The leader of an international credit card fraud scheme that netted around $200 million has pleaded guilty in a New Jersey court.
Tahir Lodhid directed other gang members as they fabricated more than 7000 false identities to obtain tens of thousands of credit cards before doctoring credit reports to pump up the spending and borrowing power associated with the cards.
Lodhi and his team then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts, causing more than $200 million in confirmed losses to businesses and financial institutions, say authorities.
The massive enterprise involved more than 1800 'drop addresses,' including houses, apartments, and post office boxes, which the gang used as the mailing addresses of false identities.
Lodhid's team created dozens of sham companies, obtained credit card terminals for them and then ran up charges on the fraudulent cards. The fake firms also served as 'furnishers', providing credit bureaus with false information about the history of false identities of people who purportedly worked at or owned the companies.
The operation cost millions of dollars to run but Lodhi and his conspirators still managed to spend lavishly on luxury cars, electronics, spa treatments, expensive clothing and millions of dollars in gold. They also stockpiled large sums of cash and wired millions of dollars overseas.
Lodhi has pleaded one count of conspiracy to commit bank fraud and faces up to 30 years in jail when sentenced in October.
US Attorney Paul Fishman says: "This type of fraud increases the costs of doing business for every American consumer, every day. Lodhi hurt not only the credit card issuers, but everyone who pays increased interest rates and fees because of the money sucked out of the system by criminals."
Meanwhile, in a separate card fraud case, Fishman has charged eight people with allegedly hacking into more than a dozen financial institutions and trying to steal at least $15 million.
Ukrainians Oleksiy Sharapka and Leonid Yanovitsky, who are accused of running the operation, are still at large. Another four US-based gang members have been arrested, with authorities pursuing two more.
According to the complaint, the gang managed to hack into the computer networks of Aon Hewitt; Automated Data Processing; Citibank; E-Trade; Electronic Payments; Fundtech; iPayment; JP Morgan Chase; Nordstrom Bank; PayPal; TD Ameritrade; US Department of Defense, Defense Finance and Accounting Service; TIAA-CREF; USAA; and Veracity Payment Solutions.
Once inside, the hackers allegedly diverted money from customer accounts to accounts and pre-paid debit cards they controlled. They then implemented a 'cash out' operation, employing crews of 'cashers' to get hold of the stolen funds through ATM withdrawals and fraudulent purchases. Proceeds were laundered, often through international wire transfer services, to the leaders of the conspiracy overseas.
The eight defendants are charged together in a criminal complaint with conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to commit identity theft.