3 California Men Indicted for Credit Card Fraud Scheme

Three Los Angeles-area residents have been indicted by a federal grand jury following a probe by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the U.S. Secret Service that allegedly revealed the defendants orchestrated a far-reaching scheme to import and produce counterfeit debit and credit cards.

The defendants - Jose Rolando Renderos, 38, of Montebello; his son, Jose Ulloa, 18, of San Bernardino; and Milagro del Carmen Alvarez Hernandez, 27, of Montebello - are charged in a nine-count indictment handed down Tuesday, February 12, 2013, with a variety of violations, including access device fraud; possession of counterfeit access devices; and trafficking in counterfeit goods. All three defendants are currently in federal custody. They are expected to be arraigned Feb. 25.

According to the case indictment, defendants Renderos and Ulloa would obtain blank counterfeit credit cards from China. The phony cards bore the names and logos of such well-known financial institutions as American Express, Capitol One, U.S. Bank and Wells Fargo. The indictment alleges the father and son then embossed and activated the counterfeit cards using actual credit card numbers illegally obtained from point of sale devices.

"Credit card fraud scams like this result in major losses for the affected financial institutions and it's ultimately consumers who pay the price," said Claude Arnold, special agent in charge for HSI Los Angeles. "HSI will continue to work closely with its federal law enforcement partners to target criminal schemes that undermine the integrity of our financial system."

The defendants allegedly kept unembossed card stock in a storage unit in Monterey Park. When federal agents executed a search warrant at the location Feb. 6, they recovered a cache of more than 80,000 cards, along with an embossing machine and multiple credit card skimmers. So far, investigators have seized more than 90,000 counterfeit credit cards in connection with the case. Given the minimum credit limit of $500 per card, authorities conservatively estimate the value of the phony access devices at $45 million.

"Cooperation and partnerships have allowed us to focus our resources and respond quickly to uncover and prevent these types of crimes, whether they originate within or outside our borders," said U.S. Secret Service, Los Angeles Field Office Special Agent in Charge Joseph F. Beaty Jr.

The probe into the credit card scheme is still ongoing, but investigators believe the defendants may have been using the counterfeit cards to purchase high-end merchandise for re-sale. According to the indictment, Alvarez used one of the counterfeit cards in December to purchase more than $1,600 worth of merchandise at a children's boutique in Los Angeles.

The probe leading to the indictments of Tuesday, February 12, 2013, began two weeks ago after officers with U.S. Customs and Border Protection (CBP) intercepted four packages from China that were being shipped to San Bernardino, Calif. Inside, officers discovered more than 12,000 counterfeit credit cards.

The probe is being spearheaded by HSI with substantial assistance provided by the Los Angeles Field Office and Riverside Residence Office of the U.S. Secret Service.

Man Pleads Guilty to Identity Theft and Tax Evasion

A New Jersey man pleaded guilty Wednesday, January 30, 2013, in connection with his role in a large-scale identity-theft scheme. If convicted, he faces up to 52 years in prison. This case is being investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), FBI, Internal Revenue Service's (IRS) Criminal Investigation and the Bergen County Prosecutor's Office.

Sang-Kyu Seo, 63, of Palisades Park, N.J., pleaded guilty to charges of conspiracy to unlawfully produce identification documents and false identification documents, aggravated identity theft, conspiracy to commit wire fraud, conspiracy to commit bank fraud and tax evasion.

According to court documents, Seo was the owner and operator of Hang Jin Yi Inc., doing business as Hwangini, a salon located in North Bergen, N.J., and Pier 7 Corporation, a purported small business located in Palisades Park.

Seo conspired with Sang-Hyun Park, aka Jimmy, and others, to obtain a Social Security number beginning with the prefix '586' for another individual. These 586 Social Security numbers were issued by the U.S. to individuals, usually from China, who were employed in American territories, such as Guam. Park is alleged to have been the leader of a criminal organization headquartered in Bergen County that obtained, brokered and sold identity documents to customers to commit credit card fraud, bank fraud, tax fraud and other crimes.

Park pleaded guilty Jan. 9 to his role in the enterprise, and is awaiting sentencing.

This 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 - members of the enterprise's credit build-up teams who received a fee for this service. 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 did not know the real person to whom the identity belonged or virtually any of the customers who had purchased the identities.

After building up the credit associated with these identities, Park and his co-conspirators directed, coached and assisted the customers in opening bank accounts and obtaining credit cards. Park and his co-conspirators then used these accounts and credit cards to commit fraud. Park relied on several collusive merchants who possessed credit card processing 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 these fraudulent transactions, the collusive merchants gave the money to Park and his co-conspirators, minus their kkang fee.

Seo admitted that he obtained a 586 Social Security card and counterfeit driver's licenses through Park for a family member, who then used this identity to 'bust out' credit cards. Seo also admitted that he gave his corporate and personal credit cards to Park for the purpose of 'busting out' these maxed-out credit cards. In furtherance of this conspiracy, Park and his co-conspirators issued worthless checks, drawn on bank accounts that had been established using the 586 identities, as payment toward the balances on Seo's credit cards.

Before the banks and credit card companies realized that these checks were bogus, Park and his co-conspirators charged Seo's credit cards through collusive merchants or used them to purchase merchandise.

Seo also admitted that in 2007, with the assistance of a loan broker, he fraudulently obtained a $100,000 commercial loan on behalf of Pier 7. Seo admitted that he and the loan broker made false statements to obtain the loan including falsely representing that his businesses annual revenue was about $620,000.

Finally, Seo admitted that he committed tax evasion by issuing checks to himself and others, representing income derived through the operation of Hwangini, and then failing to report this income on his personal tax returns.

Seo admitted that in April 2008, he filed an individual income tax return for tax year 2007. This return declared that his taxable income for calendar year 2007 was about $197, and the amount of tax due and owing was about $19. Seo admitted that this return failed to include $304,848 in additional taxable income that he had received in 2007, thus having an additional tax of $81,643 due to the United States government.

Seo's sentencing is scheduled for May 14.

Vietnamese Illegal Alien Pleads Guilty to Credit Card Fraud Conspiracy

Tri Tran, aka Tony, 35, a citizen of Vietnam unlawfully in the country and residing in Maryland, pleaded guilty Friday, February 1, 2013, to mail fraud in connection with a scheme to skim credit card account data and re-encode the data onto different credit cards used to buy merchandise at retail stores. As a result of the scheme, more than 50 victims incurred losses totaling more than $70,000.

The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) Baltimore; U.S. Secret Service, Baltimore Field Office; Harford County Sheriff's Office and the assistance of the Harford County State's Attorney Office.

According to his plea, beginning in 2009 through Feb. 28, 2011, co-conspirator Nghia Nguyen, 35, a Vietnamese citizen residing in Santa Ana, Calif., mailed an electronic skimming device to Tran in Maryland, who used the device at the business where he was employed to access data from customer credit cards. During 2009, Tran mailed Nguyen the skimming device approximately twice a month, typically when the data of five to 15 credit cards were stored on the skimmer. This pace picked up slightly in 2010 and in 2011 there were about four or five exchanges prior to his arrest. Tran would also mail several credit cards bearing his name to Nguyen.

Nguyen would then extract the data from the skimmer and re-encode the magnetic strip of the other cards with the victims' data. Nguyen would then send Tran three or four re-encoded cards in return, and Tran would use these cards, typically for one or two transactions at about $200 per transaction before the accounts were shut down. This process was repeated several times over the course of the scheme.

On Jan. 14, 2011, the Harford County Sheriff's Office began investigating a complaint related to credit card skimming activity at the retail location where Tran worked. On Feb. 28, 2011, Tran's residence was searched and HSI special agents seized computer equipment and peripheral devices used in the creation of the fraudulent credit cards.

Tran faces a maximum sentence of 20 years in prison and a $250,000 fine for mail fraud at his May 24 sentencing before U.S. District Judge James K. Bredar.

Nguyen previously pleaded guilty to his participation in the scheme and was sentenced Dec. 17, 2012, to six years in prison.

Today's announcement is part of efforts underway by President Obama's Financial Fraud Enforcement Task Force, which was created November 2009 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 more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

HSI Orange County, the Drug Enforcement Administration and U.S. Postal Inspection Service in California, City of Orange Police Department, Costa Mesa Police Department and the U.S. Attorney's Office for the Central District of California assisted in the investigation.

The case is being prosecuted by Judson T. Mihok.

California Men Charged with Wire Fraud and Bribery

Federal prosecutors filed criminal charges Monday, January 28, 2013, against the CEO of an Orange County electronic components company who paid kickbacks for years to ensure contracts for his firm, and against an official with Panasonic's American subsidiary who accepted the bribes.

The two men charged Monday, January 28, 2013, with "honest services" wire fraud are William McMahon, 47, of Norco, the CEO and co-owner of Trustin Technology, and Sean Volin, 38, of Oakland, New Jersey, a manager with Panasonic Corporation of North America in Secaucus, New Jersey.

In addition to criminal informations filed in U.S. District Court, prosecutors filed plea agreements in which both men admitted their criminal conduct and agreed to cooperate in the ongoing probe conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI.

According to court documents, for the past decade, Trustin sold RAM modules and hard drives to Panasonic – Trustin's largest and most important customer – for use in at least one line of laptop computers.

Approximately 10 years ago, Volin approached the then-CEO of Trustin to discuss a price reduction for hard drives Trustin was supplying to Panasonic. In response, the then-CEO proposed a kickback scheme in which Panasonic would continue to pay the same price for hard drives, but Trustin would give Volin half of the proposed price reduction for each unit sold. 

Volin "agreed with the former CEO's proposal, did not obtain a price reduction for Panasonic, and a stream of illicit payments between Trustin and Volin began," according to Volin's plea agreement.

McMahon became CEO of Trustin in 2005, and he learned of the kickback arrangement that had already paid more than $100,000 to Volin. The payments stopped under McMahon's watch for a period of time, but resumed as McMahon's relationship with Volin developed. Instead of paying a kickback for each hard drive sold to Panasonic, McMahon made regular payments in exchange for Volin "looking out for Trustin's interests and as a reward for his prior assistance to Trustin," according to Volin's plea agreement.

From November 2005 through the end of 2011, McMahon oversaw payments of more than $555,000 that went to a company Volin had established to accept the illicit payments from Trustin. In total, Volin was paid more than $664,900 by Trustin. Volin and McMahon also admitted in the court documents that Volin received other benefits, including trips to the Kentucky Derby and Napa Valley.

"In exchange for this stream of payments, and acting with the intent to defraud Panasonic of Volin's duty of honest services, Volin continued to assist Trustin in obtaining additional business from Panasonic, resulting in Panasonic's designating Trustin a 'master vendor,' according to court documents, which say that as a result of the scheme "Trustin was able to obtain tens of millions of dollars of business from Panasonic."

McMahon and Volin will be summoned to appear in federal court in Orange County in February. The wire fraud charge alleged in the two cases filed Monday, January 28, 2013, carries a statutory maximum penalty of 20 years in federal prison.

Panasonic Corporation of North America fully cooperated with the government's investigation.

Hawaiian Men Sentenced for $1.6 Million Ponzi-Style Fraud Scheme

Three men who led a Ponzi-style scheme that defrauded investors of more than $1.6 million were sentenced in federal court Thursday, September 13, 2012, following a joint investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Federal Bureau of Investigation.

Syed Qadri, 39, Ruben Carrillo Gonzalez, 50, and Jeffrey Greenhut, 40, were sentenced by U.S. District Judge Leslie E. Kobayashi to 51 months, 41 months and 24 months in federal prison, respectively. The trio, who pleaded guilty to wire fraud charges in September 2010, were also ordered to pay restitution to the victims of the scheme.

In addition to the defendants, Qadri's wife, Patricia Roszkowski, 48, was also sentenced to one month in prison for filing a fraudulent credit application with a local bank as part of the scheme.

According to court documents, the three men schemed to defraud investors through two Honolulu companies, Amasse Capital, LLC, and Solomon & Co., LLC. The trio operated a Ponzi-style scheme in which the companies purportedly invested in high yield bonds that exposed investors' principal to minimal risk, when, in reality, the investments were used to pay back earlier investors, with the remainder of funds converted to Qadri's personal use. The net loss to victims as a result of the scheme was more than $1.6 million.

Qadri, who led the fraud scheme, served as Amasse Capital's president and chief executive officer. He and Roszkowski lived in a luxurious Kahala residence, purchased several expensive cars and leased an entire floor in a downtown office building. Gonzalez served as Amasse Capital's senior vice president of marketing and was responsible for soliciting investors. Greenhut, Amasse Capital's chief operating officer, managed investor funds.

Amasse Capital was marketed as an investment firm registered with the Securities and Exchange Commission. The company's prospectus listed the defendants as management and members of the board of directors and made false claims about the experience of the defendants in order to induce investment. Additionally, the prospectus contained false statements about the business activity, capability and financial stability of the company. Qadri and Gonzalez claimed that the companies could return 100 to 400 percent monthly interest on investments.

The case was prosecuted by Assistant U.S. Attorneys Chris Thomas and Ronald Johnson of the U.S. Attorney's Office, District of Hawaii.

Texas Lawyer Sentenced for Wire Fraud and Corporate Identity Theft Scheme

A Houston lawyer was sentenced to 18 months in federal prison and 36 months of home confinement Thursday, Aug. 9. This case was investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) Tampa and the U.S. Secret Service's Tampa and Newark, N.J., field offices.

According to testimony and evidence presented at trial, from February 2005 through July 2006, Roger Shoss, 67, of Houston, and codefendant Nicolette Loisel, also a Houston lawyer, conspired to steal the identities of dormant, publicly-traded companies. They then used the corporate identities they had stolen to create fraudulent, empty-shell companies that had the appearance of being publicly traded. They subsequently sold the fraudulent empty-shell companies for a profit. 

The four companies featured in the indictment were Mobilestream Inc., Regaltech Inc., Nanoforce Inc. and Rocky Mountain Gold Mining Inc., which emanated from 3E International Inc., Pacific Chemical Inc., Webgalaxy Inc. and Greensmart Corporation, respectively.

The administrative and money laundering functions of this scheme were headquartered in Pinellas County, Fla. Multiple wire transfers, totaling at least $800,000, were initiated from the Middle District of Florida to Shoss, in payment for the companies. Shoss, in turn, paid Loisel more than $450,000 for her role in the scheme.

"These individuals – both attorneys – conspired to make a profit through a sophisticated investment fraud and money laundering scheme," said Sue McCormick, special agent in charge of HSI Tampa. "HSI works closely with our law enforcement partners to identify and prosecute con-artists like Shoss and Loisel."

In addition to his prison sentence, Shoss is required to pay a final forfeiture money judgment, in the amount of $800,000. This amount represents proceeds obtained by Shoss and Loisel as a result of their criminal activities. A final order of forfeiture was also entered for Shoss' residence in Houston, which was purchased with proceeds traceable to the wire fraud conspiracy. 

"The U.S. Secret Service and HSI continually strive to enhance our law enforcement partnership by leveraging our respective capabilities, expertise and manpower in support of our distinct law enforcement missions," said John Joyce, U.S. Secret Service's Tampa special agent in charge. "The U.S. Secret Service and HSI will continue to effectively investigate, deter and diminish the threat posed by various types of criminals to our nation's financial infrastructure."

A federal jury found Shoss and Loisel guilty of conspiracy to commit wire fraud on May 22. Loisel's sentencing is scheduled for Sept. 4.

New York Jeweler Arrested for Forging Government Seal

A jewelry wholesaler was arrested Sunday, August 5, 2012, for allegedly committing wire fraud and forging the seal of U.S. Customs and Border Protection (CBP). The arrest is a result of an investigation by U.S. Immigration and Customs Enforcement's (ICE) Office of Professional Responsibility and the Internal Revenue Service, Criminal Investigation.

Tejas Mehta, 36, the owner of Saritijediam Inc., doing business as Design Trends, is a jeweler who conducts business in Manhattan's diamond district. He is accused of allegedly forging the seal of CBP, a component of the U.S. Department of Homeland Security. Mehta used the fraudulent CBP seal to allegedly steal approximately $1 million from his business associates and other diamond and precious stones wholesalers.

Mehta received diamonds, jewelry and precious stones from other wholesalers under consignment. Once in his possession, Mehta would sell the jewels. Instead of giving the proceeds to the owner of the merchandise as he had agreed to, Mehta allegedly falsely claimed that he could not return or sell the merchandise because it had been seized by U.S. authorities.

"The production and use of fictitious government documents and seals is a serious crime," said Terence S. Opiola, special agent in charge of the ICE Office of Professional Responsibility in the Northeast. "ICE OPR is committed to aggressively investigating these crimes and takes great pride in protecting the integrity of all ICE and CBP employees."

"IRS-Criminal Investigation is always eager to work with our federal law enforcement partners and share our financial investigative expertise," said Toni Weirauch, acting special agent in charge for IRS-CI in New York. "We are proud to work with ICE on this important investigation, especially because of its governmental integrity aspect."

According to court documents, one victim consigned $650,000 in diamonds to Mehta, who then allegedly made excuses and did not return the stones or any funds from the sale of the diamonds. Mehta told the victim's attorney that the stones had been seized by U.S. authorities. Mehta allegedly used the fraudulent seal to falsely state that the diamonds, precious stones and jewelry - which were consigned to him - had been seized by CBP.

This case is being prosecuted by the U.S Attorney's Office for the Southern District of New York.

Former CBP Officer Sentenced to 115 Days for Investment Fraud

A former San Diego-area officer for U.S. Customs and Border Protection (CBP) who defrauded individuals after promising to invest their money in a technical school was sentenced Friday, July 27, 2012, to 115 days in federal prison, following a probe by U.S. Immigration and Customs Enforcement's (ICE) Office of Professional Responsibility (OPR).

Dario Tomas, 53, of Oceanside, pleaded guilty in June to wire fraud after admitting he swindled $240,000 from two victims as part of a financial scheme he orchestrated while working for CBP in Busan, Korea, in 2007.

Tomas admitted to falsely promising the two investors, a U.S. serviceman and a South Korean national, that their money would go toward building a computer training school in the Philippines. Tomas furthered the scheme by sending electronic messages to the investors using fraudulent email accounts he set up under other people's names, and by making phone calls so it would appear the project was progressing. Tomas later admitted he lost the money gambling.

Tomas was arrested in October 2010 by special agents with ICE Homeland Security Investigations (HSI) assigned to the agency's attaché office in Manila, aided by officers from the U.S. Diplomatic Security Service and the Philippine National Bureau of Investigations. Tomas was then extradited to South Korea where he served a two-year prison term for the offense.

In April, Tomas was released from prison in South Korea and deported to the U.S. to face federal fraud charges brought in Southern California.

At his sentencing, U.S. District Court Judge Janis L. Sammarinto also ordered Tomas to pay $240,000 in restitution to the two victims.