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Best Buy fraud unveiled
Best Buy has surfaced in the news as federal investigators say the retailer was conned out of $31 million.
The scam was actually quite simple. Basically, a company by the name of Chip Factory, owned and run by husband and wife Russell and Abby Cole, won Best Buy contracts by offering amazingly low bids. They then turned around and charged the company a much higher price for the computer parts. The couple, who are yet to be charged in the case, were said to have been able to make the deals go through without setting off major alarm by the help of former Best Buy employee, Robert Paul Bossany. Last month Bossany pleaded guilty to 29 counts of conspiracy to commit mail fraud and money laundering. Here is how the three managed the scheme, according to the court affidavits:
Chip Factory sold the parts to Best Buy through an online system bidding system run by National Parts. After agreeing to a price, Chip Factory turned around and jacked those prices up, before the transaction was completed. I know what you are thinking: not necessarily rocket-science. Naturally, National Parts saw the changes and questioned the transactions, but Best Buy employee, Bossany eased the concerns and saw to it that the transactions went through. In return, allegedly, Bossany received cash and gifts. It’s unclear how the alleged fraud was discovered, but the investigation involves the Internal Revenue Service, the Federal Bureau of Investigation and the US Postal Service.
In one case, Chip Factory won a contract for 20 computer parts at $42 each, beating out the next lowest bid of $72. Then Chip Factory allegedly charged Best Buy $571 per part to fill the order.
I have to say, this case seriously puts the people running Best Buy’s accounting department in question.
First of all, how on earth could a Mom-and-Pop computer equipment retailer possibly provide parts at such a drastic discount from the rest of the bidders. Take the above example: The difference between paying $42 and $72 is about a 71%. No one ever thought to put that in question?
Secondly, how on earth did the Best Buy accounting department not notice a difference in the agreed $42 and the charged $571? Somebody was definitely sleeping on the job.
On the other hand, the Coles, reportedly, have made a killing in the meantime. The Coles dutifully reported $15.5 million in income between 2003 and 2007, $14.2 million of which investigators say resulted from fraud. During that time, they also managed to purchase a Ferrari coupe, Lamborghini convertible and 9 other luxury cars, worth about $2.8 million in total. Investigators have seized all of the aforementioned vehicles for the time being.
The fact that the Coles have not been charged to date should definitely cause worry within their household, especially since their ‘insider’ has already admitted guilt. I can almost guarantee that investigators dangled a lengthy sentence in front of Bossany’s face only to follow it up with the old: “well, if you help bust the big guys, we’ll make your sentence much more lenient”. Once their informative clearly spills all the details of the scheme, the Coles should definitely be listening for a knock on their door.
This case has been going on for sometime now and I am quite surprised that it has not called for more media attention. Then again, Best Buy may have been doing its best to keep such a scam on the ‘down-low’ as a story like this is likely to get the wheels turning inside the brains of other less-well-to-do employees and dealers.
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we share the same curiosity. I think we need to take a step back and 1) realize that the stories in the media are only one-sided. what if this so called “fraud” stemmed from something else? like you said how does a mom- pop company get away with charging so little and then charging the product 200% or more? come on, i don’t buy it, at least not for 4 years!!! also, i work in a similar department as bossany, no way could he have the ability to allow these transactions to go through without other approvals. well unless of course the big great best buy truly does hire idiots that don’t check one another…
2) the contract is with national parts, right? why aren’t they going after them? i’m no lawyer here, but considering the contract was with NP shouldn’t they be getting sued as well?
3) something else smells fishy. can’t put my finger on it, but when you look at what the media has presented, it just doesn’t add up….
Well, the Trial which just ended proved a much
different story than where it started. Turns out
Best Buy expected their employee of taking
gifts/bribes from this company and as soon as
he pleaded to get a “better deal” with the government
Best Buy filed for a $15,000,000 increase
in their “Employee Dishonesty” policy they
had with Zurich Insurance. It came out in
court that the head of Auditing of Best Buy
applied for this increase knowing it was
investigating this but lied on the application
and was accused of insurance fraud-this story
is in the process of being exposed. The government
witness, the one who pleaded to the very Judge
in this trial, took BACK his confession! He did
this in the face of DOING MORE time in
prison! The judge told the jury that this witness’s
sentence depended on much he helps the
government!!! And what did he do? He stood up
and admitted he took gifts from all the venders
and he COULD NOT hide these bid-invoice
variances!! The trial also brought out that
all the venders were doing these changes
while the head systems guy knew about these
invoice changes daily! There was a contract
between Best Buy and a third party company,
National Parts, Inc. and this company reported
ALL of these changes to Bedt Buy. Bedt Buy knew
about these changes, accepted them and paid National
Parts who then paid Chip Factory. Because
Best Buy filed this fraudulant claim,
they went after Chip Factory to try and show
these were done fraudulantly. The government
worked with Best Buy to intimidate
and try and scare these people into pleading
guilty but they hung on for justice!!!
The government tried to stop this company
from bringing this insurance company to
trial because finding out that Best Buy filed
this fraudulant claim signed by the head auditor
of Best Buy, the guy who WORKED with
the government to charge these people, would
destroy the governments case! The very
insurance company who fell victim to this
fraudulant claim WANTED to testify at this
trial and the government tried to stop the
truth from coming out and by trying to
do this, was protecting Best Buy!! Is this
large corporate greed meeting corrupt
government at the expense of a 20 year
old company that was started by a woman
out of her basement? Why did the government
send 24 agents 360 miles to raid these
individuals home? No guns, no drugs,
no prior record….just a terrified 6 year
old girl holding onto her mom’s leg as they
ransacked their home for 13 hours! They took
5 small boxes of personal items!! Spent
hundreds of thousands of tax payer dollars only
to leave a 6 yr old girl and their family
destroyed because Best Buy had a “hunch”
that they engaged in a conspiracy, only
to find there was none! The government’s
“star key” sole witness turned his plea
around at trial. One has to ask: would the
federal gov drive 24 agents 360 miles if you
or your “small” business had a “hunch”??
Again, big local corporate influence, Best Buy,
convincing their local Feds in Minneapolis
to intimidate this family!! This trial proved
all of this. When the government’s witness
turned on the government, the handwriting
was on the wall.
This case is a bunch of Bull. They picked
on this company and used the government
as their collection agency. These are good
people and the media twisted the story.
Every Best Buy ofucial knew all these venders
were making changes to their bid prices
due to quality….it came out in court. Jury
didn’t care and picked on them out of jealousy.
Big business ganging up with corrupt government
to bring this couple down!! Tragic.
We all love to push for the underdog in situations like this but in this case, the underdog got caught taking too many dog bones. When you openly participate in fraud be prepared to suffer the consequences of the law. Fraud is fraud.