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‘Free tablet’ scammer will pay $2.8 million for rebate scheme

‘Free tablet’ scammer will pay $2.8 million for rebate scheme


There’s no such thing as a free tablet

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This week, New York Attorney General Barbara Underwood announced the conviction and sentencing of a Nevada corporation and its CEO on grand larceny and securities fraud, among other charges. Sungame Corporation and its CEO, Neil Chandran, were ordered to cough up more than $2.8 million in restitution to investors of the scheme, or face up to four years in prison.

Sungame offered an unusual deal: For every $1,000 paid upfront, the company would send you an experimental tablet that could render content in 3D. A few weeks later, Sungame would send you back $1,500 as a rebate, no strings attached. After that, you’d have the option to either hold onto the tablet itself or let Sungame resell it and send you back the profit. As Chandran presented it, it was part of a pre-purchase incentive plan, a way to get inventory moving before the product itself was shipping.

If that sounds too good to be true, it should. Sungame wasn’t actually making tablets — although in 2016, the company did buy 9,000 of Dlodlo’s VR headsets to keep the demos running and the illusion intact. A civil suit claims one victim transferred $230,000 over the course of 2014, only to get the runaround when he asked about the rebate. By the end of the year, the company said he’d be repaid ten times the investment as a reward for his patience. Needless to say, the money never showed up.

At the same time, the tablet sales were inflating Sungame’s earnings — and because Sungame was publicly traded, the rebate scam blew up into outright securities fraud. Chandran was arrested in February 2017, arriving at Los Angeles International Airport on a flight from Hong Kong. After today’s plea, he’s barred from trading securities in New York State.