Acting Attorney General John J. Hoffman today announced that 12 people have been charged with first-degree money laundering and other crimes in a joint federal and state investigation targeting an elaborate fraud scheme in which the defendants allegedly used fictitious identities to obtain credit cards and open bank accounts which they used to steal approximately $3 million from various banks. Eleven defendants have been arrested and one remains a fugitive.
The defendants, many of whom live in Secaucus and Jersey City, allegedly created “synthetic” identities by pairing real Social Security numbers with fictitious names and birth dates, using them to open numerous checking and credit card accounts. They allegedly opened the accounts online so as to avoid face-to-face interaction with the financial institutions. Bad checks were deposited into the bank accounts so that the accounts could be used to make payments on the credit cards, which temporarily inflated the lines of credit on the cards.
In addition, funds were withdrawn from the bank accounts via ATM and U.S. Postal Money Order Purchases before the bad checks were discovered. It is alleged that the defendants ultimately “busted out” the credit cards by running up the unpaid balances until they reached or exceeded the credit limits.
The scheme included a group of “merchants” who in many cases allegedly ran shell businesses set up solely for the purpose of participating in this fraud. The merchants allegedly swiped the fraudulent credit cards using point of sale terminals and received reimbursement from credit card processing companies via wire transfer, while never actually providing any merchandise or services. The ring members allegedly split the proceeds. The bank accounts of the shell companies set up by the merchants also allegedly were used to launder the proceeds of the scheme, with checks being written from one company to another as if they were conducting business.
“While the credit card holders, businesses and purchases in this scheme were fictitious, the losses suffered by the banks were very real and totaled an alarming $3 million,” said New Jersey Acting Attorney General John J. Hoffman. “We’ll remain extremely vigilant on this front, because financial fraud on this scale hurts commerce and can bankroll other crimes. Our investigation is ongoing, but we’re confident that with these arrests, we’ve dismantled this prolific theft ring in New Jersey.”
Each of the following 12 defendants was charged by complaint with first-degree money laundering, second-degree theft by unlawful taking, and third-degree fraudulent use of credit cards:
Naim Tahir, 47, of Clark, N.J.,
Hassan Shahbaz, 42, of Jersey City, N.J.,
Aqeel Ahmed, 60, of Secaucus, N.J.,
Shama Munir, 49, of Secaucus, N.J.,
Faisal Mushtaq, 37, of Secaucus, N.J.,
Mohammad Shakeel, 46, of Jersey City, N.J.,
Muhammad Farooq Bhatti, 64, of Jersey City,
Rilvan Junaid, 49, of Spring Valley, N.Y.,
Shakeela Ahmed, 56, of Secaucus, N.J.,
Aqeel Sheikh, 54, of Secaucus, N.J.,
Mahamed Khan, 53, of Piscataway, N.J., and
Huda Ahmed, 27, of Secaucus, N.J.
All were arrested yesterday, with the exception of Shakeel, who was arrested early this morning at John F. Kennedy International Airport, Junaid, who surrendered to investigators this morning, and Khan, who is being sought on an arrest warrant as a fugitive. The arrested defendants are being lodged in the Union County Jail with bail for each set at $1 million, no 10 percent option.
Tahir allegedly was primarily responsible for creating the synthetic identities and applying for the bank accounts and credit cards used in the fraud. Shahbaz is the owner of USA United Trading, a business in Jersey City that he allegedly opened for the sole purpose of defrauding financial institutions. It is alleged that USA United Trading conducted approximately $1.6 million in fraudulent credit card transactions over the past 22 months. USA United Trading held itself out as a carpet retailer, with a store front at 150 Monticello Avenue in Jersey Citythat had several rolled up carpets in the window.
Investigators executed search warrants yesterday and seized evidence at four locations where members of the ring lived or where the ring had “drop addresses” used for mailings in the scheme. They also seized approximately $150,000 in cash and multiple bank accounts controlled by ring members containing approximately $320,000.
The state is awaiting information from banks on funds contained in additional accounts that were seized in the investigation.
The investigation began when the U.S. Postal Inspection Service (USPIS) received a referral from Wells Fargo Bank in connection with a bad check case the bank was investigating.
The charge of first-degree money laundering carries a sentence of 10 to 20 years in state prison, including a mandatory minimum term of parole ineligibility of one-third to one-half of the sentence imposed. It also carries a fine of up to $500,000 and an additional anti-money laundering profiteering penalty of up to $500,000 or three times the value of any property involved. Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000, while third-degree charges carry a sentence of three to five years in state prison and a fine of up to $15,000.