Thief Says He Lost $260,000 Of Stolen Money By Betting On GameStop Shares 

Ramish Zafar
A protestor showing his support for GameStop after trading platform Robinhood restricted the company's shares from being traded in 2021. Image: Ian C. Bates/The New York Times

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

A software engineer working for an e-commerce retailer in Seattle lost substantial amounts of money that he stole from the company by betting them on GameStop shares, according to his statements to the police. Ermenildo Castro, who worked for Zulily, LLC, a company that primarily sells products for children and women, was arrested by the police in July, and the police report and court documents share more details about his theft and plans for the money. They suggest that Castro stole over a quarter of a million dollars by routing shipping fees into his account and more than $40,000 by tweaking Zulily's code to buy items at steep discounts. After being questioned by the authorities, the engineer claimed that the money was now lost as he bet it all on GameStop shares.

Engineer Admits To Stealing Funds From Company By Diverting Shipping Fees To Personal Account

The 'heist' was inspired by the 1999 office comedy Office Space, where employees take revenge on the company for downsizing by installing a virus on their company's computers. This virus lets them divert pennies to personal accounts, accumulating in large amounts over time.

While Castro's scheme did not involve him siphoning off mere pennies, he did admit to using a similar software trick to divert funds to a personal account. Details suggest that by modifying Zulily's software, the engineer charged customers more for shipping and often simply sent their shipping fees to his Stripe account.

He has now been charged with two counts of theft and one count of identity theft in a scheme that also involved him buying items at discounts and shipping them to a woman that he met on the dating application Tinder. The charges have been filed in the King County Superior Court in Seattle, and Castro was released soon after his arrest, according to the police report.

Zulily also laid off corporate workers early last year as part of efforts to stem operating losses by its parent company. Image: Taylor Soper/GeekWire

When questioned by the police on where the money that he diverted to his account went, Castro replied that it was "gone" and that he had invested it in GameStop Corporation's share options. Prosecutors will, of course, scrutinize the transactions of the purported share purchases, including their timing. He had embezzled the funds between February and June 2022, which is crucial when we take a look at GameStop's share price movements for that period.

While GameStop's shares are down by more than 53% over the year, the shares, which were trading at $35 during the first week of 2022, had dipped to $19 by the end of March's second week. However, over the next two weeks, they would peak at $47.40, just two dollars shy of the current 52-week high of 49.85. After dipping again to $20 in May, the shares would close June by trading at close to $30. This implies that had Castro bought the shares in March, he could have scored sizeable returns on his investment.

Court documents show that a little over $260,000 was routed to Castro's account and that he 'stole' another $40,842 by reducing the prices of items on Zulily and then buying them. These items were shipped to his house and to a friend he met on Tinder - who used to send him item requests. Zulily discovered the price adjustment fraud in May, and a corporate security member from Zulily visited Castro's house the next month to discover packed Zulily boxes.

Castro was fired from Zulily later in June, and his company laptop would become his undoing as it contained a document titled "OfficeSpace Project.” This file laid out his plans in detail, including the routing of funds to the account and actions to hide the fraud from his former employer. All in all, Castro ordered more than a thousand items from Zulily at discounted prices. When questioned about shipping orders to his Tinder girlfriend, he said that he was "peacocking" - a slang term describing attempts to impress someone.

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