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NY: EMH Group to Pay $400K in Fraud Settlement

Jun 10, 2007 4:34 AM   By Zach Helke
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RAPAPORT... Manhattan jeweler Ezra Dweck, owner of the EMH Group, has agreed to pay $400,000 to settle a civil fraud complaint by New York attorney general, Andrew Cuomo.

EMH employees were directed by Dweck to place secret bids on the company's own jewelry auctions on online auction site eBay, to boost the average price of goods by 20 percent, the attorney general told the New York Times. The settlement includes a four year ban on participation in online auctions, a $100,000 fine and $300,000 in restitution for what is known as "shill" or fraudulent bidding.

According to Cuomo, Dweck distributed spreadsheets to his employees indicating what bids to place with phony accounts to drive up the final sale price of his auction items. In a one-year period, the company placed some 232,000 bids totaling $5 million.

Ebay, in an ongoing effort to combat abuses of its services, brought the deceptive practices to the attention of then attorney general (now governor) Eliot Spitzer in late 2005. The office of the attorney general then spent more than a year investigating EMH, a company that on it's own website claims to sell "large quantities" of diamonds and gold jewelry to "most of the major U.S. chain stores."

The online auction site has been developing new policies and surveillance methodology to combat abuses such as shill bidding, and has assisted New York authorities to bring civil and criminal charges against auctioneers unfairly inflating the prices of high-priced items, such as jewelry, artwork and automobiles.
Tags: Auctions, Jewelry
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