Federal Officials announced seven people have been charged for their alleged roles in a large-scale conspiracy to commit bank fraud in New Jersey, New York, Pennsylvania, Maryland, Virginia, and Michigan over the course of two years.
The criminal complaint charges the defendants with conspiracy to commit bank fraud, in connection with a fraudulent scheme that used hundreds of fraudulent accounts to defraud several major banks causing losses of over $3.5 million.
According to documents filed in the District of New Jersey and statements made in court:
From 2018 through April of 2020, the defendants conspired to defraud several major banks and electronic merchant processors.
To accomplish this, the defendants established bank accounts associated with sham entities, and would then issue checks payable to other sham entities associated with the criminal organization, knowing that the accounts contained insufficient funds.
The defendants would also conduct numerous fraudulent credit card and debit card transactions between shell companies to fraudulently credit payee accounts and fraudulently overdraw payor accounts.
Alternatively, the defendants would use these shell companies to execute temporary refund credits, to checking accounts associated with the criminal organization, where no prior legitimate transaction had occurred.
In each one of these instances, members of the criminal organization withdrew the funds that banks and/or merchant processors had credited to the payee bank accounts at the time of the fraudulent transaction.
Because the defendants withdrew the credited funds from the payee accounts before the banks could recognize the fraudulent transactions, the banks and merchant processors were left with substantial losses.
The investigation has identified approximately 200 bank accounts and 75 merchant credit card processing accounts used to facilitate the schemes. The defendants’ unlawful activities have caused an aggregate loss to banks and merchant processing companies of at least $3.5 million.
The bank fraud conspiracy count carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million.