A crime ring based in New Jersey created thousands of fake identities to obtain 25,000 credit cards and steal more than $200 million in one of the largest scams of its type, the Justice Department said.
Eighteen people engaged in a conspiracy to create thousands of false identities and credit profiles, burnish their creditworthiness, and take large loans that were never repaid, according to a Federal Bureau of Investigation arrest complaint unsealed Feb. 5 in federal court in Newark, New Jersey.
"This is, as far as we can tell, one of the largest, if not the largest, credit card fraud cases ever prosecuted by the Department of Justice," U.S. Attorney Paul Fishman said at a news conference in Newark. "We have already documented losses of $200 million, and that number could quite well go higher."
The ring used a sophisticated blend of identity theft and credit card fraud, Fishman said. Millions of dollars were wired to Pakistan, India, the United Arab Emirates, China, Romania, Japan and Canada, the FBI claims. The defendants also bought luxury cars, electronics, spa treatments, high-end clothing and millions of dollars in gold, according to the FBI.
"The goal is to get credit cards, get the credit limits as high as possible, then use those credit limits to max them out, and then walk away," Fishman said. "A lot of what they did was very painstaking and very sophisticated and took a long time."
Thirteen people were arrested Feb. 5, and authorities searched 13 locations. They have seized three jewelry stores in Jersey City. Four people were previously charged, and three pleaded guilty. Authorities had earlier seized cash, including $68,000 from a defendant's stove in Jersey City, and $2 million in gold from a jewelry store in that city.
Fishman said that credit card companies cooperated throughout the 18-month probe of a scam that began in 2007 or earlier. He said prosecutors charged the top operators.
The leaders, Fishman said, were Babar Qureshi, 59, of Iselin, New Jersey, and Muhammad Shafiq, 38, of Bellerose, New Jersey. Eleven live in New York, six in New Jersey, and one in Pennsylvania. Most are Pakistani, and some are U.S. citizens, Fishman said.
Those arrested Feb. 5 appeared in federal court in Newark that afternoon. They are charged with conspiracy to commit bank fraud, and face as many as 30 years in prison.
At the hearing, Assistant U.S. Attorney Zach Intrater said Qureshi posed a "profound risk of flight," and U.S. Magistrate Judge Madeline C. Arleo ordered him detained until a bail hearing on Feb. 8. Intrater said he has access to "enormous sums of money" and often travels to his native Pakistan. After the hearing, Qureshi attorney Paul Casteleiro declined to comment.
"The investigation is continuing," Fishman said at the news conference. "There are lots of people with whom these defendants were working, who have not yet been charged and have not yet been caught, and may have had lower-level functions."
After using 7,000 false identities to obtain 25,000 credit cards, the conspirators ran the scam through real businesses such as the jewelry stores, and at least 80 sham companies that used more than 1,800 addresses, according to Fishman and the FBI.
The network also used black-market businesses known as "tradeline" providers, according to Fishman. A primary tradeline is a line of credit in a credit history, which affects how much a user can borrow. A second type of tradeline allows a credit card holder to add an authorized user to an account. That lets an authorized user raise his credit score.
The complaint referred to CC-1, a co-conspirator who e- mailed a defendant in February 2011 about primary tradelines for sale.
Fishman said the credit card companies, which he wouldn't identify, have "ongoing dialogue every day" with the FBI and other agencies that helped to build the case. The U.S. Postal Inspection Service, U.S. Secret Service and Social Security Administration also worked on the case.
"They were working very closely with the FBI and the other investigative agencies and our office to detect this," Fishman said. "They've been very helpful in helping us figure out which credit cards were real and which were not, which accounts were real and which were not."
Banks and U.S. investigators give each other leads "all the time," he said.
"There's real cooperation that goes on between the banks and credit card issuers and law enforcement to try to track this stuff down," Fishman said.
The case is U.S. v. Qureshi, 13-mj-8013, U.S. District Court, District of New Jersey (Newark).