RIAA's New Policy Isn't About Deterrence, It's About Sidestepping Due Process

Fry's Exec Funnelled $65 Million To Himself For Gambling Debts

from the want-to-know-why-Fry's-is-expensive? dept

Mon, Dec 22nd 2008 6:04pm — Mike Masnick

Silicon Valley folks certainly know Fry's -- the electronics superstore that's probably as well known for its poor customer service as its vast selection. However, apparently a top exec at the company, who had worked his way up over the course of 20 years from a starting job as a floor sales guy has now been arrested for a massive fraud, creating kickbacks from vendors and potentially defrauding the company of over $65 million -- much of it used to pay off gambling debts (apparently he still owes a lot more -- potentially another $100 million from the sound of it) incurred by frequently taking the Fry's corporate jet to Vegas. The guy basically set up a separate front company that he funneled millions of dollars to in the form of exorbitant commissions and kickbacks from vendors. Apparently, while Fry's makes you go to hell and back to justify returning a computer component, its own internal auditing process missed $65 million going out the door.

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Filed Under: ausaf umar siddiqui, fraud
Companies: fry's

37 Comments

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TEA-Time, 22 Dec 2008 @ 6:47pm

I think he was just able to resist the super-mega impulse item maze. Heh
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Haywood, 22 Dec 2008 @ 6:51pm

Not one cent
A couple of years ago I bought an LCD monitor on line from them & they canceled my order saying they were out of stock. Later the same day they put the same monitor on sale for a higher price, not one red cent since. Now an even better reason, thanks. In the stores most of their components are dated anyhow, if you want the latest and greatest & good prices as well, New Egg is the best option.
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Todd Miller, 22 Dec 2008 @ 7:05pm

Returns to Fry's
I've been shopping at Fry's in Sacramento,CA for at least 5 years now, and have had NO problems returning anything.
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Alex Hagen, 22 Dec 2008 @ 7:06pm

Fry's returns
"Apparently, while Fry's makes you go to hell and back to justify returning a computer component"

What? I have never had Fry's so much as blink when returning anything. Ever. Their liberal return policy is one of the main reasons I keep going back.
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Anonymous Coward, 22 Dec 2008 @ 7:38pm

Well, you must not be paying attention...
I totally agree with the article.

Fry's has amongst the worst customer service on the planet. Especially when you consider that they have such a high employee to customer ratio.

Couple that with the dismal treatment when you have a return which includes opening boxes that are clearly sealed as new.

Add in the fact that they have started adding a 15 to 20% restocking charge sticker to some of their merchandise combined with the fact that their off ad pricing is out of sight. Some of their ad pricing is not so good anymore either.

Then finally the crappy treatment that they added when I tried to have an appliance purchase delivered by them which I will never make that mistake again. Even the delivery people indicated that they were about to quit because of the policies that they had to enforce.

Overall, Fry's is a pain and a half to do business with and I have improved by disposition by forgetting that they are in business.
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Anonymous Coward, 22 Dec 2008 @ 8:04pm

Be grateful
Be grateful you got a Fry's. Here in Michigan we got little to no place to go on a Sunday when your P.S. blows up. Imagine missing CompUSA! A Microcenter an hour drive away. Each time I visit my in-laws in L.A., I make a trip over the hill to Fry's. Freakin candy store for geeks!
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Julie Hoffer, 22 Dec 2008 @ 8:14pm

"Fry's makes you go to hell and back to justify returning a computer component"

I have never had a problem returning parts to Fry's. It is usually cut & dry. The lines are sometimes an issue, but the same could be (and often times are) said for Best Buy or any retail chain that deals with many people at a time.

Sure, the customer service at Frys Sucks for some, but many people enter Frys claiming to know everything while really only knowing little-to-nothing. Try being one-of-many Fry's Floor-Service-Guy who's job it is to, in two seconds, tell the difference between a customer who expects to setup a home-network as if it was as simple as pushing a button on a microwave... and a guy who actually knows what he is doing and is just looking for a hard-to-find/specialized part that he should have initially just ordered online.

Both customers in this scenario will refuse to admit that they themselves are the problem, and will complain that it is customer service that is bad.
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Mojo, 22 Dec 2008 @ 9:18pm

I also have only had good experiences returning stuff at Fry's. I'd bet someone complaining about "going to hell and back" to return something was probably trying to return it well outside the 30 day period.

You know the type... he's usually the one yelling at the clerk for making HIM adhere to policy.
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fryguy, 22 Dec 2008 @ 9:25pm

Re: Well, you must not be paying attention...
"adding a 15 to 20% restocking charge sticker to some of their merchandise"

That happened after 70% return rates for GPS units after holiday weekends and 80% returns on air conditioners after a one week heat wave in the bay area in '07. After Costco (which similar stocking fees on similar products), Fry's has the most liberal return policy of any major electronics retailer.
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Anonymous Coward, 22 Dec 2008 @ 10:01pm

in spite of what the other responders said the individual who wrote the article knows fry. they have a good selection but are way off base on the advertising and they customer service. for a computer company you would think that their own invoicing and database program would work well but it does not. I am in their computer three times because it is too difficult for the clerk to change an address.
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lavi d (profile), 22 Dec 2008 @ 10:25pm

Just Have to Say
...Fry's makes you go to hell and back to justify returning a computer component...
I've never had a problem returning anything to Fry's here in Las Vegas.
I've dealt with my share of insolent, arrogant sales staff, but I've also been served by knowledgeable, helpful and friendly people in the same store.
I've probably cost the company several hundred dollars in time, effort and restock/resale-losses on my returns while using their parts to troubleshoot some nagging problem.
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Mac46, 22 Dec 2008 @ 10:50pm

Not up here
Up here in Oregon, near Portland, Fry's is a good place to go for geek stuff. The service is good, and returning is easy. I do it all the time, and I've never had a problem. Sometimes it takes 20 minutes to get through the line, but that's a small price to pay for trying equipment out. Also, the Fry's people here are friendly and helpful.

I've been at other Fry's, mostly Palo Alto, and it's not as friendly and the service isn't as good, but that's what you get for living in California! ;-)

I also buy a lot from NewEgg. Although there's never a problem with returns, there often have been problems in delivery by UPS, and doing returns by mailorder is a lot more time-consuming than just popping into Fry's.
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LINDA, 22 Dec 2008 @ 11:07pm

WHAT GOES AROUND COMES AROUND
HAHAHAHAHHA!!! try returning a defective item there...they ripped me off big time and would not honor my insurance I paid on a printer ..they never wait on you and consider customers a burdon to even talk to
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Ron Larson (profile), 22 Dec 2008 @ 11:17pm

Who extends $100m in credit to a gambler?
I'm curious about the sentence "apparently he still owes a lot more -- potentially another $100 million from the sound of it)"

What casino was dumb enough to let this guy gamble away $100m on credit? How to they expect to collect it? Perhaps I don't understand because gambling is a dumb waste of money and time to me.

So... do casinos really loan gamblers money?
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Anonymous Coward, 23 Dec 2008 @ 1:08am

"So... do casinos really loan gamblers money?"

Ok. Do you think the term 'High-Roller' was coined in the movie industry and these people do not really exist? Do you think people with very high profit potential for the casino will never get 'red carpet treatment'? Get a clue. Casinos love to loan money to fools easily parted from it.
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senshikaze (profile), 23 Dec 2008 @ 6:24am

fry's
While I agree, Cust. service is not stellar, the customers that walk into a Fry's are not exactly the bright bulbs in the world either. I work in Customer Service in the Tempe, Arizona branch and the customers I got on a daily basis were as stupid as they come. Now, most of the policies there were retared as well (repackageing returned items as new) and the employees were only smarter the customers in how to steal money, but on a whole i liked the store. If you knew what you wanted and avoided sales people like the plague, it was actually an enjoyable experience, even before I started working there. And on another note, my local best buys wouldn't know customer service if it bit them on the ass.
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:Lobo Santo, 23 Dec 2008 @ 6:27am

$65 million
$65 million would buy me like, 3 of EVERYTHING in the Fry's Electronics store...
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Anonymous Coward, 23 Dec 2008 @ 6:46am

over $100 million in gambling debts!!! wow, my new hero.
I wonder how much he spent (spends) on cocaine.
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Robert, 23 Dec 2008 @ 6:49am

Re: Not one cent
I experienced a similar illegal tactic in the Alpharetta store in Georgia. The assistant manager was the biggest @$$hole I'd ever come across.

What happened there is they tried to charge me a higher price at the register than was on the shelf and I called them on it. Naturally, they refused to honor the price. When I went to take a picture of the price with my cellphone, I was met with security.

The illegal activity of this type is so pervasive, I can't help but wonder why they haven't been busted yet.

I'll dance the happy dance the day the Fry brothers go to prison and the entire management staff is looking for handouts on street corners.
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nullop, 23 Dec 2008 @ 7:51am

Fry's
Is it just me or is embezzlement on the upswing? Seems like more and more execs think they can steal the companies money and get away with it. Execs need to know getting your bucks the old fashioned way is still the best way to go-negotiate a ungodly lucrative golden parachute!
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Dave, 23 Dec 2008 @ 8:08am

Fry's
Well what was not talked about is the fact that the "reps" paying out all the "kick-back money" are not even going to get mentioned in all of this. The way I look at it they should be made public.. Lets see who was throwing him the money.. how legal was that action.... well, this maybe over all your heads....
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Tom Rogin, 23 Dec 2008 @ 8:19am

Re: Well, you must not be paying attention...
The onlything you forgot to add was. "If you want any more details, come see me in the video department at Best Buy"
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Petréa Mitchell, 23 Dec 2008 @ 8:32am

The warning sign
For everyone who's wondering if this might be going on at their company, I'd say the red flag should be when your VP of marketing does this:
"He convinced Fry's that the company should eliminate sales representatives on his accounts, and instead, he would act as a middleman between vendors and Fry's."
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Petréa Mitchell, 23 Dec 2008 @ 8:34am

Re: Not up here
I also shop at the Wilsonville, OR store, and the only time I've had reason for complaint was when a laptop repair required it to be sent somewhere else within the Fry's organization and it wound up taking over 2 months.

Maybe it's something to do with the history of whichever store you use? Ours is one of the ones that used to be part of Incredible Universe.
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Anonymous Coward, 23 Dec 2008 @ 8:54am

Re: Returns to Fry's
Well whooptie freakin doo. Want a cookie now?
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nasch, 23 Dec 2008 @ 9:44am

Re: fry's
Now, most of the policies there were retared as well (repackageing returned items as new)

That's not just "retared", that's illegal, isn't it?

and the employees were only smarter the customers in how to steal money, but on a whole i liked the store. If you knew what you wanted and avoided sales people like the plague, it was actually an enjoyable experience, even before I started working there.

So other than the stupid employees that must be avoided, and anti-customer, unethical, possibly illegal policies, it's a great store? I'm curious, what would you categorize as a bad shopping experience? If the merchandise actually falls off the shelf and crushes you?
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nasch, 23 Dec 2008 @ 9:47am

Re: Fry's
You forgot the rest of the process.

1. Negotiate golden parachute
2. Run company into the ground to ensure you're fired
3. Collect on parachute
4. (this is the one I don't understand) Get hired for 6-7 digit salary to helm another company
6. Repeat

Why do companies hire CEOs that just came from failures? I don't get it.
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Anonymous Coward, 23 Dec 2008 @ 10:31am

Re: Re: fry's
L.M.F.A.O.
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devnull, 23 Dec 2008 @ 11:16am

Re: Fry's
getting access to the corp jet doesnt happen unless one of the top execs/owners is on the take too - mr party guy could be the fall guy - commissions from vendors seem to be more lucrative than the products business itself!
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howkriv, 23 Dec 2008 @ 1:40pm

Fry's Service
All my experiences at Fry's have been good. I have returned items after 30 days without a problem, and received store credit.

The sales people have always treated me well, and answered questions accurately. Often they are very busy and answer quickly, or just point me in the right direction, but they do it nicely. One salesman spent quite a bit of time with me and steered me to a very good deal on a factory refurb desktop.

Upper management must have been pretty dense not to catch such major fraud. It is amazing that it was detected only by chance. This magnitude of theft will ultimately be at the expense of the company and the consumer.

Maybe Fry's should have a "We Caught Him" sale.
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casinoworker, 23 Dec 2008 @ 10:55pm

Re:
ill tell you how much he spends on cocaine----NOTHING!!!!!!! he has been a guest at my resort for almost 10 years and the drug scene is not his style....why do you assume that because he was embezzling money you think it is because of drugs??????
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AuthorityDisfigure, 25 Dec 2008 @ 9:36am

Intresting enough the people that complain are probably the ones that pull the door when it clearly says push. So many people coamplain that the odds of someone having a pacemaker odds increase, please go to your local seven eleven and warm yourself a honey bun. Now all this is bad business, but its over. People are people, and it is what it is.
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Antoine Pham, 26 Dec 2008 @ 11:33pm

Re: Who extends $100m in credit to a gambler?
sure they will...depends on your income and assets. They will not loan me as much as they loan him because I don't make that much and have that much assets. Gambling (among other things) is a business (big one), they will lure you in and suck your money dry. People do it out of habit/addiction plus it's a seemingly easy way to "work" for money. Majority of the people are lazy, mediocre, don't think too much and guess who are in the casino gambling (look for the mentioned characteristics)? If I had anything to do with gambling, I want to be the owner because that is where all the money eventually goes to.
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FRY'S FRIENDLY Customer, 27 Dec 2008 @ 11:17pm

Re: WHAT GOES AROUND COMES AROUND
Yeah... HAHAHAHAHHAHAH!!! Laugh to the ground. If you read the return policy on the back of the receipt and stay with it. Fry's has no problem of taking your product back. May be you have damaged the product in your hands, then tried to return to get your money back. Who is at fault? You, the consumer that don't know how to use the product, are to be blame.
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nevernerd, 29 Dec 2008 @ 10:04pm

ppppleease!! like it never happens!!
This is only proof, Eventually the truth comes out, sooner or later, but lets not joke....really...is not like it never happens...Power-->Money--->Opportunity to do more...Money & have more Power....are we surprise over this issue, unethical issues happens everywhere where there are money and power involved, that we just turn around and look the other way just to ignore it..is another thing...but some dummies like this Fry's VP..was eager enough about money that he fell from his own cloud...whether Fry's Customer Service is good or bad (idk 'cause is not in this state) has nothing to do with the enormous corruption we live in. Uncontrollable Power + Money = Corruption..or look at our so distinguish Commander in Chief...yeahh...right ..let's ignore it..right...
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Simple Mind, 7 Jan 2009 @ 7:10pm

fry's receipt checking
The funny thing is that Fry's has a policy of
checking everyone's receipts at the door to make
sure you aren't stealing anything. As an honest
paying customer the practice is demeaning and time
wasting to me. It seems extremely petty to do that
to customers in light of this $65M loss.
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jai, 17 Mar 2009 @ 9:04pm

fry's....
...is a joke.Best buy is the best place to go. Good deals, price matching, and strong helpful customer service.
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