Fraud ring netted more than $200 million from credit card companies

Posted at 7:37 PM, Feb 05, 2013
and last updated 2013-02-05 19:37:28-05

If you ever wondered why it is banks charge outrageous fees and get away with making it so tough to get a higher credit line—federal agents gave you part of the answer.  Fraud.  Early Tuesday morning agents in New Jersey swooped in and arrested a dozen alleged scammers and closed down several Jersey City jewelry stores and confiscated money, gold and jewelry.

U.S. Attorney Paul Fishman laid out the years-long scam.  “The goal is to get credit cards, get the credit limit as high as possible, max them out, and then walk away.”

Hundreds of Federal Agents, U.S. Postal Police and Secret Service agents were a part of the take down this morning, bringing in what they call are the masterminds of this $200 million scheme.  More arrests could be coming.  And virtually all of the money–will eventually come out of your pocket since bank pass on their losses to customers.

Fishman explained it is through, “increased interest rates and fees because of money sucked out of the system.”

18 defendants were named today, most of Pakistani origin.  None of them had known jobs, yet are alleged to have scammed massive amounts of money, hundreds of thousands or more from banks and credit card companies by setting up 25,000 phony credit card accounts, making up to 7,000 fake id’s and working bank security loopholes.  Money was alleged to be shipped to overseas accounts.  And that may never be recovered.

“They sent millions of dollars in profits to Pakistan, Canada, India and the UK,” explained Fishman.

The defendants lived in New Jersey and Long Island, Queens, Staten Island and Philadelphia.  Only two are related.  The agents say millions of dollars in profits were used to buy gold and gold jewelry.  The explained how this part worked.  The scammers are accused of making phony id’s, setting up post office boxes, applying for credit cards, then swiping those cards for non-existent purchases at the Jersey City jewelry stores of other alleged bad guys, collecting the money, and eventually defaulting on the cards.  Cash was even being stashed in homes.

Fishman said thousands of dollars were seized.  “$68,000 from one house.  It was seized from a kitchen stove.”

13 defendants were arraigned in New Jersey Federal court today; 6 more defendants are being sought.  More arrests are expected as informants provide more information.