Owner of Chain of Cellular Phone Stores Pleads Guilty to Defrauding Customers and a Carrier
Fulton Mall-based Defendant Misappropriated Customers' Credit Information and Inflated Commissions Charged T-Mobile
MAYER VAKNIN, the principal owner of Cellular Island, Inc. (“Cellular Island”), a chain of retail telephone stores that operated in and around the Fulton Mall in Brooklyn, pleaded guilty today to conspiring to commit wire and mail fraud, and to aggravated identity theft. The proceeding was held before United State District Court Judge David G. Trager at the U.S. Courthouse in Brooklyn, New York.1
VAKNIN’s guilty plea is the result of a joint investigation conducted by the Secret Service, the New York State Police, and the New York City Police Department. The fraud schemes victimized hundreds of individual customers who had purchased cellular telephones and cellular service from Cellular Island and induced T-Mobile USA, Inc. (“T-Mobile”), a national carrier whose products and services were resold through Cellular Island, to make hundreds of thousands of dollars in overpayments to Cellular Island.
The guilty plea was announced by Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, and James Cawley, Special Agent-in-Charge, United States Secret Service, New York Field Office.
As of January 2006, VAKNIN operated eight Cellular Island outlets, located primarily at the Fulton Mall. Cellular Island held sub-licenses that permitted it to acquire T-Mobile telephones at wholesale prices and, in exchange for commissions, resell the telephones and sell T-Mobile service plans to retail customers. Cellular Island was also authorized to negotiate renewals and modifications of existing service agreements with its customers. In addition to standard commissions, Cellular Island was eligible to receive incentive payments by meeting or exceeding monthly sales quotas that T-Mobile established. As part of its retail business, Cellular Island obtained and kept records of the names, social security numbers (“SSN”s), and credit history reports of customers who ordered T-Mobile products and services.
Between January 2004 and January 2006, VAKNIN and others sold SSN and credit information of more than 900 of its customers to co-conspirators, who used that information to purchase in excess of 1,940 cellular telephones in the names of the unsuspecting customers. Cellular Island then purchased the cellular phones from the co-conspirators and resold almost all of the fraudulently-acquired inventory to new customers. The retail value of the telephones that Cellular obtained and resold in the course of the scheme exceeded $741,731. After the fraud was detected, T-Mobile reversed the charges of victim customers who verified that they had not ordered the telephones.
As part of a related scheme, VAKNIN admitted today that he and others fraudulently induced T-Mobile to pay Cellular Island commissions and bonus payments for service plans and upgrades customers had not in fact requested. At VAKNIN’s direction, Cellular Island employees used the SSNs and credit information of existing customers, without their knowledge or consent, to file applications in the customers’ names for new service agreements, renewed service agreements, and service upgrades. As a result, Cellular Island claimed, and T-Mobile paid, approximately $500,000 in unearned bonus payments.
“Consumers have a right to expect that vendors will safeguard their identity and credit information,” stated United States Attorney Mauskopf. “We are committed to prosecuting those who misuse that information for their own personal gain.” Ms. Mauskopf thanked the New York City Police Department and the New York State Police for their assistance in this case and added that the investigation is continuing.
Secret Service Special Agent-in-Charge Cawley stated, “This joint investigation provided an opportunity for our agency, along with the New York City Police Department and New York State Police, to dismantle another variation of a criminal enterprise featuring identity theft and fraud. We are extremely pleased at the level of cooperation that was again achieved between the United States Secret Service, the New York City Police Department, New York State Police, and our corporate partners so that we could minimize the impact on, as well as the number of, victims in this case. The United States Attorney’s Office has also put forth a tremendous effort in a case that involved a complicated scheme uncovered through hard work and long hours.”
When sentenced, VAKNIN faces a maximum sentence of 20 years’ imprisonment, three years of supervised release, and a $250,000 fine (or twice the gross gain or loss as a result of the offense) on each of the conspiracy to commit mail fraud and conspiracy to commit wire fraud counts, and two years’ imprisonment, one year of supervised release, and a $250,000 fine on the aggravated identity theft count, which sentence must run consecutive to the sentence imposed on the conspiracy counts. In addition, VAKNIN has agreed to forfeit to the United States an apartment in the South Beach neighborhood of Miami valued at approximately $500,000, and an H2 Hummer vehicle worth approximately $70,000.
The government’s case was prosecuted Assistant United States Attorneys Jeff Rabkin, Kenneth A. Stahl, and Jed Davis.
Name: MAYER VAKNIN
1 Previously, co-defendant Kinda George pleaded guilty to aggravated identity theft and
conspiracy to commit wire and mail fraud, and Patrick Rodriguez pleaded guilty to access device
fraud, aggravated identity theft, and conspiracy to commit mail fraud.
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