Marketer Who Defrauded eBay Gets 5 Months in Federal Prison

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May 3 2014 8:00 AM

Marketer Who Defrauded eBay Gets 5 Months in Federal Prison

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There's a party for justice inside HQ.

Photo by Justin Sullivan/Getty Images

This post first appeared on Business Insider

Shawn Hogan, the CEO of a successful online marketing company called Digital Point Solutions, was sentenced to five months in federal prison for his role in defrauding eBay of an alleged $28 million in online marketing fees.

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He must remain on three years’ probation after that, and was fined $25,000. Hogan will enter prison on July 14, according to federal court records. Hogan also previously reached a civil settlement with eBay.

The sentence brings one of eBay’s strangest chapters to a close.

Affiliate marketers are people who drive traffic to eBay and take a cut when the traffic results in a sale. eBay had secretly cooperated with the FBI since June 2006 to root out affiliate marketers whose success was a bit too good to be true. eBay had even created an online sting operation, called “Trip Wire,” to monitor the traffic Hogan was sending.

eBay initially alleged that Hogan had rigged eBay’s system so that it falsely credited him for sales he did not generate. He did this by seeding unknowing users with hundreds of thousands of bits of tracking code, or “cookies.” If any of those people bought something on eBay, the code signaled to eBay that Hogan should get a cut of the sale—even though he had done nothing to promote eBay.

The sting also netted Brian Dunning, eBay’s second biggest affiliate marketer. The company had paid Hogan and Dunning a combined $35 million in commissions over the years, court papers say. Both men pleaded guilty to wire fraud. Dunning’s sentencing is later this year.

In his defense, Hogan had alleged that eBay had known about how he developed traffic for the site for years, and even encouraged him to keep doing it. The company once wined and dined him at an expensive Las Vegas restaurant, and offered him credit for private jet flights, he has said. But no evidence of wrongdoing by any eBay employee was produced in the case.

Before he was indicted, Hogan had become the No. 1 affiliate marketer at eBay out of an army of 26,000 others. He was also ranked No. 2 among Google’s AdSense partners in 2013.

Correction, May 5, 2014: This headline originally misstated the length of sentencing. It was five months, not five years. We were a bit over-zealous. Sorry.

Jim Edwards is a deputy editor at Business Insider. Follow him on Twitter.

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