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The scheme spanned at least 8 countries and 28 states, said Fishman, who has scheduled a late-morning news conference to formally announce indictments against 18 people identified either by their real names or phony identities. Federal agents in four states arrested 13 of them today.
Among them: Vinod Dadlani, 49, of Lyndhurst, who, Fishman said, processed bogus credit card transactions at his Tanishq Jewels shop on Newark Avenue in Jersey City.
The co-conspirators and their associates “constructed an elaborate network of false identities,” maintaining more than 1,800 “drop” addresses, including houses, apartments, and post office boxes that they used as mailing addresses, according to a complaint on file in U.S. District Court in Newark.
They also created dozens of sham companies “that did little or no legitimate business, obtained credit card terminals for the Sham Companies, and then ran up charges on the fraudulently obtained credit cards,” it says.
The defendants also relied upon complicit businesses, including several jewelry stores in the Jersey City area, to extract money from the bogus cards, the complaint says.
Whenever legitimate merchant processors shut down a card, the ring simply created new companies and applied for new terminals, the government said.
The ill-gotten gains were used to buy luxury cars, electronics, spa treatments, high-end clothing and millions of dollars in gold, Fishman said.
The defendants also “stockpiled large sums of cash” – including $68,000 that federal agents found in a kitchen oven.
Many of the co-conspirators “have no reported legitimate employment in the last five years,” the complaint says. “The bank accounts and purchases of these individuals, however, tell a far different story.”
For instance, one of them made a $500,000 wire transfer last September. Government agents also tracked more than $1 million “that has flowed through just one” bank account of another defendant since 2005, the complaint says.
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The three-step process:
“Makeup”: First, the defendants created false identities using bogus documents and credit profiles with major credit bureaus;
“Pump up”: Then they boosted 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 unwittingly incorporate this material into the false identity’s credit report, making it appear that the false identity had excellent credit,” the federal complaint alleges;
“Run up”: Then the defendants would “run up” large loans using the false identity. “The higher the fraudulent credit score, the larger the loans that the defendants could obtain,” the complaint says. “These loans were never repaid, and the defendants reaped the profits.”
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According to the complaint:
“Once the defendants made up an identity and pumped up the identity’s credit, they ran 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.”
One of the defendants, Vernina Adams, allowed the organization to post primary tradelines on credit histories of fake identities for lines of credit that didn’t exist, using her business, “One Stop Credit Shop,” the government alleges.
“Other co-conspirators contacted [Adams], who then obtained fake lines of credit for the false identities connected to the [organization] to help improve the credit score of the false identity.”
Adams also offered “credit card sweeps” – methods of repairing the credit of the bogus identities after fraudulent loans were rung up by claiming identity theft.
“The credit card sweep scam sometimes involved submission of false police reports,” the complaint on file in Newark says.
The profits didn’t only go to a few ringleaders, the government says: The enterprise “supported a massive network of co-conspirators over a period of several years.”
Millions of dollars were also spent “sustaining the elaborate network of drop addresses and running credit reports on the thousands of false identities.”
An analysis of at least 169 bank accounts identified more than $60 million dollars in proceeds that moved from sham companies to individuals – as well as millions of dollars wired overseas to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan, the complaint says.
The operation spanned at least 28 states, including Alabama, Arizona, California, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.
This morning, hundreds of law enforcement officers from the FBI and the U.S. Postal Inspection Service arrested 13 defendants and searched 13 locations in New Jersey, New York, Pennsylvania, and Connecticut.
All of the defendants are charged with one count of bank fraud.
Those arrested were scheduled to appear later today before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.
“This type of fraud increases the costs of doing business for every American consumer, every day,” Fishman said.
“Through their greed and their arrogance, the individuals arrested today and their conspirators allegedly harmed not only the credit card issuers, but everyone who deals with increased interest rates and fees because of the money sucked out of the system by criminals acting in fraud rings like this one.”
Also attending this morning’s news conference at Fishman’s office in Newark were FBI Acting Special-Agent-in-Charge David Velazquez and Acting U.S. Postal Inspector-in-Charge Marie Kelokates.
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