Acting Attorney General Christopher S. Porrino announced that investigators have arrested the owner of a go-go bar in Roxbury and five associates on charges including first-degree racketeering and money laundering for allegedly engaging in an elaborate scheme in which they used stolen credit cards – as well as gift cards that they purchased with the stolen credit cards or acquired through other criminal schemes – to steal more than $9 million. The owner’s wife also was charged.
The following six men were arrested yesterday on charges of racketeering (1st degree), money laundering (1st degree), conspiracy (2nd degree), theft (2nd degree), and credit card theft (3rd degree). They were lodged in the Morris County Jail with bails ranging from $100,000 to $250,000.
1. Kevin Lipka, 61, of Livingston, N.J., co-owner with his wife of the company She-Kev Inc., which does business as Smiles II, a strip-club bar on Route 46 West near Route 10 in Roxbury. He allegedly led the criminal enterprise with the help of key associates.
2. Peter Vasilipous, 71, of Elizabeth, N.J., a manager of Smiles II who allegedly partnered with Lipka in the criminal enterprise.
3. Eric Olsen, 47, Roxbury, N.J., a second manager of Smiles II who handled finances for the business and allegedly partnered in the criminal enterprise.
4. Kevin Bae, 28, of Edgewater, N.J., who allegedly partnered with Lipka in processing transactions with the stolen credit cards and illegally acquired gift cards.
5. Jordan Turner, 23, of Jamaica, N.Y., who allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits.
6. Kevin Rodriguez, 23, of Whitehall, Pa., who allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits.
Lipka also is charged with misconduct by a corporate official (2nd degree) and failure to file a tax return (3rd degree), and Bae is charged with failure to file a tax return. In addition, Lipka’s wife, Shelly Lipka, 60, was charged by summons with misconduct by a corporate official and failure to file a tax return.
The defendants were charged in a 10-month investigation called “Operation Smiles” led by the Division of Criminal Justice Gangs & Organized Crime Bureau and the Roxbury Police Department. The Roxbury Police initiated the investigation and brought in the Attorney General’s Office. The Livingston Police assisted in the arrests and execution of search warrants at Smiles II and other locations.
The investigation revealed that, over a period of four years, the defendants allegedly conspired to steal more than $9 million by defrauding retailers, banks, credit card processing companies and credit card holders. The scheme involved the use of stolen credit cards and fraudulently obtained credit cards. The credit cards were used to purchase pre-paid gift cards issued by credit companies such as Master Card and Visa at various retail stores, including Target and Home Depot. The gift cards were later “cashed in” through phony transactions at Smiles II, and the proceeds were allegedly divided between the individuals who supplied the cards, including Rodriguez and Turner, and Lipka and his partners at Smiles II. At times, the credit cards were used directly for transactions at the go-go bar. The cards were swiped through credit card processing devices to conduct fraudulent transactions which generated proceeds that went into the business accounts of She-Kev Inc.
The investigation revealed that individuals including Rodriguez and Turner also allegedly used stolen credit cards to buy high-priced merchandise at retail stores, particularly Home Depot. The merchandise was later returned for in-store credit that could be used later, or for in-store gift cards that could be exchanged for cash on the Internet. In other cases, the defendants allegedly purchased liquor for Smiles II using stolen credit cards or illegally acquired gift cards.
The investigation further revealed that the defendants allegedly acquired gift cards through various other criminal schemes. In one scheme, vehicles were fraudulently offered for sale through eBay and Craigslist. Unsuspecting purchasers would be directed to pay for the vehicle with pre-paid gift cards from credit companies such as Master Card and Visa, and those gift cards also were allegedly processed through Smiles II. The vehicles were never shipped to the victims. In other instances, the defendants allegedly obtained gift cards through variations on the common “grandparent” scam, in which an elderly victim is contacted by someone posing as the grandchild or nephew of the victim and claiming to need bail money to be released from jail. The victim would be told to pay the bail by purchasing gift cards and providing the gift card information by phone to a “police officer’ involved in the arrest.
The first-degree charges carry a sentence of 10 to 20 years in prison and a fine of up to $200,000. The racketeering charge includes a mandatory period of parole ineligibility equal to 85% of the sentence imposed. The money laundering charge includes parole ineligibility equal to one-third to one-half of the sentence imposed. It carries a fine of up to $500,000 and an additional money laundering penalty of up to $500,000. Second-degree charges carry a sentence of five to 10 years in prison and a fine of up to $150,000, while third-degree charges carry a sentence of three to five years in prison and a $15,000 fine.