Officials in New York on Thursday announced charges against seven members of an identity theft ring that stole more than 180 consumers' credit accounts at retailers including Sears, Kmart, Kohl's, Home Depot to receive more than $1 million in merchandise, store credits and gift cards.
New York Attorney General Eric Schneiderman said that the offenders then resold the merchandise and gift cards. As part of the scheme, members of the scheme allegedly manufactured driver's licenses using the stolen identity information to impersonate legitimate card holders in the stores.
The seven defendants are Phillip Smith, the alleged ring's leader; Melissa Morton; Mahmoud Abdul Hussein, Ali Abdul Hussein and Fadal Abdul Hussein - three brothers who allegedly made the fake driver's licenses from their storefront smoke shops in Greenwich Village; and Francisco Hidalgo and Randy White - who allegedly resold the illegally obtained store credits.
According to the complaint unsealed Thursday, since the ring’s inception in 2008 or earlier, Smith allegedly obtained stolen identities, including the names and Social Security numbers of legitimate account holders at the large retail chains. After doing so, he called the customer service numbers at the retail stores to confirm that the victims had credit accounts and to determine the account holder’s available credit limit.
Smith drove one of his co-defendants, Morton, to retail stores throughout New York, Connecticut, New Jersey and Pennsylvania, where she charged expensive merchandise and gift cards to victims’ accounts. Morton would tell the checkout clerks that she had forgotten her store credit card and would instead use the phony driver’s license and the victim’s Social Security number as proof of identity.
Smith then allegedly drove Morton to branches of the retailers in other locations where she returned the fraudulently acquired merchandise for store credits. The credits were then sold to other members of the ring – including Hidalgo and White – for approximately 60% of their face value. Hidalgo and White, in turn, resold some of the store credits and gift cards to others, usually for 70% of their face value.
During the investigation, court-authorized wiretaps were used to intercept telephone calls between the defendants.
Smith, 54, Morton, 24, and White, 56, are residents of the Bronx, N.Y. Hidalgo, 44, lives in Pomona, N.Y. Mahmoud Abdul Hussein, 27, Ali Abdul Hussein, 33, and Fadal Abdul Hussein, 22, are residents of Seaford, N.Y.
Schneiderman's office, United States Attorney for the Southern District of New York Preet Bharara, and James T. Hayes Jr., the Special Agent-in-Charge of the New York Office of Immigration and Customs Enforcement’s Homeland Security Investigations, jointly announced the charges.
"The multi-state identity theft ring that we dismantled today jeopardized the financial livelihood of vulnerable Americans already struggling in these economic times,” said Hayes. “Homeland Security Investigations will continue to work with our law enforcement partners to identify any and all vulnerabilities utilized by criminal organizations to exploit the creation and use of fraudulent identification documents for monetary gain.”
The case is being handled by Assistant United States Attorney Joseph P. Facciponti of the Office’s Complex Frauds Unit, Assistant Attorney General Meryl Lutsky, who has been designated a Special Assistant U.S. Attorney, and Assistant Attorney General Tyler Reynolds.