Online retailer charged in $5-million scam

A Long Island man was charged by federal authorities Friday with scamming customers of his Internet discount clothing business out of $5 million in 2008.

Daniel Greenberg, 38, of Lawrence, was accused of retaining credit and debit card data of people who bought merchandise from Classic Closeouts Llc, his Internet retailer, and then later billing for phony purchases more than 70,000 times.

When hundreds of customers challenged the charges, the Brooklyn federal court complaint said, Greenberg persuaded credit card companies that they were valid sign-up fees for what he claimed was a frequent-shopper club.

Classic Closeouts, operating out of an office in Hempstead, had 30 to 40 employees in 2008. Greenberg allegedly billed many customers' accounts multiple times, until they canceled their credit cards, according to the complaint.

The scam generated more than 1,000 consumer complaints to various agencies in 2008, and a Federal Trade Commission lawsuit, the complaint said.

If convicted, Greenberg faces up to 20 years in prison for wire fraud.

He was held without bail Friday, pending another hearing next week. His lawyer, Leo Kimel, said he was innocent.

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"He definitely says he's not guilty," Kimel said. "He was a businessman, he did a lot of transactions, and this was just part of the business. He denies any criminal act."