Breaking News in the Industry: August 1, 2016

Go-go bar front for $9 million fraud scheme

The owner of Smiles II go-go bar, two managers and three associates have been charged in an elaborate credit card fraud and theft case that allowed them to steal $9 million over a four-year period, acting state Attorney General Christopher S. Porrino announced Friday after releasing details of a 10-month investigation conducted by the state Division of Criminal Justice and Roxbury police.

The defendants were charged after a 10-month investigation called “Operation Smiles” led by the Division of Criminal Justice Gangs & Organized Crime Bureau and the Roxbury Police Department. The probe revealed that over a period of four years, the defendants conspired to steal more than $9 million by defrauding retailers, banks, credit card processing companies and credit card holders.

The scheme involved the use of stolen credit cards and fraudulently obtained credit cards. The credit cards were used to purchase pre-paid gift cards at various retail stores, including Target and Home Depot. The gift cards were later “cashed in” through phony transactions at Smiles II, and the proceeds were allegedly divided between the individuals who supplied the cards. The probe also showed that individuals, including Rodriguez and Turner, also allegedly used stolen credit cards to buy high-priced merchandise at retail stores, particularly Home Depot. The merchandise was later returned for in-store credit that could be used later, or for in-store gift cards that could be exchanged for cash on the Internet. In other cases, the defendants allegedly purchased liquor for Smiles II using stolen credit cards or illegally acquired gift cards.

“These defendants allegedly racked up millions of dollars in illicit proceeds in the back room of a go-go bar, where they spent hours swiping stolen credit cards and ill-gotten gift cards,” said Porrino, the acting attorney general. “With these arrests, we have frozen their bogus credit and put a stop payment on their criminal schemes,” he said.

“Most people think of gift cards as the perfect present when they don’t know what to give, but criminals think of them as a perfect way to launder money anonymously,” said Elie Honig, director of the Division of Criminal Justice. “We showed these alleged con artists that their perfect fraud scheme was not so perfect after all. They face the most serious financial charges provided for under state law.” [Source: USA Today’s Daily Record]


3 Walmart employees charged with manslaughter in death of shoplifter

Three Walmart workers in Florida have been charged with manslaughter in the death of a shoplifter, police said Friday. They are accused of suffocating Kenneth Wisham after he tried to steal $380 worth of DVDs in a shopping cart from the Walmart.

The employees chased Wisham, who fell. They then held him on the ground. As he was being restained, Wisham stopped breathing. The employees called 911 and an ambulance took him to the hospital, where he died.

Lakeland police said Friday that criminal charges were warranted after the coroner ruled that Wisham died of mechanical asphyxia and that he had suffered 15 broken ribs. Charged were Nathan Higgins, a support manager, Crucelis Nunez, a customer service manager, and Ruandall Tooko, who works in loss prevention.

A police affidavit quotes a witness as saying she saw Nunez knock Wisham to the ground and then pummel him with her fists. Her account differed from Nunez’s. She told cops that she “nudged” Wisham as it appeared he was about to fall. According to the affidavit, Nunez also said she heard Wisham say, “Let me go, I didn’t do anything” and later say, “I can’t breathe.” Walmart suspended the three employees in February as police investigated Wisham’s death. [Fox News]


Friendly fraud: Online sellers are losing billions

Some people do this with fraudulent intent. Others just because they changed their mind. Friendly fraud is an undeserved chargeback. It occurs when a customer fraudulently files a chargeback claiming the item ordered was never received or he never made the charge.

Here is how this is done. Someone goes to a website, enters his credit card details and makes a purchase. Later on, he denies making the purchase and walks away with both, the goods and the money. It is easier to do this when buying intangible services on the Internet because all a card holder has to say is, “That wasn’t me”. Quashing such a claim is difficult because a merchant will find it difficult to prove that the person who received the online service is the same as the card holder.

What makes friendly fraud even easier to perpetrate is the reluctance of our banking system to thoroughly investigate chargeback claims. Failure to be thorough in investigation is perpetuated by society’s idea that “customer is always right.” If banks do not follow through with the investigation quickly, they risk losing business. In the end, reversal of transaction favors both the cardholder and the bank.

Because of this, chargeback fraud has become a way for consumers to make easy money. Instead of approaching the seller and giving them an opportunity to resolve the conflict, the cardholder immediately goes to their bank to ask for a chargeback. Even though ignorance may be a factor in the recurrence of friendly fraud, some find it to be an easier way to make money. By winning a chargeback claim, they end with both, money and goods. [Source: The Nation]


3 charged in theft of $250,000 lottery ticket in N.W. Iowa

An employee at an Iowa lottery retailer is charged with stealing a winning $250,000 instant scratch ticket and working with her boyfriend and mother in a clumsy attempt to claim the prize, investigators said Friday.

Prosecutors allege that Casey’s General Store employee Ashley Bosler, 20, found the winning ticket by scratching off a corner and scanning the bar code that confirmed it was a winner of the game’s top prize.
Authorities allege that she hadn’t paid for the ticket and was too young to play and asked a co-worker to sign it and eventually her boyfriend, who tried to claim it. Suspicious lottery officials refused to approve the payout after noticing scribbling on the back of the ticket.

The risk of theft and fraud by lottery retailers has long been a concern. In a 2009 investigation, the Iowa Ombudsman’s Office found that “some retailers and store employees have been uncommonly lucky playing the lottery” and warned that the agency needed to do more to prevent and detect problems. The report warned about “pickouts” in which store employees keep winning scratch tickets and sell losers to the public. “It is definitely a phenomenon that’s known about in the lottery security world,” said ombudsman investigator Bert Dalmer. “It sounds like the lottery has been keenly aware of that in this case, which is a good thing for players.” [Source: The Des Moines Register]


Six arrests made in connection to theft of 27 handguns

Five teens have been arrested for their alleged involvement in the burglary and theft of 27 handguns from a Deleware sporting goods store. Four unknown male suspects smashed through the front door glass of the Artemus Outfitters. The suspects then entered and stole 27 handguns from a display before fleeing the scene. Although no photos were released, the incident was captured on surveillance cameras.

Wilmington Police later responded to a shooting where upon investigation four stolen firearms were recovered and connected to the sporting good store burglary. The 17-year-old juvenile victim of the shooting would later be implicated in the burglary through the joint investigation. After further investigation, detectives were able to link four other juvenile suspects to the burglary. The five teens were all charged with 27 counts of theft of a firearm, third-degree burglary, wearing a disguise during the commission of a felony, second-degree conspiracy, and criminal mischief.

Additionally, troopers patrolling U.S. route 40 conducted a traffic stop on a Toyota sedan after the vehicle made an abrupt lane change in front of the patrol vehicle. The driver, identified as Gregory M. Wise, had a “strong odor of marijuana” coming from his vehicle. A search was conducted on the car after a state police K9 alerted to the presence of drugs and a total of 255.91 grams of marijuana was located. Also located in the search was a Ruger handgun which was found to be one of the guns stolen in the Artemus Outfitters burglary. [Source: WDEL News]


Store clerk shoots gang member at market

Fresno Police have identified a man shot by a store clerk at a market late Friday afternoon as a known gang member with a significant history of arrests for violent crimes. Officers say Marcus Hardin was threatening the store clerk before the clerk fired a shot hitting Hardin in the stomach. Hardin’s injuries are not life threatening. He will be taken to jail because of a parole warrant. At this point the clerk will not face charges.

Investigators say the clerk was prepared for trouble. “They know him from prior crimes in the store and problems and right away you could see the clerk, they have a gun behind there and when the guy comes in he puts the gun in his pocket,” said Fresno Police Lieutenant Joe Gomez.

The suspect swings at him and the clerk told the guy to leave saying “hey I’ve got a gun” he showed him the gun and the guy threw his backpack off and was ready to fight,” said Lt. Gomez. The clerk fired one shot from a small handgun hitting Hardin in the stomach. Hardin’s injuries are non-life threatening and he’ll be going to jail for a parole warrant.

Officers say in this area clerks need to protect themselves. “I was raised in this neighborhood, it’s a very, very bad neighborhood, so that if they’re armed it’s not that unusual. It’s probably a good idea,” said Lt. Gomez. Investigators say the clerk feared for his safety before firing the gun. Convenience store clerks have been attacked and even killed on the job in Fresno. Advocates for the clerks working these dangerous jobs continue to raise awareness. [Source: WDEL News]


7-Eleven store in Kansas City robbed by flash mob

A flash mob of about 50 people took items from a Kansas City 7-Eleven store. Police have released a video Sunday which they say shows dozens of people mobbing a Kansas City convenience store in order to rob it. The 7-Eleven was quickly overrun by a steady stream of young people who swarmed throughout the store. Some of them paid for their items, but police say that many others simply walked out with items they took off the shelves. The store manager says they are still tallying how much was stolen. [Source: CBS News Kansas City]


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