The man behind a massive used phone scheme is accused of violating court orders.

“Returned to sender.”

That’s the stamp on hundreds of boxes of used phones, now on their way back to customers who sent them in to Laptop and Desktop Repair in Sparks, Nevada.

Those customers didn’t get the promised “top dollar” for their phones and laptops, according to the Federal Trade Commission, but some will get their devices back from this used tech scheme that generated more than 2,500 customer complaints.

Is it ‘game over’ for the alleged mastermind of the scheme?

No. Documents from the FTC show attorneys worry he may be cooking up an escape plan.

The company owner, Vadim Kruchinin—aka David Kruchin—may be stockpiling gold and silver bars to skip out on the legal troubles now facing him in the courts, according to an FTC motion filed on October 26.

“Plaintiffs are concerned that Defendant Kruchinin may have purchased the precious metals to make his assets easily transportable and concealable and that he might be planning to leave the United States,” the motion said.

“That’s just mind blowing to me,” said customer Melissa Williamson, who said she lost her phone to the company in August. “He’s a thief and now possibly can leave the country and get away with it all.”

Boxes of used devices at Laptop & Desktop Repair in Sparks, Nevada. Image via Hays Financial Consulting

Contempt of court?

The FTC shut down Desktop and Laptop Repair on September 29, serving the owner with a court order saying he had to freeze his assets and turn them over to the receiver, Hays Financial Consulting.

The receiver is investigating company records to see if there is any way to get money for customers who may have been ripped off.

But Kruchinin violated that court order “almost immediately,” the FTC said.

Within hours, the motion said, he began to systematically hide his assets.

He transferred more than $100,000 from a Charles Schwab account and spent nearly all of it on gold and silver bars, according to the documents.

He also made multiple stock trades and transferred money to a company belonging to his alleged romantic partner, adding up to more than $150,000 that should be in the hands of the receiver, the FTC said.

FTC documents say the company owner tried to hide money by purchasing gold bars after the FTC shut his company down and froze assets. 

Connections in the Philippines

Kruchinin has business connections in the Philippines. He also asked the receiver for his passport—possible signs that he will take off with his easy-to-transport precious metal bricks and leave the FTC with no way to refund customers, the documents said.

“While Defendant Kruchinin wishing to obtain his passport is not in and of itself problematic, when coupled with his failure to repatriate his assets, his purchase of foreign currency, and his purchase of easily transported and concealed gold bars, Plaintiffs are concerned that Defendant Kruchinin may attempt to leave the United States, taking with him his assets and the Court’s ability to redress consumers at the end of this case,” the motion read.”

FTC attorneys said Kruchinin should be held in contempt of court.

Archer News contacted an attorney who represented Kruchinin, but received no response.

Court documents say the company owner had business connections with a company called One Jump Web in the Philippines.

“Totally disgusted”

These latest allegations from the FTC makes some customers’ lips curl in distaste.

“I am totally disgusted, mad and in shock that he used people’s products and money he promised us for his own personal gain,” said Tiffany Narveson, who sent her used phone in.

The company, working under the name eCycle Best, told her she would get $433, but upon receiving the phone, offered her less than $50 and refused to give her the phone back, she said.

“I worked hard for that phone I had and took his company and their word—just to find out he ripped me off for his personal gain ‘cause he didn’t want to work like the rest of us,” she told Archer News.

Desktop and Laptop Repair created multiple websites with names like cashforiphones.com, cashforlaptops.com, ecyclebest.com, smartphonetraders.com, sell-your-cell.com, smartphonetraders.com, cellphonecity.com, laptopaid.com, 1aptopheaven.com, 1aptopsintocash.com, ecyclewireless.com, iphonepartspro.com, ecyclepawnbrokers.com, cashforapples.com, cashforberrys.com, cashforprinters.com, cashforipads.com, according to the FTC.

More than 2600 customers sent complaints in to the Better Business Bureau saying they lost their phones, tablets and laptops over false promises. 

Returned to sender

If you sent your phone to one of Laptop and Desktop Repair’s companies at the end of September, you may get it back.

Investigators said they found hundreds of unopened packages at the company’s Sparks warehouse.

About 800 unopened boxes have been sent back to customers, and another 700 to 800 boxes that customers sent through a third-party carrier called Newgistics are on their way home and should arrive by Thanksgiving, according to Hays Financial Consulting. 

But there are many more devices and parts that Laptop and Desktop Repair workers had already received and processed—a warehouse crammed full of them.

And some customers are asking if they will get those devices back.

“If a phone was in there that still had the customer data on it, ideally we would just return that phone. That’s what everybody wants to happen.” said Greg Hays of Hays Financial Consulting. “It’s making it happen that’s hard.”

800 unopened boxes have been returned to customers so far, according to Hays Financial Consulting. Image via Hays Financial Consulting

Not so easy

One problem—the receiver’s report shows that Laptop and Desktop Repair owes money for loans, credit cards, employee payroll and more, so multiple parties could have claims on the many items in the warehouse. 

“It’s a legal issue we’re going to have to work through,” Hays told Archer News. “The secured creditors have liens on the inventory. If the item was in inventory, if it was in the warehouse, they’ll have an interest in that.”

If the parties work through that issue, there is still another problem—will there be enough money left over to pay for workers to identify and ship a large warehouse full of used tech?

“It would take a long time for somebody to go in and take all those items, box them up, put the postage on them, arrange for shipping and ship them all out,” Hays explained.

And who would pay those workers?

“It takes money to do that,” Hays added. “There’s no magic money. There’s nobody stepping forward saying, ‘I feel sorry for these customers,’ and putting up all this money.”

No magic money

That means money has to come from the defendant—Laptop and Desktop Repair—according to Hays.

One plan—Hays Financial Consulting is asking for approval to take over another one of Kruchinin’s businesses, called Coney Island 84.

Coney Island 84 owns the warehouse building where Laptop and Desktop Repair is located, documents showed.

Sell the warehouse, and there could be money to help get devices back to customers, or even some money back for customers whose devices are long gone, Hays said.

A judge now has to approve or deny the plan to take over Coney Island 84.

In addition, the FTC is trying to keep Kruchinin from leaving the country with a stockpile of precious metals, according to the motion filed on October 26.

“If we had the gold bars, we could sell them. We’d have the money. We’d hire the employees back and we’d ship the phones back. We’d do that right away,” Hays said.

Part of the inventory at the Laptop & Desktop Repair warehouse in Sparks, Nevada. Image via Hays Financial Consulting.

Long haul

It will take months to go through the process and see what shakes out for customers, Hays said. 

“It’s way too premature to know if there’s any money to pay some of these people,” he said.

“If there’s money, we will set up a claims process and send out a claim form to these people. But we haven’t done that yet. It’s just too early to know,” Hays added.

You can file a complaint about Laptop and Desktop Repair with the FTC.

You can sign up for e-mail alerts about the case through the Hays Financial Consulting website.

You can also look for updates on Archer News, as well as through @KerryTNews on Twitter and Kerry Tomlinson News on Facebook.

Some customers hope Kruchinin is held accountable for the scheme that left so many customers angry.

“He is a coward, and to think my phone refund just went into his pocket makes me sick to my stomach,” Narveson said.

“We need better policies or legislation to keep people like him in the country to face the possible charges against him,” said Williamson.

See also:

Inside the Takedown of a Multimillion Dollar Used Phone & Laptop Scheme

The Hunt for Phones and Money after Used Tech Scheme Shutdown