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Brooklyn Man Pleads to Nearly $400,000 Fraud Scheme
MARCH 5, 2012

BOSTON - A Brooklyn, N.Y., man pleaded guilty today in federal court to bank fraud and credit card fraud in connection with a check kiting and credit card “bust-out” scheme.

Ayman Ibrahim Khalil, 43, an Egyptian national who had lived in Brooklyn, prior to his arrest, pleaded guilty to 14 counts of bank fraud and eight counts of access device fraud. U.S. District Judge Richard G. Stearns scheduled sentencing for May 24, 2012, at 2 p.m.

Had the case proceeded to trial, the government would have proved that in 2008, Khalil, using an alias, set up two shell corporations in Saugus and registered their names with the Massachusetts Secretary of State's Office. Khalil then opened business checking accounts in the name of the sham businesses at numerous banks in eastern Massachusetts. He also obtained credit card transaction capabilities for the sham businesses by opening merchant accounts with credit card processing companies.

Over the course of about a week in mid-August 2008, Khalil deposited bad checks in the business checking accounts and withdrew available funds before the banks discovered that the checks were unfunded. At the same time, Khalil used credit card terminals which were fraudulently obtained for the sham businesses to process scores of "forced" credit card transactions, using closed or expired credit card numbers. While these credit card transactions were initially rejected, those rejections were overridden by the fraudulent use of authorization codes, effectively forcing the transactions through, and causing funds from the credit card processors to be deposited into one of Khalil’s sham accounts. Khalil also withdrew these funds before the fraud was detected.

In the course of the scheme, about $245,000 in worthless checks were deposited into Khalil’s sham accounts and about $148,000 in forced credit card transactions were processed.

United States Attorney Carmen M. Ortiz and Steven Ricciardi, Special Agent in Charge of the United States Secret Service's Boston Field Office made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.



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