The FBI today said it broke up what it called one of the largest credit card, cyber-fraud schemes in its history - a $200M scam that created more than 7,000 false identities and tens of thousands of fake credit cards.
The FBI said it arrested 13 people involved in the scam the agency said maintained more than 1,800 "drop addresses," located across the country including houses, apartments, and post office boxes, which they used as the mailing addresses of the false identities.
The scam involved a three-step process in which the defendants would:
■"Make up" a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus.
■"Pump up" the credit of the false identity by providing false information about that identity's creditworthiness to the credit bureaus. Believing the furnished information to be accurate, the credit bureaus would incorporate this material into the false identity's credit report, making it appear that the false identity had excellent credit.
■"Run up" large loans using the false identity. The higher the fraudulent credit score, the larger the loans that the defendants could obtain. These loans were never repaid, and the defendants reaped the profits.
According to the FBI the defendants then created dozens of sham companies that did little or no legitimate business, obtained credit card terminals for the companies, and then ran up charges on the fraud cards. To accept payments in the form of credit cards, a business must establish a merchant account with an entity known as a merchant processor. The merchant processor provides the business with equipment to process credit cards, receives payments from credit card companies for credit cards run at the business, and deposits those payments, minus a fee, into the business' bank account. When the merchant processors shut down accounts operated by the conspirators for fraud, they would apply for new terminals and create new companies, the FBI stated.
The FBI said sham companies also served as "furnishers," providing the credit bureaus with false information about the credit history of numerous false identities of people who purportedly worked at or owned the sham companies. The defendants used sophisticated methods-including a network of black-market businesses called "tradelines" providers-to commit fraud.
The conspiracy generated enormous profits for the defendants-even though they spent millions of dollars sustaining the elaborate network of drop addresses and running credit reports on the thousands of false identities, the FBI said.
Records of the New York and New Jersey Departments of Labor reveal that many of the defendants have no reported legitimate employment in the last five years. Nonetheless, the defendants used the proceeds of the criminal enterprise to buy luxury automobiles, electronics, spa treatments, expensive clothing, and millions of dollars in gold. They also stockpiled large sums of cash. Law enforcement discovered approximately $70,000 in cash in the oven of one defendant, the FBI said.
The defendants were sophisticated in their money dealings as well. An analysis of 169 bank accounts of the defendants, sham companies, and complicit businesses has identified $60 million dollars in proceeds that flowed through the accounts, much of it withdrawn in cash. The conspirators wired millions of dollars to Pakistan, India, the United Arab Emirates, Canada, Romania, China, and Japan. Due to the massive scope of the conspiracy, which involved over 25,000 fraudulent credit cards, loss calculations are ongoing. Final figures may grow beyond the present confirmed losses of more than $200 million, the FBI said.
The list of defendants reads like this:
Babar Quereshi, 59 ,Iselin, New Jersey
Muhammad Shafiq, 38 ,Bellerose, New York
Ijaz Butt, 53 ,Hicksville, New York
Qaiser Khan, 48, Valley Stream, New York
Shafique Ahmed, 52, Floral Park, New York
Habib Chaudhary, 45, Valley Stream, New York
Raghbir Singh, 57 ,Hicksville, New York
Muhammad Naveed, 35, Flushing, New York
Khawaja Ikram 40, Staten Island, New York
Nasreen Akhtar, 37, Jersey City, New Jersey
Mohammad Khan, 48, Staten Island, New York
Azhar Ikram, 39, Howard Beach, New York
Shahid Raza, a/k/a "Abid Mian," 44 ,Valley Stream, New York
Vernina Adams, 31, Philadelphia, Pennsylvania
Sat Verma, 60, Iselin, New Jersey
Vijay Verma, 45, Iselin, New Jersey
Tarsem Lal ,74 ,Iselin, New Jersey
Vinod Dadlani, 49 ,Lyndhurst, New Jersey
Cyber-crime investigators from the FBI said the investigation of these alleges crimes has been ongoing for more than 18 months. It previously resulted in the arrest of four other individuals and the seizure of more than $2 million in gold from a jewelry store in Jersey City. The bank fraud count with which the defendants are charged is punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million.
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