Inside the takedown of a multimillion dollar used phone & laptop scheme
Customers celebrate now that the notorious sell-us-your-used-electronics company is shut down.
The employee yelled as he drove by.
“F—k you!” he screamed through the open car window.
That was his answer to my question—why was his company, Desktop and Laptop Repair in Sparks, Nevada, getting thousands of complaints with the Better Business Bureau?
Now that employee and dozens of others are out of work. The Federal Trade Commission shut down this phone and laptop buyback operation that left many customers feeling ripped off.
“They were scamming people and they didn’t have a conscience about it,” customer Tiffany Narveson of McMinnville, Oregon told Archer News. “I feel really glad that it’s been shut down so they can’t really scam anybody else.”
But documents reveal that the head of the company, Vadim Kruchinin—aka David Kruchin—may be trying to lie and scheme his way out of responsibility, even now, after the federal crackdown on his business.
A report filed last week says he showed “blatant disregard” for a judge’s order and tried to siphon off money for himself.
The scheme worked like this, according to the FTC—you saw a site online that offered you a great price for your used phone or laptop. You sent your device in with the promise that you could get it back if you didn’t get the price you wanted. But when you received a lowball offer of less than 10% of the promised price, the company refused to give you your phone or laptop back.
“It was very bad,” said Narveson, who said she sent in six-month-old Samsung S5 Active with the promise of $433 in return, but was given a check—that bounced—for less than $50.
When she tried to get her phone back, the employee hung up on her, she said.
“I just thought that they would continue on with scamming and taking advantage of people,” she added.
Like a laptop chop shop, the company dismantled used laptops and sold the parts on eBay, Amazon and other sites, according to the FTC. The company sold off the used phones as well, the document said.
Image of one of Laptop and Desktop Repair’s many sites before it was shut down.
As an investigate reporter for a Portland, Oregon television station, I worked with a local used-tech store to test out Laptop and Desktop Repair last spring.
We documented on camera as Nick Robitsch of CompRite sent in a used-but-in-good-condition iPhone 4S with a value at the time of about $50.
The company uses many names. In this case, it was eCycle Best, promising us $93, but upon receiving the phone, declaring a payout of only $7.
When we called to ask for the phone back, the employee told us we were lying about the condition of the phone and hung up.
Finally, after more than 2,000 similar complaints with the Better Business Bureau, the FTC moved in.
“Because of its deceptive business practices, LDR [Laptop and Desktop Repair] has reaped millions of dollars from consumers in this district and throughout the United States by pulling a classic ‘bait and switch’ on those who attempt to sell their devices to the Company,” the FTC charged in its complaint dated September 26.
Google Maps image of the Laptop & Desktop Repair warehouse in Sparks, Nevada.
On the morning of September 29, local police, agents of the FTC, and representatives from Hays Financial Consulting gathered near the Laptop and Desktop Repair office and warehouse in Sparks.
Hays Financial Consulting had been appointed as the ‘Receiver,’ the company that would take over Laptop and Desktop Repair from the owner, as ordered by a judge.
Police officers moved in first, entering the building and telling employees to step away from their computers and desks, according to the Receiver’s First Status Report.
Then, a process server gave Kruchinin a temporary restraining order. The FTC immediately began copying all hard drives and computer data. Hays Financial Consulting representatives collected all keys and swipe cards, started looking for critical financial records, and brought in a locksmith to change the locks.
The approximately 50 workers at Laptop and Desktop repair were mostly cooperative, some saying they expected this to happen. But Kruchinin himself was not, the report said.
Recent shipment of phones and laptops found inside Laptop & Desktop Repair’s warehouse. Image via Hays Financial Consulting
Not cooperative, not credible
While other employees filled out questionnaires and answered questions, Kruchinin stonewalled, the report said.
Representatives asked him for the logins and passwords for his computer accounts. Suddenly, Kruchinin became very forgetful.
“Mr. Kruchinin claimed he could not remember his password and claimed it was written on a piece of paper in his office which he was unable to locate,” the report said.
Those claims were found to be not credible, according to the document.
Though the company claimed to give you “top dollar” for your used tech, customers received offers far below the quoted price and market value, the FTC charged.
Who set the prices at Laptop and Desktop Repair?
Employees told Hays Financial Consulting that a computer program automatically set the prices.
The person who set up the computer program then said Kruchinin set the prices.
“Mr. Kruchinin denied setting the prices and claimed that the prices were set by lower level employees, a claim which did not seem credible to the Receiver,” the report said.
Questionnaire for Laptop & Desktop Repair employees. Image via Hays Financial Consulting.
The search for crucial business documents soon hit a wall, the report shows.
Investigators said they found the person who ran Laptop and Desktop Repair’s computers, also one of only two people who had access to the company’s inventory records.
At first, he was cooperative and agreed to print out the inventory reports, according to the Receiver documents, but then said he had to go pick up his child, with a promise he would return. He never did, the report said.
The report said Kruchinin himself refused to produce the records.
Archer News tried to contact Kruchinin through e-mail addresses, phone numbers and attorneys representing the business, but did not receive a response.
Phones and laptop parts at Laptop & Desktop Repair warehouse. Image via Hays Financial Consulting
Kruchinin was instructed to freeze company assets in the temporary restraining order, but did not do so, the report said.
He transferred $22,000 from PayPal accounts to a company called Happy Smile or Happy Smiles, according to the Receiver’s investigation.
Happy Smiles is a company registered to Kruchinin’s home address, the report said, and the registered agent of the company is a woman with whom Kruchinin is “romantically involved.”
“It is clear to the Receiver that Mr. Kruchinin has blatantly disregarded the TRO [temporary restraining order],” the report concluded.
How much money Kruchinin took from customers—and where that money went—is a mystery, the report said.
It shows that Laptop and Desktop Repair’s financial records may be inaccurate, the company laden with debt, and Kruchinin’s plans to transform the company into something new—untenable.
His plan, as laid out in the report, was to stop buying phones and laptops from individual customers, and instead buy equipment from wholesalers only.
Kruchinin showed a summary of his so-called “Warehouse Plan” that estimated a profit of $60 per phone. But investigators said they found a spreadsheet that revealed an average profit of $26 per phone, and determined that Kruchinin was likely “exaggerating the estimated profitability of this business.”
This Warehouse Plan also would not generate enough money to pay off all of his unhappy customers, according to the Receiver report.
Citing these and other problems, like Kruchinin’s “lack of transparency” and “failure to cooperate,” Hays Financial Consulting decided that Desktop and Laptop Repair should be closed for good.
Phone testing area at Laptop & Desktop Repair warehouse. Image via Hays Financial Consulting
The next steps
The search for financial records continues. Kruchinin will get to argue his side in court. And the FTC is asking anyone who was impacted by Laptop and Desktop Repair’s operation to let the agency know.
“If they have not filed a complaint with the FTC, it’s important that they do that,” the FTC’s Jay Mayfield told Archer News. “That’s vital to us to get an understanding of how many consumers are involved.”
You can file a complaint through this link or call 877-FTC-HELP.
The FTC said Laptop and Desktop Repair also operated under other names, including 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.
For many customers, the takedown is a victory. The company that seemed to send the constant message of “F—k you” to customers and people who questioned its business practices is gone, the locks changed and websites shut down.
“Even though it doesn’t help those who were scammed, it does stop them from scamming more people and sends the message ‘You will be caught if you break the law,’” said Narveson.
“I’m just glad that it worked out,” said Robitsch. “Because people were getting screwed.”