SEVEN INDIVIDUALS ARRESTED IN CONNECTION WITH $3.5 MILLION MULTI-STATE BANK FRAUD CONSPIRACY

Seven Others Charged in Separate Criminal Complaints Filed in Virginia and Maryland in Connection with Coordinated Investigation of Related Scheme

TRENTON, N.J. – Seven people have been charged for their alleged roles in a large-scale conspiracy to commit bank fraud in New Jersey, New York, Pennsylvania, Maryland, Virginia, and Michigan over the course of two years, U.S. Attorney Craig Carpenito announced today.

The criminal complaint unsealed today in Trenton federal court charges the defendants with conspiracy to commit bank fraud, in connection with a fraudulent scheme that used hundreds of fraudulent accounts to defraud several major banks causing losses of over $3.5 million. Today’s arrests of five of the defendants were made in coordination with two other federal investigations conducted by the U.S. Attorney’s Offices for the Eastern District of Virginia and the District of Maryland, which led to the filing of separate criminal complaints, also unsealed today, that charged five defendants in the Eastern District of Virginia and two defendants in the District of Maryland. Four of the defendants in custody are scheduled to appear today before U.S. Magistrate Judge Lois H. Goodman.

According to documents filed in the District of New Jersey and statements made in court:

From 2018 through April 2020, the defendants conspired with each other and others to defraud several major banks and electronic merchant processors. To accomplish the conspiracy’s unlawful objective, the defendants established bank accounts associated with sham entities that had no legitimate purpose, and thereafter would issue checks payable to other sham entities associated with the criminal organization, knowing that the accounts on which the checks were drawn contained insufficient funds. The defendants would also conduct numerous fraudulent credit card and debit card transactions between shell companies to fraudulently credit payee accounts and fraudulently overdraw payor accounts. Alternatively, the defendants would use these shell companies to execute temporary refund credits, commonly referred to as “charge-backs,” to checking accounts associated with the criminal organization, where no prior legitimate transaction had occurred.

In each one of these instances, members of the criminal organization withdrew the funds (through ATMs or bank tellers) that banks and/or merchant processors had credited to the payee bank accounts at the time of the fraudulent transaction. Because the defendants withdrew the credited funds from the payee accounts before the banks could recognize the fraudulent transactions, the banks and merchant processors were left with substantial losses.
The investigation has identified approximately 200 bank accounts and 75 merchant credit card processing accounts used to facilitate the schemes. The defendants’ unlawful activities have caused an aggregate loss to banks and merchant processing companies of at least $3.5 million.

The bank fraud conspiracy count carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million.

U.S. Attorney Craig Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, Newark Division, and Acting Inspector in Charge Felicia George, Michigan Division; special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina in Newark; the Social Security Administration, under the direction of John F. Grasso; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark, with the investigation leading to today’s charges. He also thanked the Department of Homeland Security, Homeland Security Investigations, Michigan Division, and the U.S. Attorneys for the Eastern District of Virginia and the District of Maryland for coordinating the investigation.

The government is represented by Assistant U.S. Attorney Ray Mateo of the U.S. Attorney’s Office Criminal Division in Trenton.

The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The defendants charged in the New Jersey complaint unsealed today are listed below:

*denotes at large

20-208

• SharifEtAl.Complaint.pdf