Breaking News in the Industry: February 6, 2018

Two more sentenced to prison in international $200M credit card fraud conspiracy

An Indian American from Iselin, New Jersey and another man from New York were sentenced ton January 30, to federal prison terms for their respective roles in one of the largest credit card fraud schemes ever charged by the Justice, U.S. Attorney Craig Carpenito announced. Qaiser Khan, 53, of Valley Stream, New York, previously pleaded guilty to an information charging him with one count of conspiracy to commit bank fraud. He was sentenced to six months in prison. Sat Verma, 65, of Iselin, New Jersey, previously pleaded guilty to an information charging him with one count of access device fraud. He was sentenced to one year in prison. U.S. District Judge Anne E. Thompson imposed both sentences, January 30, in Trenton federal court. According to documents filed in this case and statements made in court, Khan and Verma were originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. They are the last of 22 defendants to be sentenced in this scheme.

The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a phony credit profile with the major credit bureaus; pump up the credit of the false identity by providing bogus information about that identity’s creditworthiness; then borrow or spend as much as they could without repaying the debts. The scheme caused more than $200 million in confirmed losses to businesses and financial institutions. The scope of the criminal fraud enterprise required the conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses for the false identities. Khan admitted he helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted they knew the cards would be used fraudulently at businesses. Verma admitted he effected transactions with access devices issued to another person. [Source: The Indian Panorama]

Another serial shoplifter arrested

Cedar Grove, New Jersey, police arrested an East Orange man for shoplifting on Tuesday at Foodtown. Police responded to the store around 2:50 p.m. on Tuesday on a report of a shoplifting in progress.  According to police, the officers stopped and arrested the suspect as he tried to flee in a motor vehicle.  Upon further investigation, police found that Richard Burwell, 48, of East Orange had shoplifted merchandise from the store and was also in possession of a large quantity of goods shoplifted from stores outside of Cedar Grove. The officers also determined that Burwell was suspected in a previous shoplifting at Foodtown and was wanted by numerous jurisdictions for shoplifting offenses. He was charged with shoplifting and receiving stolen property and was turned over to Morris County Sheriff’s Detectives who transported him to the Morris County Jail.  [Source: TapInto]

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NH police arrest 3 NY men for fraud

Three New York men were arrested in Hudson, New Hampshire, last week in connection with an alleged fraud at the town’s Cumberland Farms store. The suspects were identified as Deval Rhodes, 26, of New York City; Justin Foe, 22, of New York City; and Taylon Hill, 19, of Westbury, New York. Rhodes was charged with identity fraud; Foe was charged with identity fraud and credit card fraud; and Hill was charged with credit card fraud. Police said the trio tried to use a fraudulent credit card to buy more than $100 worth of cigarettes at the Central Street Cumberland Farms. “Noting discrepancies with the identification and credit card, the clerk cancelled the transaction and called the police,” Hudson Police Detective Sergeant Thomas Scotti said in a statement. The trio fled in a silver Volkswagen Jetta and were pulled over by an officer and arrested, Scotti said. In an unrelated case in Nashua last week, police arrested another trio from New York in an alleged $40,000 iPhone/iPad scheme.  [Source: Nashua Patch]

For Bon-Ton, founded in the 19th century, an uncertain retail future

Bon-Ton Stores, saddled with debt and faltering sales, enters the week beside a throng of other retailers under bankruptcy protection, seeking a buyer for pieces or all of a department store that was founded at the tail end of the 19th century. The company has survived a score of severe economic downturns, including the Great Depression, but finds itself in uncharted territory today. While has revolutionized the way people shop, the behavior of Americans had had already been diverging radically both in terms of what they buy, and where they buy it. The changes have been so sweeping they’ve left the aisles of many department stores barren of customers even during the crucial days leading up to Christmas. There have been signs for some time that Bon-Ton was in trouble and that did not ease heading into the most recent holiday season. Sales at established Bon-Ton stores, a critical gauge of a retailer’s health, slid 2.9% in the nine-week period before the New Year. Those sales had tumbled 6.6% in the prior quarter. On Sunday, Bon-Ton filed for Chapter 11 protection in the U.S. Bankruptcy Court for Delaware. There, it joined several dozen other retailers who entered a bankruptcy court over the past year, among them Toys R Us, Payless ShoeSource, and Gymboree Corp. Bon-Ton received a commitment of $725 million in debtor-in-possession financing to operate during its restructuring process. [Source: USA Today]

Chinese counterfeiter made over $1.1M trafficking phony iPhones, iPads in US

A Chinese national living in the U.S. on a student visa will be sentenced in May after pleading guilty to conspiracy and trafficking of counterfeit Apple products including iPhones and iPads, a scheme for which he earned more than $1.1 million. According to the U.S. Department of Justice, Jianhua “Jeff” Li, 43, pleaded guilty on Friday to one count of conspiracy to traffic counterfeit goods and labels and smuggle said goods into the U.S., and one count of trafficking counterfeit goods. 

Li, along with fellow conspirators Andreina Becerra, Roberto Volpe, Rosario LaMarca, and others, operated a smuggling and trafficking ring through Li’s company Dream Digitals from July 2009 through February 2014. Under the scheme, the cohort conspired to bring more than 40,000 phony devices, including iPhones and iPads, as well as labels and packaging into the U.S. 

Documents show Li received more than $1.1 million in sales proceeds from the endeavor.

To avoid U.S. Customs and Border Protection scrutiny, Li and his band of conspirators shipped in the various necessary components separately; iPhones and iPads came in one shipment, labels with counterfeit Apple branding in another. Li would then assemble the packages and send them out to comrades “all over the United States.”

Further obscuring his operation from officials, Li diverted funds received to co-conspirators’ bank accounts located in Florida and New Jersey. A portion of proceeds was also transferred to collaborators in Italy.

It took the cross-jurisdictional collaboration of the HSI Newark Seaport Investigations Group and the Bergen County Prosecutor’s Financial Crimes Unit, along with help from Europol and Italy’s Guardia di Finanza, to successfully uncover the crime. 

All of Li’s three named partners have pled guilty, with LaMarca sentenced last July to 37 months in prison. Becerra and Volpe are awaiting sentencing, while ringleader Li is scheduled to hear his fate on May 30.

As a purveyor of the world’s most desirable tech products, Apple has grappled with counterfeiters. Much of the company’s troubles stem from China, a country known for rampant counterfeiting, though fake iPhones and iPads do pop up on occasion in the U.S. [Source: AppleInsider]

Kroger, others rolling out self-serve shopping

The days in which human cashiers play a major role in the grocery shopping experience may be numbered. Retailers across the nation have for years provided technology that allows shoppers to check out using automated kiosks, and now retail giant Kroger is about to roll out a new service which will allow shoppers to eventually bypass the checkout process altogether. Cincinnati-based Kroger announced recently that it’s about to implement the new Scan, Bag and Go service in 18 operating divisions to include 400 stores across the nation. According to its news release, Kroger will roll out Scan, Bag and Go in “select locations” across the country including the Delta Division, which serves Mississippi shoppers. Which stores will be included was not immediately available.

Scan, Bag and Go allows customers to stroll through the aisles with an app or handheld scanner which will scan products as they’re placed into bags. As shoppers scan and bag their groceries, the system will keep a running total of the items in the basket, and show coupons and specials. For now, consumers will have to stop at the self-service checkout stand to pay for their groceries, but soon will be able to pay directly from a smartphone app and walk out of the store with a minimum of hassle. Kroger’s “Restock Kroger” initiative is part of a large-scale retooling of the retail giant’s plans for the future. Kroger has said it plans to double its investment in new technologies in the next year, a move designed to make it more competitive in an era of stiff competition not only from sister bricks-and-mortar retailers, but also from online services such as and Amazon and self-prepared services such as Hello Fresh and Blue Apron. [Source: Clarion Ledger]

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