08-05-05 -- Sheika, Gemal -- Conviction -- News Release

Garfield Merchant Convicted in Credit Card "Bust Out"

NEWARK - A federal jury on Thursday convicted a Garfield man in a credit card "bust out" scheme that cost 15 credit card companies more than $305,000 in losses, U.S. Attorney Christopher J. Christie announced.

The jury convicted Gemal Sheika, 38, on one count each of conspiracy, credit card fraud and mail fraud. The verdict came after about four hours of deliberations late on Thursday following a nine-day trial before U.S. District Judge William G. Bassler.

Immediately after the verdict, Judge Bassler revoked bail for Sheika and ordered him detained pending sentencing on Nov. 15.

The fraudulent credit card charges were incurred as part of a "bust out" conspiracy in which collusive credit card holders, card brokers, and merchants conspired to incur credit card charges that no one intended to pay. When the banks that had issued the credit cards finally paid the merchants, the proceeds of the fraudulent transactions were shared by the card holders, brokers, and merchants, according to Assistant U.S. Attorneys Judith Germano and Kevin Walsh, both of whom prosecuted the case.

Trial evidence showed that the conspiracy relied upon credit card holders who were willing to ruin their credit, either because they were preparing to leave the United States permanently or because they were seriously ill or near death. The conspiracy's ringleader, Khalid Nijem, 42 of West Palm Beach, FL - who pleaded guilty prior to Sheika's trial but did not testify - was responsible for collecting dozens of credit cards from several card holders and distributing the credit cards to various merchants, all of whom were located in the same office building on Main Avenue in Clifton. Sheika was one of those merchants.

After Nijem delivered the credit cards to Sheika, Sheika would run them through the credit card swipe machines at his two companies, First Class Limousine and Sheika Crystal. No goods or services were provided in return, but as a result of the credit card swipes at the two companies, the issuing banks for the credit cards would deposit money into Sheika's bank account and bill the card holders, none of whom intended to pay for the fraudulent charges.

Trial testimony showed that the defendant's Sheika Crystal company was bogus and created for the sole purpose of carrying out the fraud scheme. Its sole assets were essentially a credit card swipe machine and a business checking account. Evidence also revealed that, during summer 2002, Nijem shipped the credit cards overseas where numerous fraudulent credit card charges were incurred at an Egyptian travel agency.

For the conspiracy conviction, Sheika faces a maximum penalty of five years in prison and a $250,000 fine; the credit card fraud conviction carries a maximum penalty of 10 years in prison and a $250,000 fine; and the mail fraud conviction carries a maximum of 20 years in prison and a $250,000 fine.

In determining an actual sentence, Judge Bassler will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.

Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.

Christie credited Special Agents of the FBI, under the direction of Special Agent in Charge Leslie Wiser, Jr., and the Postal Inspectors with the U.S. Postal Inspection Service, under the direction of Inspector in Charge Thomas C. Van de Merlen, with developing the case against the defendants.

The government is represented by Assistant U.S. Attorney Germano of the Terrorism Unit, and Assistant U.S. Attorney Walsh of the Public Protection Unit, both in Newark.

-end-

Defense counsel:

Hamdi M. Rifai, Esq., Clifton