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‘Operation Smile’ Busts $12M Credit Card Scam at Strip Club

Not even braces could correct this ex-dentist’s crooked smile. Former dentist Kevin Lipka had his dentistry license suspended for three years in the 1990s, and apparently went into the strip club business after that, before he and his wife, Shelly, went completely rogue. The Lipkas and seven associates were all frowns when the New Jersey Attorney General’s Office came to town and busted up their $12 million scam involving stolen credit cards and hot gift cards.
Investigators from the Division of Criminal Justice teamed up with the Roxbury Police Department in 2015 on the probe dubbed “Operation Smiles,” targeting the ex-dentist, 63, who owned Smiles II, a strip club bar on Route 46 in Roxbury. Lipka’s wife, Shelly, also got wrapped up in the alleged scheme that employed a crew of “runners.”

The Internet is chock full of stories about the Lipkas alleged wheeling and dealing over the years. And some outer stretches of the ether contain lascivious and unsubstantiated claims about Kevin Lipka’s sex life. The retired dentist described himself as an entrepreneur who liked working with people who “think outside the box and who are a little off center,” according to his profile on the Jewish Business Network website. Liens have been placed on the bar, two of the Lipkas’ homes worth a combined $4 million, and two more homes owned by Kevin Lipka in Essex Fells and Belvedere, as well as a vehicle, and multiple bank accounts.“Credit card fraud of the type alleged in this case is becoming a major source of illicit revenue for organized criminal groups in the cyber age and a costly drain on the financial service and retail industries,” Attorney General Gurbir Grewal said in a statement. “These ring members allegedly were prolific in purchasing stolen credit card information on the dark web, turning it into plastic, and ultimately converting the plastic into millions of dollars in cash.”

The couple set up She-Kev Inc., the parent company that operated the strip club, in 1994, according to online business directories. The couple set up the business a year before Kevin Lipka’s dentistry license was yanked, and his Bloomfield practice eventually shuttered, by the state over allegations of insurance fraud. The Livingston couple, along with five associates, was originally hauled in by the authorities in July 2016, after search warrants were executed at Smiles II, Kevin Lipka’s home, his vehicle and other locations, leading to the seizure of thousands of gift cards and other documents related the scheme. They were charged with heading up a $9 million scheme, sparked by a call to Roxbury Police from an out-of-state law enforcement agency that had tracked gift cards purchased with stolen credit card information to Smiles II where they were “cashed out,” the AG’s Office said.

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Roxbury Police tapped the Division of Criminal Justice Gangs & Organized Crime Bureau to head up a sprawling investigation that uncovered a treasure trove of alleged misdeeds at the bar. Authorities continued investigating since the initial arrests, leading to two more arrests Friday of runners Chintan Patel, 34, of Edison, and Adam Ferguson, 26, of Bronx, N.Y, who split some profits from the scheme, authorities said. They are accused of providing Lipkas with stolen credit cards and illegally acquired gift cards to use in their mad plan. Others previously arrested include alleged partner Kevin Bae, 30, of Edgewater, who shared a back account with Lipka and allegedly had millions of dollars transferred into their joint account; Eric Olsen, 49, of Roxbury, a daytime manager at Smilles II in charge of finances.

The authorities allege Olsen and a nighttime Smiles II manager, Peter Vasilipous, 73, of Elizabeth, spent hours at the strip joint processing transactions of stolen gift and credit cards. Kevin Rodriguez, 25, of Whitehall, Pa., and Jordan Turner, 25, Jamaica, N.Y, are also accused of being part of the couple’s runner crew. They were all hit with a 19-count indictment, handed up in Mercer County that includes charges of racketeering, conspiracy, money laundering and receiving stolen property. Kevin Lipka, Bae, Rodriguez and Turner are each charged with theft by deception. The Lipkas face charges of misconduct by a corporate official, tax fraud and tax evasion.

The case is being handled in Morris County where defendants are expected to be arraigned on the charges at a later date, authorities said. Authorities believe the gift card and stolen credit card ploy was pretty sophisticated. It began in April 2014, when the accused hatched a plan they set in motion to defraud retailers, banks, credit card processing companies and credit card holders in April. The plot worked like this, according to the authorities: The defendants used a machine to slap together “cloned” credit cards using stolen credit card info, purchased off the “dark web.” That information was placed onto plastic bank cards equipped with magnetic strips that appeared legitimate, authorities said.

Runners took those cards and used them to buy pre-paid gift cards from Master Card, Visa and American Express at retail stores, including Target and Home Depot, across Southeast Pennsylvania and Brooklyn, New York, investigators said. Once they had the gift cards in hand, they were cashed through fake transactions at Smiles II, swiping cards that pumped money into accounts linked up to She-Kev Inc. Some of the suspects bought liquor from the strip joint using the stolen credit or gift cards. A cut of the kitty was divvied up among the runners, the Lipkas and their partners, who took about 20 percent.

The suspects hatched other ways to get their hands on gift cards, including a more common “grandparent” scam where callers posed as locked-up relatives who needed bail money. The victims were told to buy gift cards to pay the bail and told to give information to a fake “police officer” that was involved in the arrest.  Another scheme involved the alleged sale of vehicles through eBay and Craigslist that directed purchases to buy the vehicles with pre-paid gift cards from credit companies. But the victims never got their cars shipped out, the authorities said. Other times, the Lipkas and some of the suspects returned stolen high-end power drills to Home Depot without receipts for store credit, totaling $368,000, then hawked store credit on a gift card buyback website. [Source: The Trentonian]

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