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In what the Justice Department termed the “largest credit card fraud scheme ever,” four accused criminals pleaded guilty in a $200 million international credit card fraud conspiracy.
Muhammad Shafiq, 39, Vernina Adams, 31, and Raghbir Singh, 57 pleaded guilty to one count of conspiracy to commit bank fraud. Mohammed Khan, 49 pleaded guilty to a conspiracy to defraud the United States.
According to an FBI press release, this is how the scheme worked:
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.
Shafiq, Adams, and Singh face a maximum penalty of 30 years in prison and a $1 million fine, or twice the gain or loss caused by the offense. Khan’s crime carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.
U.S. Attorney Paul Fishman pointed out the work of special agents of the FBI’s Cyber Division, the U.S. Secret Service, as well as postal inspectors and the Social Security Administration for their roles in apprehending these criminals.
Also credited was the Financial Fraud Enforcement Task Force, which coordinates more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners. For information on the task force, visit www.stopfraud.gov.
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