Defendants Used Stolen Identities and Hundreds of Stolen Credit Card Numbers to Fraudulently Obtain over $1 Million in Goods, Services, and Cash
Preet Bharara, the United States Attorney for the Southern District of New York, announced that RANA KHANDAKAR, and USAWAN SAELIM were sentenced today to 56 and 36 months in prison, respectively, for engaging in a massive internet credit card fraud and identity theft scheme. KHANDAKAR and SAELIM were convicted in July 2014 following a three-week jury trial before U.S. District Judge John G. Koeltl, who imposed their sentences.
Manhattan U.S. Attorney Preet Bharara said: “Khandakar and Saelim used the internet to engage in a smorgasbord of frauds, ranging from the unauthorized sale of EZPass tags to Medicaid fraud. For their years of cyber scamming, the defendants now face years in federal prison.”
According to the Superseding Indictment, evidence admitted at trial, and submissions made in connection with sentencing:
From 2008 through 2012, KHANDAKAR and SAELIM engaged in a large-scale and sophisticated cyber fraud involving millions of dollars in completed and attempted fraudulent charges on hundreds of stolen credit cards and debit cards. The defendants’ fraud consisted principally of two types of schemes from which they netted over $1 million worth of goods, services, and cash. In one type of scheme, the defendants used stolen credit and debit card numbers to buy goods, such as EZ Pass tags, baby care items, gift cards, movie tickets and computers, and then resold those items online. The second scheme involved the use of stolen identities to set up merchant processing accounts, which were then used to incur charges on stolen credit cards for the benefit of the defendants. In addition, KHANDAKAR and SAELIM used stolen personal identifying information of their victims to establish fake businesses, open bank accounts, acquire and manufacture credit and debit cards, and create counterfeit checks, among other things.
One way in which the defendants obtained the personal identifying information of their victims was by posting fake job listings online, in which they required applicants to submit their Social Security number and other personal identifying information. The defendants also used stolen credit and debit account information to obtain goods and services for their personal use, such as food delivery, pet insurance, entertainment, and cash. Throughout the course of their fraud scheme, while amassing hundreds of thousands of dollars in ill-gotten gains, the defendants were also defrauding the Medicaid program, by collecting thousands of dollars in health insurance benefits intended for low-income individuals to which they were not entitled.
The Fraudulent Purchase and Re-Sale of EZ Pass Tags and other Items
KHANDAKAR and SAELIM used at least 50 stolen American Express credit cards to purchase EZ Pass tags and credits. They then resold the tags and credits through two websites they founded – www.drezpass.com and www.ezpasstag.com. Neither of these websites was an authorized EZ Pass retailer. The defendants also purchased baby care items using stolen credit card information and re-sold those items on another website they founded – www.udiapers.com. In addition, the defendants purchased tens of thousands of dollars of gift cards, computers, and movie tickets, and resold those items on websites such as eBay and Craigslist. Because they had obtained the merchandise for free using stolen credit cards, their profit margin in reselling the merchandise was 100% of the sale price.
The Fraudulent Merchant Accounts
In order to process credit and debit card transactions, a business must establish an account with a credit and debit card processor, known as a “merchant account.” Each merchant account is linked to a bank account associated with the business.
As part of their scheme, KHANDAKAR and SAELIM established fraudulent online merchant accounts linked to phony businesses, such as “Tips,” “La Pala Pa,” and “Cafe 007,” which they used to process bogus credit and debit card charges. The defendant used stolen personal identifying information to set up the merchant accounts, and then made unauthorized charges to those merchant accounts using stolen credit and debit card numbers.
Through these fraudulent merchant accounts, KHANDAKAR and SAELIM attempted to make millions of dollars’ worth of charges on at least 385 stolen American Express credit card accounts, and on more than 1,000 credit or debit card accounts at Citibank, JP Morgan Chase, Bank of America, and Discover, among others. In some cases, the same credit cards that incurred charges in connection with the fraudulent EZ Pass purchases were also charged in connection with the fraudulent merchant accounts.
KHANDAKAR and SAELIM were convicted of one count of conspiracy to commit mail and bank fraud; one count of access device fraud; one count of aggravated identity theft; and one count of theft from the government. In addition, Khandakar was convicted of one count of mail fraud and SAELIM was convicted of one count of bank fraud.
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In addition to their prison sentences, KHANDAKAR and SAELIM were sentenced to three years of supervised release, and were each ordered to pay $263,000 in restitution and $950,000 in forfeiture.
Mr. Bharara praised the work of the Secret Service, the MTA-OIG, the Port Authority OIG, and U.S. Department Health and Human Services OIG. He also thanked the New York State Police, the New York State Department of Vehicles Field Investigative Unit, and the Social Security Administration for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Christine I. Magdo is in charge of the prosecution.
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