South Florida Criminal Attorneys Blog
In one of the biggest schemes ever encountered by the United States Government relating to credit card fraud, with definitive losses to financial institutions and independent businesses of more than $200 million in phony charges, two men have pleaded guilty before two separate U.S. Magistrate Judges within a period of six days
Statements made in court, and documents filed in this case establish that Shafique Ahmed, 52, of Floral Park, New York and Qaiser Khan, 49, of Valley Stream, New York were members of a group who put together more than 7,000 fabricated identities for the purpose of obtaining tens of thousands of credit cards. The two men were originally charged in a February roundup of eighteen individuals by special agents of the FBI’s Cyber Division. The original arrests were announced by U.S. Attorney Paul J. Fishman of the Department of Justice. At the time, hundreds of FBI agents along with U.S. Postal Inspection Service officers arrested the eighteen suspects in separate locations spanning across New York, New Jersey, Connecticut and Pennsylvania. The actual illegal operation is thought to expand through dozens of states as well as having International connections.
Mr. Ahmed pleaded guilty before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court on September 11, to an allegation which charged him with conspiracy to commit bank fraud. Less than a week later, Mr. Khan, one of his codefendants in the case, pleaded guilty to the same charge before a separate judge, U.S. Magistrate Judge Madeline Cox Arleo.
Previously, during a four-week period between July 24 and August 7, four others of the accused parties pleaded guilty to separate informations relating to the case. On July 24 Mohammad Khan, 49, of Staten Island pleaded guilty to the charge of conspiracy to defraud the United States. On July 31 both Raghbir Singh, 57, of Hicksville, New York and Vernina Adams, 31, of Philadelphia, Pennsylvania pleaded guilty to one count each of conspiracy to commit bank fraud, and finally on August 7, Muhammad Shafiq, 39, of Bellrose, New York, pleaded guilty to the same charge. All pleas were heard by Judge Arleo.
The remaining perpetrators that have yet to stand before a judge who live in the Metropolitan area are: Vinod Dadlani, 49 from Lyndhurst, New Jersey, Ijaz Butt, 53 from Hicksville, New York, Habib Chaudhary, 45 and Shahid, 44 both from Valley Stream, New York, Muhammad Naveed, 35 from Flushing, New York, Khawaja Ikram, 40 from Staten Island, New York, Nasreen Akhtar, 37 from Jersey City, New Jersey, Azhar Ikram, 39 from Howard Beach, New York, in addition to Babar Quereshi, 59, Sat Verma, 60, Vijay Verma, 45, and Tarsem Lal, 74, all from Iselin, New Jersey.
The scam entailed a process of three steps. First the defendants created false identities by constructing documents of identification that were phony along with a fabricated credit profile provided to the major credit bureaus. Then, they would inflate the credit of the phony identities by giving those credit bureaus fictitious information creating the appearance of being credit worthy. Lastly, large loan amounts were amassed.
Once this was all set up the members of the scheme retained what are known as “drop addresses”. Across the country in excess of 1,800 of these entities were set up including actual apartments, single family homes, and post office boxes. The suspects then used these as mailing addresses for the persons who these false identities were set up for.
The defendants then fashioned bogus businesses that actually performed no services and obtained very little or no revenue at all. They then acquired credit card terminals for these enterprises. Once in place, they collectively started running up charges on the fraudulent cards. In order to accept payments in the usage of credit cards, businesses have to institute a merchant account with a body recognized as a merchant processor. The processor affords the companies with equipment for the processing of the cards, accepts the payments directly from the credit card companies on behalf of credit card transactions completed by the businesses. The funds are then deposited into the bank account of the individual companies, minus a pre-agreed upon fee. When the case arose where the processors closed some of the accounts operated by the collaborators for possible fraudulent activity, they would simply apply for new terminals and fashion new businesses, starting the entire process again.
The mock companies would also function as “furnishers,” who provided the credit bureaus with fabricated facts and figures regarding the credit history of the many bogus identities of the deceitful individuals who supposedly worked at the fake companies or claimed to be the owners.
The crime of credit card fraud is frequently correlated as a supplement to identity theft. According to the United States Federal Trade Commission, although identity theft had been holding steady prior to 2008, reports display a massive percentage increase in the crime over the past 5 years. Yet, in comparison, credit card fraud by itself has decreased as a percentage of all identity theft complaints. This latest investigation just may move the falling percentages a bit closer.