US prosecutors have charged seven people, several of whom are of Pakistani origin, for bank fraud amounting to USD3.5 million over two years.
Five of them were arrested Monday, the Department of Justice said. The criminal complaint unsealed in a federal court in New Jersey charges them with conspiracy to commit bank fraud through a scheme that used hundreds of fraudulent accounts to defraud several major banks causing losses of over USD3.5 million.
According to the Department of Justice, those charged include Rana Shar, 36; Awaise Dar, 32; Shamser Farooq, 26; Habib Majid, 34; Naveed Arif, 42; Ali Abbas, 38; and Erm Ayaz, 36.
To accomplish the conspiracy's unlawful objective, the defendants established bank accounts associated with sham entities that had no legitimate purpose, and thereafter would issue checks payable to other sham entities associated with the criminal organization, knowing that the accounts on which the checks were drawn contained insufficient funds.
They would also conduct numerous fraudulent credit card and debit card transactions between shell companies to fraudulently credit payee accounts and fraudulently overdraw payor accounts. Alternatively, they would use these shell companies to execute temporary refund credits, commonly referred to as “charge-backs,” to checking accounts associated with the criminal organization, where no prior legitimate transaction had occurred, federal; prosecutors alleged.
According to court papers, in each one of these instances, members of the criminal organization withdrew the funds (through ATMs or bank tellers) that banks and/or merchant processors had credited to the payee bank accounts at the time of the fraudulent transaction. Because they withdrew the credited funds from the payee accounts before the banks could recognize the fraudulent transactions, the banks and merchant processors were left with substantial losses, prosecutors alleged.
The investigation has identified approximately 200 bank accounts and 75 merchant credit card processing accounts used to facilitate the schemes, they alleged. The bank fraud conspiracy count carries a maximum potential penalty of 30 years in prison and a maximum fine of USD1 million.