Network of Transnational Fraudsters Indicted for Racketeering in Scheme to Steal Millions from American Consumers’ Bank Accounts

Network of Transnational Fraudsters Indicted for Racketeering in Scheme to Steal Millions from American Consumers’ Bank Accounts

14 individuals have been indicted by a federal grand jury in Los Angeles for their alleged involvement in a transnational scheme to steal millions of dollars from American consumers’ bank accounts. The Justice Department announced on Monday that the defendants were members and associates of a racketeering enterprise that unlawfully debited money from the bank accounts of unsuspecting US consumer-victims.

The defendants obtained identifying and banking information for victims through shell entities that claimed to offer products or services such as cloud storage. They then executed unauthorized debits against victims’ bank accounts, which they falsely represented to banks were authorized by the victims. The scheme generated high return rates as some of the unauthorized debits resulted in returned transactions.

To conceal and continue conducting unauthorized debits, the enterprise’s shell entities also generated “micro debits” against other bank accounts controlled and funded by or for the enterprise. The micro debits artificially lowered shell entities’ return rates to levels that conspirators believed would reduce bank scrutiny and lessen potential negative impact on the enterprise’s banking relations.

The defendants face charges of racketeering conspiracy and wire fraud. Co-conspirator Harold Sobel was previously convicted for his role in the scheme in Las Vegas federal court and sentenced to 42 months in prison.

In a related civil case also filed in Los Angeles federal court, injunctive relief and settlements totaling nearly $5 million were obtained against various persons, including several who are charged in this criminal indictment.

“The scheme alleged in the indictment involved an elaborate plot to reach into consumers’ bank accounts and steal their hard-earned savings,” said Principal Deputy Assistant Attorney General Brian M. Boynton. “The Department of Justice will use all of the tools at its disposal to prosecute such schemes.”

The US Postal Inspection Service (USPIS) is investigating the case, and the Consumer Protection Branch, in conjunction with the USPIS, is pursuing wrongdoers who disguise the unlawful nature of business activities. If convicted, each defendant faces a maximum penalty of 20 years in prison for racketeering conspiracy and, if applicable, 30 years in prison for each count of wire fraud.

The department urges individuals to regularly check their bank, credit card, and other financial statements and contact their financial institution if they see a charge they do not recognize. Fraudulent debit reports may be filed with the FTC at or at 877-FTC-HELP.

News Source: U.S. Department of Justice

By Joshi

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