A new investigative piece from Fortune describes how Manhattan resident Dina Wein Reis allegedly pulled a fast one on dozens of consumer product giants, including Procter & Gamble, Unilever, and Hershey, in “exquisitely orchestrated scams” that netted as much as $15 million a year.
The story came out last year, but now we know much more about how the alleged fraud went down.
Wein Reis, a self-described businesswoman, film producer, and philanthropist, was a “diverter,” a player in “the little-known but large grey market in which consumer goods are bought and sold in channels unauthorised by manufacturers. Diversion is not necessarily illegal. But the way Wein Reis did it was fraud, prosecutors allege.”
Here’s how it worked: Wein Reis would cold-call middle- and upper-level marketing executives with a high-paying job offer to replace her as the head of her conglomerate. After flying them to New York to discuss, she’d also persuade them to sell her their company’s merchandise at huge discounts, promising to give the products to schools, senior centres, Native American reservations, or military bases as part of a “sampling program.” She would then resell the goods to other middle-men.
Wein Reis also told the sellers that if the program were successful, the companies would gain exclusive access to these hard-to-reach markets through her “National Distribution Program,” which didn’t exist.
Some of those duped were Roche, who says Wein Reis bilked it out of $10 million of diabetes-testing equipment; Unilever, which put its losses at $2.23 million in a deal involving detergent; and Procter & Gamble says it handed over several million dollars’ worth of shampoo.
Some juicy details:
- The feds have uncovered more than 100 bank accounts, some overseas.
- She used multiple aliases to run more than 100 shell companies.
- FBI agents carted off scores of necklaces and watches, a pair of Louis XVI footstools, two Bugatti throne chairs, a pair of Empire sleigh beds, and a 1920s cast-iron vanity from Reis’ six-story Beaux Arts townhouse on the Upper West Side.
- She has luxurious homes in Westhampton Beach, N.Y., Bal Harbor, Fla., and Jerusalem. Her Manhattan townhouse was featured in Architectural Digest.
- She cultivated friendships in New York society, hosting lavish parties for the Whitney Museum of American Art.
It’s not quite on the scale as Madoff or Stanford, but the scheme appears just as brazen.
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