12 people have been charged with first-degree money laundering and other crimes in a joint federal and state investigation which targeted an elaborate fraud scheme in which the defendants allegedly used fake identities to obtain credit cards and open bank accounts which they used to steal approximately $3 million from various banks. The group were among a dozen foreign nationals and U.S. citizens charged with money laundering this week in a crackdown on an “elaborate” credit card scheme, acting Attorney General John Hoffman announced Wednesday, December 09.
The accused – some of them family members, some business associates lived mostly in Hudson County and stole millions by passing bad checks and making phony credit card payments, authorities claim. The twelve defendants were charged with first-degree money laundering, second-degree theft, and third-degree fraudulent use of credit cards:
Being charged with first degree money laundering, they face up to 20 years in prison. All have been arrested and are being held in the Union County Jail with bail for each set at $1 million.
The defendants, many of whom live in Secaucus and Jersey City, allegedly created “synthetic” identities by pairing real Social Security numbers with fictitious names and birth dates, using them to open numerous checking and credit card accounts.
They allegedly opened the accounts online so as to avoid face-to-face interaction with the financial institutions. Bad checks were deposited into the bank accounts so that the accounts could be used to make payments on the credit cards, which temporarily inflated the lines of credit on the cards. In addition, funds were withdrawn from the bank accounts via ATM and U.S. Postal Money Order Purchases before the bad checks were discovered.
It is alleged that the defendants ultimately “busted out” the credit cards by running up the unpaid balances until they reached or exceeded the credit limits. The scheme included a group of “merchants” who in many cases allegedly ran shell businesses set up solely for the purpose of participating in this fraud. The merchants allegedly swiped the fraudulent credit cards using point of sale terminals and received reimbursement from credit card processing companies via wire transfer, while never actually providing any merchandise or services.
The ring members allegedly split the proceeds. The bank accounts of the shell companies set up by the merchants also allegedly were used to launder the proceeds of the scheme, with checks being written from one company to another as if they were conducting business.
Businesses were opened for the sole purpose of defrauding financial institutions. It is alleged that one business had been setup as a carpet retailer, with a store front that had several rolled up carpets in the window.
“While the credit card holders, businesses and purchases in this scheme were fictitious, the losses suffered by the banks were very real and totaled an alarming $3 million.
“Between 2012 and 2015, the defendants allegedly obtained hundreds of credit cards with fake identities, engaging in millions of dollars in phony transactions at their businesses which were created solely to commit this fraud.
The charges are merely accusations and the defendants are presumed innocent until proven guilty.