An epic credit card fraud scheme

There are a lot of scams out there, and ordinary people fall prey to them every day.  From fake Nigerian royalty to stolen passwords, these scams can burn holes in pockets and ruin lives.  I myself have had the PIN to my debit card stolen, and it is not a pleasant experience.  Elderly people are the first people we think of who are vulnerable to email scams, but it turns out even the most seasoned financial professionals can be duped.

In Newark, New Jersey, eighteen people were charged in a big credit card fraud scheme in 2013.  How big?  Federal authorities believe that, over the course of six years, the group may have stolen $200 million!  The victims in this case?  Credit card companies.

The details in this case are absolutely stunning.  Based in Jersey City, the scam dates back to 2007.  It was allegedly operated in at least 28 states, and money from this scam has been wired to countries like Pakistan, India, China, and Japan.  Newark’s FBI special agent described the plan as a “virtual cafeteria of sophisticated frauds and schemes.”  The alleged $200 million stolen in this scam certainly leaves a bad taste in my mouth.

The group involved in the scheme used at least seven thousand fake identities to obtain more than 25,000 credit cards.  (And you thought Ronaiah Tuiasosopo had a problem with fake identity…)  The participants set up more than 1,800 mailing addresses and created fake documents to provide credit card companies with what appeared to be legitimate information for creating lines of credit.  They then sent fake reports to credit rating agencies, who then raised their credit limits because they saw what they thought were balances being paid off.  The schemers then took out loans or maxed out the credit cards and did not repay the debts.  Not only were thousands of fake identities created, the group also created at least 80 fake businesses that accepted payments from the illegally-obtained credit cards.  This should sound crazier than any movie you’ve ever seen!

Some of the individual actions in this case are just despicable.  One defendant allegedly used a 6-year-old’s Social Security number to obtain a fake utility bill.  Another defendant had 12 false identities and stole $2.5 million by using 464 credit cards.  Another man withdrew $1.5 million from fake accounts despite not having a job.  In one particular police raid, authorities found nearly $70,000 stashed in an oven.  Investigators say the total stolen amount of $200 million is likely to rise.  Despite the thousands of fake identities created by a total of 18 individuals, each defendant in this case has been charged with just one count of bank fraud each.  The punishment could be a mere 30 years in prison and a measly $1 million fine.

We should all be embarrassed by every aspect of this case:  credit card companies being duped, individuals stealing money with fake identities, and a punishment that does not fit the crime.  People on message boards may joke that the perpetrators should’ve gotten a raise if they stole more money or that they should’ve been elected to office if they wanted to steal and avoid prison, but this is a serious situation.  If credit card companies AND credit rating agencies were both duped, who can we really trust with our finances?  Is it all a big scam?  This case should sound a call for more regulation and review within the credit world.  It should also tell the credit world that simply relying on numbers is not good business.  If credit card companies don’t get to know their customers, they may continue to get hornswoggled by idiots using fake identities and/or innocent people’s personal information.

David Pilley

David Pilley

David Pilley is a May 2010 graduate of the University of North Carolina at Chapel Hill, with a B.A. in communication studies and a creative writing minor. He is a native of Raleigh, North Carolina.

He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.

Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.

In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
David Pilley

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