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Two Brothers Swindled $1.4 Million from Nordstrom, and Now They're Off to Prison

On paper, Allen Chiu seemed to be a very big Nordstrom fan. Over the course of 22 months starting in January 2010, the Dallasite and his brother Andrew of California ordered more than $23 million of merchandise through the upscale department store's website. That won't go as far at Nordstrom as it would at, say, TJ Maxx, but still, that type of green will buy you some pretty nice duds.

Or would have, if any of the stuff the Chius ordered ever arrived. The brothers had previously been blocked from ordering from Nordstrom.com after the company became suspicious of their frequent refund claims for lost and undelivered merchandise. As they admitted back in April, this opened a loophole through which the brothers gleefully jumped.

Their scheme centered on FatWallet.com, a shopping community that provides coupons and cash-back incentives to members like the Chius. It was a simple system in which Nordstrom would pay FatWallet seven percent of a member's purchase. Half of that would be passed back to the customer.

Every time the Chius placed an order through Nordstrom.com, which they did frequently, it was automatically blocked. Their credit cards were never billed and no merchandise was ever shipped.

That vital piece of information was not very well communicated, however, since Nordstrom still paid the seven percent to Fat Wallet on orders it collected no money on, and the Chius got a 3.5-percent rebate on purchases they never made. All told, they caused Nordstrom to lose $1.4 million, with half of that going in their pockets.

Everything was going swimmingly for the Chius until Nordstrom and the FBI caught on and charged them with wire fraud. They faced as many as 20 years in prison but cut a plea deal and were sentenced Friday to two years in prison. As Forbes reports, prosecutors argued that "this was a crime committed in a calculating, careful manner over a long period of time."

"The actions of the Chiu brothers are equivalent to someone discovering that a back door to a Nordstrom store had been accidentally left open, and then walking in through that door to steal $1.4 million from the till."

Which sounds pretty sweet, but also pretty improbable. Improbable, too, are the chances you'll defraud Nordstrom through Fat Wallet. The retailer has since closed the ordering loophole.


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