Tag Archives: Fraud

News, Observation, Politics

New Legal Filing Reveals Startling Details of Possible Fraud by Trump Organization

Video
Photo Collage; Lynxotic
watch video

A new legal filing by New York’s attorney general this week accused former President Donald Trump’s company of misleading lenders about the financial health of its landmark downtown Manhattan skyscraper, 40 Wall Street, while seeking to renew the building’s mortgage.

Though the Trump Organization called 40 Wall Street “one of the great success stories post 2008,” lender Capital One found the company’s estimates of the building’s worth so unbelievable that the bank declined to refinance the tower’s loan in 2015, the filing alleges.

“Capital One harbored great skepticism regarding the Trump Organization’s valuations,” says the filing, which was submitted by Attorney General Letitia James in response to Trump’s efforts to block her from questioning him and his children as part of an ongoing investigation by her office.

The new accusations offer startling details about possible financial fraud involving 40 Wall Street — one of the subjects of a 2019 ProPublica story that highlighted conflicting financial documents the Trump Organization had filed for the building.

ProPublica’s story documented how income, expense and occupancy numbers cited in the eventual refinance for 40 Wall Street and another Manhattan building sometimes didn’t match those the company had filed with city tax authorities. A lower valuation for the city would produce a lower tax bill, while a higher valuation for lenders would make it easier to get a new mortgage.

One expert said it appeared like the Trump Organization was keeping “two sets of books.”

“It feels like a set of books for the tax guy and a set for the lender,” said Kevin Riordan, a financing expert and real estate professor at Montclair State University, at the time.

In her filing, James asserts that Trump Organization employees, including Trump’s children, took part in a pattern of deception in which they misled lenders, insurers and the Internal Revenue Service by vastly overstating values for 40 Wall Street and a host of other Trump properties, including golf courses in Scotland, Los Angeles and Westchester and his buildings on Fifth and Park avenues.

watch video
watch video

Check out Lynxotic on YouTube

The Trump Organization on Thursday lashed out at James, a Democrat, via a statement emailed by a spokesperson, saying, “The only one misleading the public is Letitia James.

“She defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule,” the organization’s statement said. It asserted that James “has no case” and that the “allegations are baseless and will be vigorously defended.”

Alan Futerfas, a lawyer for Trump’s children Donald Jr. and Ivanka Trump, also criticized James, accusing her of making “repeated threats to target the Trump family” and ignoring legal protections for “the very people she is investigating.”

James is seeking to compel testimony and obtain documents from Trump, Donald Jr. and Ivanka, who she said have not cooperated with her investigation.

The filing says that property valuations formed the heart of statements of financial condition that the Trump Organization used to demonstrate its net worth. The statements, which James said contained inaccuracies, were compiled by an outside accounting agency from a data spreadsheet and backup material provided by the Trump Organization.

Trump’s personal guarantees to some banks and insurers required him to certify that his financial statements were correct, according to James’ filing. The documents say her office has evidence Trump was “personally involved in reviewing and approving” the statements.

If the company or its employees are found to have deliberately provided misleading valuations, they could face civil or criminal penalties. The company is under investigation by both James and Manhattan District Attorney Alvin Bragg.

With its classic Gothic Revival style and signature green spire, 40 Wall Street gave Trump a presence in the most famous financial district in the world. His company doesn’t own it, but rather purchased in 1995 the right to act as the landlord for its office and retail space. Finding tenants for that space, however, particularly in the building’s narrow tower, proved a challenge, especially after 9/11, when occupancy sagged and the entire financial district struggled, the ProPublica investigation found.

James’ filing says that as early as 2009, Capital One, which held the mortgage on the property, “raised substantial concerns about cash flow” at 40 Wall Street, prompting in-person meetings with Trump, longtime Trump Organization Chief Financial Officer Allen Weisselberg and others. Donald Trump Jr. was also involved in the discussions, the filing says.

The conversations led to a loan modification in 2010, with bank personnel harboring doubts about the Trump Organization’s representations of the building’s financial standing. During those discussions, the Trump Organization provided the bank with profit numbers for 2010 of $12.3 million, which bank personnel described as “very optimistic.”

More startling were the differences between valuations that appeared on Trump’s statements of financial condition and those prepared by appraisers for Capital One. The Trump Organization set the value of the building at $601.8 million in 2010, while the appraisals for Capital One done by Cushman & Wakefield set it at just less than one-third of that, $200 million.

Weisselberg shared one of the company’s higher valuations for the building with the bank in early 2015, boasting of “considerable capital investment” and “a much improved cash flow.” He wanted Capital One to restructure its loan and waive a principal payment of $5 million due in November.

But Capital One declined to refinance the mortgage, referencing its own internal estimate that the building was only worth $257 million a few months before.

That year, 40 Wall Street’s $160 million mortgage was a thorn in Trump’s side, representing his then-largest single debt as he launched his campaign for the presidency.

After Capital One’s rejection, the Trump Organization turned to Ladder Capital Finance, where Weisselberg’s son Jack was a director. Ladder commissioned its own appraisal. Though Ladder used the same Cushman & Wakefield team that had estimated the building was worth $220 million in 2012, the team this time more than doubled the value to $540 million, legal filings said. Ladder approved the refinance.

James’ filing said that evidence her office obtained suggests the 2015 Cushman valuation “appears to have used demonstrably incorrect facts and aggressive assumptions” to arrive at the higher estimate, which the document said “did not reflect a good faith assessment of value.”

On Thursday, Cushman & Wakefield defended its practices, saying it took “great issue with mischaracterizations concerning the work performed and believe they are not supported by the evidence.

“The referenced Cushman & Wakefield appraisals were undertaken and completed in good faith based upon the material information made available,” the company said in a statement emailed by a spokesperson. “We stand behind the appraisers and the referenced appraisals which reflect fair valuations based upon the underlying facts and market dynamics.”

In 2015, the Trump Organization’s statement of financial condition listed the value of the building as $735.4 million.

Ladder Capital and Capital One did not immediately respond to requests for comment Thursday. Allen Weisselberg and Jack Weisselberg could not immediately be reached.

ProPublica’s 2019 story found several instances of the Trump Organization reporting much lower expenses to its lender, Ladder Capital, than to city tax authorities — including 40 Wall Street’s insurance costs and ground lease. Jack Weisselberg declined to comment at the time on Ladder’s loans or his relationship with the Trump Organization. Executives with Ladder also declined to be quoted for the story then.

In 2019, former Trump lawyer Michael Cohen testified before Congress that the Trump Organization inflated valuations at times to appear more profitable and deflated them to achieve a lower real estate tax bill.

Originally published on ProPublica by Heather Vogell and republished under a Creative Commons License (CC BY-NC-ND 3.0)

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: Trump, Inc. Exploring the Business of Trump

Find books on Music, Movies & Entertainment and many other topics at our sister site: Cherrybooks on Bookshop.org

Lynxotic may receive a small commission based on any purchases made by following links from this page

Business, Lifestyle, Observation

How to Avoid Being Scammed by Fake Job Ads

Above: Photo Collage / Lynxotic

As ProPublica has reported, cybercriminals are flooding the internet with fake job ads and even bogus company hiring websites whose purpose is to steal your identity and use it to commit fraud. It’s a good reminder that you should vet potential employers as closely as they vet you.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

Here are ten tips on how to spot such scams:

1. Beware of abnormally high salaries

One of the ways criminals entice people is by advertising unusually generous pay. If the salary being offered in a job ad is way above what you see in other ads for similar positions, be wary. You can get an idea of average weekly earnings by industry using the Quarterly Census of Employment and Wages or check out salary calculators on websites such as Glassdoor.

2. Don’t accept jobs you didn’t apply for

Sometimes cybercriminals obtain the contact information of people who have submitted their résumés to job-seeking websites and then email them to say they are preapproved for a job. These are bogus messages whose main purpose is to get people to share additional information, which the scammers will use to commit fraud. The emails may also include malware that can infect your computer. Ignore such messages and don’t open any attachments.

3. Be wary of job ads touting the need to verify your identity at the outset

Ads that demand you share your driver’s license or Social Security number as part of an initial application, or very soon after, are a significant red flag. Legitimate employers rarely request such information until much later in the hiring process.

4. Take the text of the job ad and put it in Google

Cybercriminals sometimes reuse the same job ads over and over, posting them on LinkedIn, Facebook and other online platforms with only slight modifications. If you spot an ad that features virtually identical language to that used by various employers all over the country, it could be a scam.

5. Research the identity of the person posting the ad

Cybercriminals are creating fake profiles on LinkedIn and Facebook meant to resemble individuals at real companies who are posting job ads. One clue: a person claiming to work for a company in the U.S. while showing check-ins at locations in other countries. When in doubt, contact the companies directly to ask if they’re actually recruiting for the positions. If they’re not, report the suspect profiles to LinkedIn and Facebook.

6. Check the spelling and domains of company names

When you vet companies, be aware that cybercriminals sometimes steer potential applicants to fake websites they’ve created that mimic the sites of real companies — except that, say, an extra letter has been added to the company’s name. When job applicants can’t spell a company’s name right in a cover letter, recruiters are apt to toss those applications in the trash. Do the same with any companies that seemingly can’t spell their own names.

7. Avoid text-only interviews

The pandemic has made it necessary for many employers to conduct job interviews remotely via services like Zoom. But be cautious of hiring managers who insist on communicating only by email or text or using messaging platforms such as Telegram to conduct interviews. Sooner or later, a real employer will want to see and interact with a recruit, whether through a video call or in person. Cybercriminals typically don’t want you to hear their voices or see their faces, since it raises the chances you’ll realize they’re not who they say they are.

8. Don’t give out your credit card or phone account login

A real employer doesn’t need to know your credit card number, credit score or phone account login to process your job application. Cybercriminals sometimes ask for such information up front to commandeer your phone and finances, often under the pretense of needing to set you up with a company phone plan or purchase equipment you’ll need to do your job (see next item).

9. Don’t buy things on behalf of a potential employer

Beware of companies that, before you’re hired, offer to send you a check to purchase a computer or other equipment. It’s a variation on an old scam that involves criminals asking marks to send their own money to some third party with the promise that they will reimburse the marks. Inevitably, the reimbursement doesn’t come through, and the mark is left holding the bag.

10. If something feels suspicious, investigate — or walk away

If at any point in the job application or interview stage something feels wrong to you, don’t ignore the feeling. Ask yourself if you see any of the warning signs outlined above. Or pause and ask a trusted friend or relative for a reality check.

Originally published on ProPublica by Cezary Podkul and republished under a Creative Commons License (CC BY-NC-ND 3.0)

Related Articles:

Check out Lynxotic on YouTube

Find books on Music, Movies & Entertainment and many other topics at our sister site: Cherrybooks on Bookshop.org

Enjoy Lynxotic at Apple News on your iPhone, iPad or Mac.

Lynxotic may receive a small commission based on any purchases made by following links from this page

Breaking News, Business, Stock Market

Picking up Quarters in front of a steam roller: Robinhood, GameStop and the Innocence of Ignorance

Tilting at Windmills as misnomers rule

Lots of confusion on all sides. There’s an internet storm brewing over the “injustice” of various entities – a ridiculous “free” trading app called, of all things “Robinhood”, the hedge funds who shorted an obviously overvalued stock. The army of short-squeezers who are screaming bloody murder that they were not able to cash in at the top (or commit Hari-kari by buying more the higher it goes).

Read more: Elon Musk, AOC, GameStop, Robinhood, Short Selling Hedge Funds

And then every pundit in the world sounding off – all the outrage and chaos with Ted Cruz & AOC & Elon Musk & Chris Cuomo & Mark Cuban and probably every celebrity in the world going nuts all at once by tomorrow and all sounding off like crazy over the “injustice”. Shake it up and shake in down.

Read more: Stonk Traders vs. Wall Street”: Heroes, Victims and Hogwash

The sheer volume of confusion over the “Robinhood Revolution” is staggering. Just wait it will be much, much worse. The depth of the ignorance is truly monumental.

Are there bad guys on “Wall Street”? Plenty. Are the google guys day traders that bid up a worthless stock to “burn” hedge funds and get rich quick heroes? Please.

https://twitter.com/RileyTaugor/status/1355005283622383617?s=20

And an App hilariously named “Robinhood” that charge phantom fees rather than stated charges (low, high or whatever) does no “stealing from the rich” and sure as hell no “giving to the poor”.

The good guys? Wanna buy the Brooklyn Bridge? I’ll sell you whichever one you want.

Traders and “Wall Street Insiders” know that danger is real. The idea of protecting “retail traders” from risk? As they tap into credit cards to buy worthless stocks that they believe they have a right to pump & dump?

And are they good guys cause they should be able to push the price of a stock endlessly higher for no reason whatsoever except that they get off on the letters from the ticker symbols that happen to sound similar to the ticker for a stock that Elon Musk did a two word tweet about (Signal, etc)?

Collusion and getting rich for doing basically nothing should be something that is available to everyone because criminals have gotten away with it left right and center?

That’s the solution? Solution to what problem exactly? And the big heroes are those who coin slogans such as “stocks only go up!”

Sign Up!

Subscribe to our newsletter for all the latest updates directly to your inBox.

Find books on Music, Movies & Entertainment and many other topics at our sister site: Cherrybooks on Bookshop.org

Enjoy Lynxotic at Apple News on your iPhone, iPad or Mac 

Lynxotic may receive a small commission based on any purchases made by following links from this page

Politics

Steve Bannon and three others charged with Fraud -Arrests made with the help of USPS

Video
https://youtu.be/tQk6zRLrJtw

The orchestrated scheme for personal gain – funneled through border wall campaign 

Steve Bannon, President Trump’s former top adviser was charged Thursday, August 20, 2020 for fraud.  ‘We Build the Wall’ campaign was a private crowdfunding account launched via GoFundMe and meant to aid in Trump’s initiatives for constructing the wall barrier between Mexico and the US border.  The crowdfunding campaign raised more than $25,000,000.

What Bannon allegedly did was divert funds and cheat thousands of donors, while making the pledge that the money would be set aside and used only for building the wall. The former adviser is said to have siphoned money from the project, in amounts totaling more than $1 million dollars, which he directed towards his own personal expenses. 

Read More: 167,000 Deaths and Counting: Lincoln Project ad says Trump is building a different kind of Wall

Bannon’s arrest took place (perhaps not too ironically) on a 150-foot, $35 million dollar yacht belonging to a Chinese billionaire named Guy Wengui. Bannon was not the only mastermind behind the alleged scam, three other men were involved in the scene to defraud donors: Brian Kolfage, Andrew Badolato and Timothy Shea.  All of whom were also arrested August 20, 2020.

Click here to see the complete full 24 page indictment.

Preview of Indictment – Click Here to See Complete

A surprising twist is that the U.S. Postal Service was involved in the arrests of Bannon and the other three men through the service’s inspection unit.  The U.S. Postal Inspection Service (USPIS)  has been around since 1872 and was created to fight against mail fraud and other mail related charges. The Postal inspectors much like FBI agents, carry weapons, make arrests, serve subpoenas and execute federal search warrants.  In the case of Bannon, the USPS helped to deliver more than just the mail, it delivered a chance at some justice. And if you weren’t aware that USPS had a police unit, you are not alone.

During his arraignment, Bannon pleaded not guilty to both charges of wire fraud conspiracy and money laundering conspiracy.  If found guilty the charges carry a maximum penalty of 20 years in prison.  Very shortly afterwards, Bannon was released from custody on a $5 million bond.  As he walked outside the courthouse, he could be heard saying to reporters:

“This entire fiasco is to stop people who want to build the wall.”

Bannon is just one among a handful (and growing) Trump advisers and associates that have been charged with federal crimes.  On the list includes: Paul Manafort, Rick Gates, Roger Stone, Michael Flynn and Michael Cohen. 

President Trump made it a point to quickly defend any association with Bannon saying he “didn’t know” anything about the private fundraising, calling it “inappropriate” while describing the unfolded news on his former advisor, as “a sad event”.  

Subscribe to our newsletter for all the latest updates directly to your inBox.

Find books on Politics, Sustainable Energy, Economics and many other topics at our sister site: Cherrybooks on Bookshop.org

Enjoy Lynxotic at Apple News on your iPhone, iPad or Mac.

Lynxotic may receive a small commission based on any purchases made by following links from this page.

Business

Amazon Allegedly Allowing Chinese Sellers to Deceive Consumers and Paralyze US Vendors

Amazon finally Admits to Facilitating Safety Issues and Fakes in Online Product Listings

Chinese products listed on the e-commerce site have been known to present a multitude of issues for US sellers on the platform. Consumers are also put into potential risks whenever purchasing an item from overseas on Amazon’s site. Counterfeits, unsafe goods, and items that lack the necessary US FDA approval, despite including the logo, are among some of the problems that have frequently occurred. 

On the U.S. site, Amazon doesn’t require a seller’s locations to be disclosed, which makes it harder for Chinese sellers to be held accountable when fake and unsafe goods are identified after shipping.

When consumers attempted to sue Amazon in court proceedings in the past, Amazon’s argument was that they held no burden on product liability, claiming that the items in question were neither manufactured nor sold directly by the company and that they merely allowed those items to be listed for sale.

An extremely dangerous case happened when a customer purchased a hoverboard on Amazon from a third party seller and the board exploded and resulted in the buyer’s house catching on fire and burning down. In that 2016 court proceeding, Amazon won the case and was not held responsible.

However, for the first time ever, Amazon is finally admitting that such risks actually exist. The 2018 Securities and Exchange Commission (SEC) file stated “Under our seller programs, we may be unable to prevent sellers from collecting payments, fraudulently or otherwise, when buyers never receive the products they ordered or when the products received are materially different from the sellers’ descriptions. We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies”  

Whether Amazon can be held liable in court for damages that result from this passivity appears to be another story.

Mysterious Third-Party Chinese Vendors Lack Accountability on Amazon’s Seller Platform

Chinese sellers within the Amazon marketplace could represent a significant portion of the third-party sellers. Although Amazon does not publicly disclose any data of sellers’ location on the Amazon.com US site, according to Market Place Pulse, approximately 38% of the top sellers are based in China and 44% of China sellers were calculated among the 5 marketplaces (France, Germany, Italy, UK and Spain). 

The majority of Chinese sellers, more than 79%, utilize Amazon Fulfillment (FBA) services that allow for customers to receive items quickly. This has resulted in US sellers struggling to compete in the market while also allowing customers to experience the same shipping experience regardless of the products’ origin.  

Legitimate US Companies Can’t Compete with Rampant Flock of Fraudulent Chinese Vendors

This insurgence of sellers from China are affecting US sellers that have sold products imported from overseas because they are not able to provide competitive prices against Chinese suppliers that are now selling the same products on the site. 

In an interview with the WSJ, a US based company that sells goose-feather duvets claims that they’ve struggled to compete with Chinese sellers that claim to sell the same quality goods but are counterfeits. This US company bought the Chinese “equivalent” and had the materials tested and found that they were duck feathers, instead of its proclaimed goose-feathers, and were being sold at a fraction of the price.

These deceptive listings not only hurt the customers that believe that they are purchasing one thing but actually receive another, but they are also killing a number of legitimate companies’ chances to make a living. The company brought the testing results to Amazon’s attention and the counterfeits were removed. However, the burden of responsibility in locating vendors that sell “fakes” should not be on the third party seller’s shoulders.

Consumers have also been deceived into thinking a product is great based on 5 star feedback when, in actuality, a string of companies have been proven to directly influence inauthentic reviews by bribing customers with gift cards in exchange for a high rating.  

Find books on Big Tech, Sustainable Energy, Economics and many other topics at our sister site: Cherrybooks on Bookshop.org

Business, Climate Solutions

Former Exxon CEO Rex Tillerson on Trial for allegedly Deceiving Investors about Climate Change

After their Destructive Secret was out, Exxon Mobil had yet to face Accountability until Now

It is no secret that Exxon Mobil hasn’t been the kindest to the planet over the years. The big oil company is one of the nation’s most prominent gasoline providers, and fueling automobiles is the world’s leading purpose for fossil fuel burning and the foremost cause of greenhouse gas emissions. 

For years Exxon has gone unchecked for the environmental damage they have done as a company—after all, they were never really doing anything illegal. However, former Exxon Chief Executive Officer and U.S. Secretary of State under President Trump, Rex W. Tillerson is currently in hot water. The man is facing two legal battles, one in New York and one in Massachusetts, for allegedly lying to investors about the risks and impacts of global warming.

The Case Casts the Primary Offense towards their Investors, not the Environment

At last, Tillerson may be held accountable, but these are not environmental trials per-se. Instead, they are hitting the oil tycoon where it really hurts: his wallet. And the cases are not about compensating for ecological destruction, but something far more pertinent to those who navigate the corporate world: money.

In both New York and Massachusetts, Tillerson is accused of knowingly providing investors with false information about the climate crisis. Reportedly, Tillerson sold climate change as underwhelming, insignificant, and perhaps even good for business. Meanwhile, he depicted Exxon Mobil as a champion of environmentalism. While the company does do some philanthropy in that area, these statements clearly omit some essential details, namely that Exxon does far more harm than good for the natural world.

It may be a Fraud Case, but Tillerson’s Case could be a First Step towards an Environmental Win

Thus, the trial is really just a fraud case, a dry instance of one person deceiving another for financial benefit. These cases happen all the time and usually do not garner much attention. Given Tillerson’s prominence, though, and Exxon’s dodgy history in the battle against climate change, this particular fraud case has made some noise. While Tillerson argues that the press attention is unnecessary, pandering, and based on corporate stigma rather than facts, many environmentalists are happy to see a big oil company put on the stand and questioned about its impact on the planet.

At the end of the day, the trial is mainly about money, but the larger implications of Tillerson having to answer for Exxon’s climate denial involves something much more significant. Trojan-horsed as a fiscal wrongdoing, Tillerson’s current predicament stands as a testimony to environmental justice and shows that rich business executives are not immune to consequences.

If all this is confusing, that’s probably because major corporations usually try to mask these muddy legal situations with jargon and loopholes in order to maintain their quality public images. Right now, however, Tillerson may be caught in a trap, and Exxon’s lies, deceits, and blatant disregard for scientific accuracy are finally becoming apparent in black and white, even if what really brought him to the stand is printed in green.

Find books on Big Tech, Sustainable Energy, Economics and many other topics at our sister site: Cherrybooks on Bookshop.org

Enjoy Lynxotic at Apple News on your iPhone, iPad or Mac and subscribe to our newsletter.

Lynxotic may receive a small commission based on any purchases made by following links from this page.

Observation, Tech

Amazon Counterfeit Problems Go Deeper than Anyone Realizes: Observation

Illustration / Lynxotic / Adobe Stock

Articles that Purport to Expose the Issues Assume Best Case Scenario:

This article will have a lot of links. Following them you can see the spate of articles recently published on Amazon’s problems with “marketplace” inventory. Even if you don’t look at the articles, the number of links shows that this is a situation that is being followed by the press.

But none of these articles even begin to hint at the deeper underlying problems. “Tip of the iceberg” would be putting it mildly.

The observations in this article are based on candid conversations with long time sellers on the Amazon Marketplace platform. As is typical, none of the sellers would agree to be named, for fear of retribution by the giant online retailer.

Reading titles of articles like “Amazon May Have a Counterfeit Problem”, the sellers we spoke with could only laugh at the equivocation and doubt. This, apparently, is not a “maybe” thing for those with intimate knowledge of the situation.

“The real situation is that Amazon’s fee structure and shipping requirements only allow for counterfeit, illegal import or “gray market” products (such as returns that are still “new” but not factory sealed) to be sold at a meaningful profit.”

– anonymous marketplace seller

There are plenty of lawsuits by well known manufacturers who claim there is a big problem with fakes selling on the Amazon platform. Daimler AG, the company that produces Mercedes-Benz products, filed a lawsuit in Washington State, and Birkenstock, the European shoe maker, has complained loudly and publicly about the situation, and ultimately pulled their Brand from the site altogether.

The problems go much deeper than this. According to the sellers we spoke to the issue is literally built into the entire inventory of more than 500 million products listed on the site.

One reason why this is not fully reported, or even spoken of, is the fear of retribution.

A second reason is the way Amazon uses a legal strategy of “having it both ways”; customers feel like they are always buying from Amazon itself when buying on the site, or at least that they are protected by Amazon. At the same time when bigger problems do arise, suddenly, the marketplace is a pseudo-public area which can not be directly linked back to Amazon and for which they claim to have no liability.

But it is the third reason that shields the mega-site, more than anything else, from bad publicity: the fact that, in order to understand the issues thoroughly, a deep investigation into its history and business practices is required.

Apparently, according to our extremely experienced sources, it all goes back to the time, before 2008, when Amazon was still primarily an online bookstore (For years, in fact, the site’s tagline was “Earths biggest bookstore”).

Ponzi Reinvented for the Digital Age: with the blessing of the US Gov.

The “business model” at that time was simple yet brutal; buy books directly from publishers at the full wholesale price and sell them for that same amount with “free” shipping (for prime members).

And in doing this they accomplished many things, all near and dear to their founder’s heart:

-Annihilate all book sellers, online or off, since selling at zero margin could only be done by losing billions, which, in-turn, only an online Wall Street financed “dot-com darling” could afford.

-Addict the suppliers (publishers) to the steady flow of sales, with the percentage from Amazon relentlessly rising until it is the only significant buyer.

-Preemptively destroy any online seller by putting the barrier to entry so high that it would be suicidal to even try to compete (see the diapers.com saga)

-Brain-wash the public into thinking that it was “normal” to be able to buy products at wholesale prices (with free shipping) and that there was nothing “fishy” about the fact that only Amazon could afford to do it (by losing billions, on paper).

An Offer they Couldn’t Refuse: Sell or Die

From a Businessweek / Bloomberg story about how Bezos forced Diapers.com, owned by Quidisi, out of business (buying them out after the strong-arm mafia-like practices outlined below):

“Quidsi could now taste its own blood. At one point, Quidsi executives took what they knew about shipping rates, factored in Procter & Gamble’s (PG) wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diaper category alone.

When Bezos’s lieutenants learned of WalMart’s counter-bid, they ratcheted up the pressure, telling the Quidsi founders that (Bezos) was such a furious competitor that he would drive diaper prices to zero if they sold to Bentonville.”

-report published in Businessweek and recounted in “The EVerything store”

All of this was a spectacular success, for Amazon, as can be attested to by the recently acquired “richest man-in-the-world” title. Amazon lost billions per quarter for decades and, and, yet, as the “last man standing” eventually turned that around into the creation of the world’s richest human. All stemming from virtual monopoly in online sales of ALL products in the US (over 50%, with the second largest online seller at 6.6%). Imagine even one other online retail company with more than 20% and it’s easy to see there is no “competition” for Amazon and no real alternative for buyers or sellers.

And what about sellers on the Amazon Marketplace? Did they benefit from the massive success of the platform (as they contributed more than 50% of revenue to the giant retailer)?

All the anecdotes of “some guy in Minnesota” who resells Walmart clearance items, aside, the only winners in that part of the story were and are …wait for it… counterfeiters, illegal importers and gray market sellers. Oh, and Chinese “no-brand” factories that sell on Amazon in the US.

Why?

It seems that, square in the bullseye of Amazon’s hit-list, in addition to anyone that sells anything who’s not on Amazon, is the very group that has kept the company afloat all these years: The millions of, mostly small, sellers on the marketplace all trying to eke out a living.

They have zero leverage and no where else to go to sell online (remember virtually all the customers are already locked into the Amazon platform due to the “bribery” of too-good-to-be-true prices and free shipping), therefore, they can be gouged with impossible fees.

The fee structure is, as you might expect, complicated, but fees are the highest of any online marketplace and never fall, only rise, which they do often, according to sellers. For items at lower price points deducted fees can be as much as 50%. The real costs are hidden in fees like “variable closing” and other made-up monikers to obfuscate the real reasoning behind the math. But in practical terms, selling a $8 item can cost up to $4 in added fees.

But, and this is the complicated bit, even that might work for a legitimate seller if not for the fact that, in many cases, the seller is competing against Amazon itself! And, as you have seen above, prices have no bottom limit as profit is not required for Amazon to “win”.

To wrap this mind-boggling concept up with a bow: if any company wants to realize even 1 cent of retail profit after fees, selling on the Amazon Marketplace, it must acquire the goods for roughly 70-90% below standard retail prices, and even that might not be sufficient.

Who can do that? Chinese no-brand factories shipping directly to the US with subsidized USPS shipping rates, counterfeiters, illegal importers and gray market sellers. Period.

A thorough investigation of the millions of sellers currently selling on Amazon would, without a doubt, say our sources, turn up not just a few bad apples, but a system that is virtually rotten to the core. Beyond even Elizabeth Warren’s wildest fears.

Find books on Big Tech, Sustainable Energy, Economics and many other topics at our sister site: Cherrybooks on Bookshop.org

Enjoy Lynxotic at Apple News on your iPhone, iPad or Mac and subscribe to our newsletter.

Lynxotic may receive a small commission based on any purchases made by following links from this page.