Two Plead Guilty to Roles in Large-Scale Identity Theft Ring

NEWARK, NJ—Two individuals today admitted their roles in a large-scale, sophisticated identity theft scheme that led to dozens of arrests last fall, U.S. Attorney Paul J. Fishman announced.

Chul-Hoe Choi, 50, of Palisades Park, N.J., pleaded guilty to a three-count Information charging him with unlawfully producing an identification document, aggravated identity theft, and conspiracy to commit wire fraud. Jong-Kwan Hong, 67, of Westbury, N.Y., pleaded guilty to an Information charging him with conspiracy to unlawfully produce a counterfeit identification document and commit credit card fraud. Both defendants entered their guilty pleas before U.S. District Judge Katharine S. Hayden in Newark federal court.

Choi and Hong were arrested on September 16, 2010, in a coordinated law enforcement takedown of 53 individuals in connection with widespread, sophisticated identity theft and fraud—including 41 other individuals charged along with Choi and Hong with participating in one large-scale criminal enterprise.

According to documents filed in this case and statements made in court:

Choi and Hong conspired with Sang-Hyun Park, a/k/a “Jimmy,” and others to obtain social security cards beginning with the prefix “586.” Social security cards with that prefix were issued by the United States to individuals, usually from China, who were employed in American territories, such as American Samoa, Guam, and Saipan. Park is alleged to have been the leader of a criminal organization headquartered in Bergen County, N.J., that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud, tax fraud, and other crimes.

The Park Criminal Enterprise engaged in the fraudulent “build up” of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various co-conspirators who received a fee for this service—members of the enterprise’s credit build up teams. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities to between 700 and 800. The members of the build up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who purchased the identities.

After building the credit associated with these identities, Park and his co-conspirators directed, coached, and assisted his customers to open bank accounts and obtain credit cards. Park and his co-conspirators then used these accounts and credit cards to commit fraud. In particular, Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit card related to these fraudulent transactions, the collusive merchants gave the money to Park and his co-conspirators, minus their “kkang fee.”

On January 12, 2009, Choi and other members of the Park Criminal Enterprise traveled from Bergen County to Chicago. Thereafter, Choi used a “586” social security number in the name of an individual with the initials “X.J.G.,” a fictitious Chinese passport in the name of X.J.G., and other false documents to fraudulently obtain an Illinois driver’s license in the name of X.J.G. After returning to Bergen County with this fraudulently obtained driver’s license in his possession, Choi used the driver’s license and the identity of X.J.G. to apply for and obtain credit cards from various banks and stores. Through this scheme, Choi and his co-conspirators fraudulently obtained in excess of $70,000 in merchandise and cash.

In addition, Choi was a collusive merchant for the Park Criminal Enterprise. Choi used the X.J.G. identity to open two merchant accounts in the names of For Your Joy and Nora Universal, two fictitious companies that neither sold products nor provided any services. After obtaining the credit card processing machines for these fictitious companies, Park and other members of the Park Criminal Enterprise provided Choi with fraudulently obtained credit cards belonging to customers of the enterprise. Choi charged these credit cards and provided portions of the cash back to Park and his co-conspirators. Through this part of the scheme, Choi, Park, and other members of the Park Criminal Enterprise obtained in excess of $600,000 from numerous banks and credit card companies.

At his hearing, Hong admitted that he was a customer of the Park Criminal Enterprise. Hong purchased a 586 social security card and a counterfeit Nevada driver’s license in the name of an individual with the initials D.L. from the Park Criminal Enterprise. Thereafter, Hong used this fraudulently obtained identity to apply for and obtain credit cards from various banks and stores. Through this scheme, Hong and his co-conspirators fraudulently obtained in excess of $28,000 in merchandise and cash.

At sentencing, Choi faces a maximum potential penalty of 15 years in prison and a fine of $250,000, on the unlawful production of an identity document charge (Count One); a mandatory minimum of two years in prison on the aggravated identity theft charge (Count Two); and a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the pecuniary gain or victim loss from the offense on the conspiracy to commit wire fraud charge (Count Three). Sentencing for Choi is scheduled for September 26, 2011.

At sentencing, Hong faces a maximum potential penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain or victim loss from the offense, on the conspiracy charge. Sentencing for Hong is scheduled for October 4, 2011.

Choi was detained pending sentencing. Hong was released on a $250,000 bond. U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; IRS—Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff; the Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Peter T. Edge; and the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli and the Office’s Chief of Detectives Steven Cucciniello for their work leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Barbara R. Llanes of the U.S. Attorney’s Office General Crimes Unit and Anthony Moscato of the Office’s Organized Crime/Gangs Unit in Newark.

As for Park and other members of the Park Criminal Enterprise with pending charges, the charges and allegations contained in the Complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

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Defense counsel:
Choi: Joseph Michael Horn Esq., Rutherford, N.J.
Hong: Michael Hammerman Esq., Forest Hills, N.Y.