Four Plead Guilty in $200 Million International Credit Card Fraud Conspiracy
|U.S. Attorney’s Office August 07, 2013|
NEWARK, NJ—A New York man who participated in one of the largest credit card fraud schemes ever charged by the Justice Department today admitted his role in the scheme, the fourth conspirator to do so in a two-week period, New Jersey U.S. Attorney Paul J. Fishman announced.
Muhammad Shafiq, 39, of Bellrose, New York, pleaded guilty today before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court to an information charging him with one count of conspiracy to commit bank fraud. Vernina Adams, 31, of Philadelphia, and Raghbir Singh, 57, of Hicksville, New York, pleaded guilty on July 31, 2013, to separate informations charging the same offense. Mohammad Khan, 49, of Staten Island, New York, pleaded guilty on July 24, 2013, to an information charging conspiracy to defraud the United States.
According to documents filed in this case and statements made in court:
Shafiq, Adams, Singh, and Khan were originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts—causing more than $200 million in confirmed losses to businesses and financial institutions.
The scheme 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 those credit bureaus; then run up large loans.
The scope of the criminal fraud enterprise required Shafiq, Adams, Singh, Khan, and their conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments, and post office boxes, which they used as the mailing addresses of the false identities.
During their guilty plea proceedings, Shafiq, Singh, and Khan admitted they helped obtain credit cards in the name of third parties—many of which were fictional—then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. They also admitted they knew the cards would be used fraudulently at businesses, with Khan admitting to personally using the cards.
Adams and her conspirators also used sophisticated methods—including a network of black-market businesses called “tradelines” providers—to commit fraud.
During her plea proceeding, Adams admitted advertising on Craigslist for individuals willing to add someone onto their credit cards. She also admitted selling other members of the conspiracy fraudulent “tradelines,” including by working with Acapulco Jewelry, a complicit business in California. Adams would extend a fictitious line of credit to a false identity, backdate the line of credit so it appeared to have existed for a longer period of time, then falsely report the line of credit had been paid.
The count to which Shafiq, Adams, and Singh pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gain or loss caused by the offense. The count to which Khan pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.
Each defendant is scheduled for sentencing by U.S. District Judge Anne E. Thompson in Trenton, New Jersey: Shafiq on November 14, 2013; Adams and Singh on November 7, 2013; and Khan on October 30, 2013.
U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the guilty pleas, as well as postal inspectors, under the direction of Postal Inspector in Charge Marie L. Kelokates, and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola. He also thanked the U.S. Social Security Administration for its role in the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater and Daniel V. Shapiro of the U.S. Attorney’s Office Economic Crimes Unit and Barbara Ward of the office’s Asset Forfeiture Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Mohammad Shafiq: Joseph Horn Esq., Rutherford, N.J.
Vernina Adams: Todd E. Henry Esq., Philadelphia
Raghbir Singh: David E. Levine Esq., Brooklyn, N.Y.
Mohammad Khan: Stephan Mahler Esq., Kew Gardens, N.Y.