Quick Answer: Seven members of an identity theft ring were charged with a $1M fraud scheme that used stolen identities of 180+ people to make fraudulent purchases at major NYC retailers like Home Depot and Kohl’s. Key red flags include manufactured fake driver’s licenses, resold merchandise for profit, and victims discovering the theft only when receiving mysterious credit card bills weeks later.
Charges were announced last Thursday against seven members of an identity theft ring that allegedly used stolen identities of more than 180 people at major New York City retail stores including Home Depot, Sears, Kmart and Kohl’s, among others. The ring of fraudsters resold merchandise and gift cards for a profit after purchasing them under account holders names fraudulently.
Allegedly, as part of the scheme, the member of the ring manufactured driver’s licenses using the stolen identity information to facilitate their impersonations of the legitimate cardholders at the stores.
The ring consisted of Phillip Smith, the ring’s leader, Melissa Morton, who allegedly impersonated female identity theft victims, Mahmoud Abdul Hussein, Ali Abdul Hussein, Fadal Abdul Hussein, three brothers who allegedly manufactured the fake driver’s licenses out of their storefront smoke shops in Greenwich Village; and Francis Hidalgo and Randy White, who are alleged to have resold the illegally obtained store credits or used them to buy materials for home improvement projects for their businesses.
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Manhattan U.S. Attorney Preet Bharara stated that “Identity theft is an insidious crime – its victims are often unaware they’ve been robbed until days or weeks later when they are hit with credit card bills for mysterious purchases made by criminal impersonators. Identity theft results in hundreds of millions of dollars in losses to unsuspecting victims and businesses, and victims may have to spend countless hours just to get their lives back in order. As [these] arrests demonstrate, we hold no quarter for the alleged perpetrators of these crimes and will work with our state and federal law enforcement partners to bring them to justice.”
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According to court documents, 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 large retail chains.
After obtaining the stolen identities, Smith called the customer service numbers at the retail stores to confirm that the victims had credit accounts and to determine the available credit limit. Once that information had been obtained Smith had a fake driver’s license in the name of the account holder made (allegedly from the Hussein brothers) but with photos of the individuals who would impersonate them at retail outlets.
As alleged, Smith drove Morton, one of his co-defendants, 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 home but would offer the fake 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 acquire merchandise for store credits. Then, the credits were sold to other members of the ring, including Hidalgo and White, for approximately 60 percent of their face value. In turn, the items were then resold for usually 70 percent of their face value.
During the investigation, court-authorized wiretaps were used to intercept telephone calls between the defendants. In some of the calls, Smith and Morton speak in code about the fake driver’s licenses and the victims whose store accounts they planned to target. In a separate call, Smith warned White that the fraudulently obtained Sears store credits had to be used “right away,” because otherwise “they [would] go bad.”
In other calls, Smith arranged to sell Home Depot store credit to Hidalgo for approximately 60% of the face value, and Hidalgo in turn allegedly found contracting businesses to buy the fraudulently-obtained store credits in return for cash. In still other calls, the Hussein brothers discussed the fake driver’s licenses they manufactured.
The Complaint charges Smith, Morton, Hidalgo and White with conspiracy to commit access device fraud, which carries a maximum term of five years in prison. The Complaint also charges Smith, Morton and the Hussein brothers with a separate conspiracy to produce fake driver’s licenses, which carries a maximum term of 15 years in prison. Smith and Morton are additionally charged with aggravated identity theft, which carries a mandatory two-year sentence if convicted – Source.
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