourage the reporting of any complaint if you believe you are or have been a victim of an internet crime, no matter the dollar value, by going to http://www.ic3.gov.

This case was investigated by the Federal Bureau of Investigation. Swantz was prosecuted by Assistant U.S. Attorneys Patricia Davies, Chief of the Special Prosecutions Section, and Suneeta Hazra of the Economic Crime Section.