Feds: 18 charged in $200M global credit card fraud

The scheme funded a lavish lifestyle for the accused, including spa treatments, electronics, luxury cars and millions of dollars of gold, authorities said.

NEWARK, N.J. — Eighteen people were charged in what may be one of the nation's largest credit card fraud rings, a sprawling international scam that duped credit-rating agencies and used thousands of fake identities to steal at least $200 million, federal authorities said Tuesday.

The elaborate scheme involved improving fake cardholders' credit scores, allowing the scammers to borrow more money that they never repaid, investigators said.

"The accused availed themselves of a virtual cafeteria of sophisticated frauds and schemes, whose main menu items were greed and deceit," said David Velazquez, assistant special agent in charge of the FBI's Newark field office.

Paul Fishman, the U.S. attorney in Newark, described an intricate Jersey City-based con that began in 2007, operated in at least 28 states and wired money to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan.

The group used at least 7,000 fake identities to obtain more than 25,000 credit cards, Fishman said. He said investigators documented $200 million in losses, but the figure could rise.

"Through their greed and arrogance," Fishman said, the people arrested harm credit card companies, consumers and "the rest of us who have to deal with increased interest rates and fees because of the money sucked out of the system by criminals."

Participants in the scam set up more than 1,800 mailing addresses, creating fake utility bills and other documents to provide credit card companies with what appeared to be legitimate addresses, investigators said. Once they obtained the cards, they started making small charges and paying off the cards to raise their credit limits, authorities said.

They then sent fake reports to credit-rating agencies, making it appear that cardholders had paid off debts, setting the stage for sterling credit ratings and high credit limits, investigators said.

Fishman said once the credit limits were raised, participants would take out a loan or max out the credit card and not repay the debts.

The group also created at least 80 sham businesses that accepted credit card payments, Fishman said. The group would run the fraudulently obtained credit cards through the machines, keeping the money, he said.

The scheme funded a lavish lifestyle for the accused, including spa treatments, electronics, luxury cars and millions of dollars of gold, Fishman said. In one raid, authorities said they found $78,000 stashed in an oven.

Three jewelry stores in Jersey City were closed Tuesday and their inventory seized, Fishman said.

The stores are located within blocks of one another in a heavily Indian section of Jersey City. All had signs advertising gold jewelry. Their metal security gates were shut. Two were surrounded by yellow crime scene tape and were guarded by FBI agents.

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Thirteen defendants were arrested Tuesday.

Seven defendants appeared before federal Judge Madeline Cox Arleo on Tuesday afternoon. Most were casually dressed middle-aged men; one was a woman. Lawyers said one man was a taxi driver, another a limo driver. Many own property in New Jersey or New York and are U.S. citizens. Three were released and four remain in custody ahead of a Friday bail hearing.

Prosecutors allege one man was able to withdraw and wire $1.5 million from personal accounts despite not having a job. They said he engaged in an "enormous" amount of travel to Pakistan and was ordered held.

Authorities said many of the defendants had family ties, including a father and son.

Six more defendants were to appear in court late Tuesday afternoon.

Lawyers for the defendants declined to comment.

Four of the defendants named in Tuesday's indictment were arrested previously and three have pleaded guilty. Others have not yet been charged and the investigation was ongoing, Fishman said.

All were charged with one count of bank fraud and face up to 30 years in prison and a $1 million fine.

Associated Press writer Samantha Henry contributed to this report from Jersey City, N.J.
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