Leader Of Multi-Million Dollar Fraudulent Credit Repair Scheme Sentenced In Manhattan Federal Court To 63 Months In Prison
Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDWIN JACQUET was sentenced today in Manhattan federal court to 63 months in prison for his leadership role in what is believed to be the largest known credit repair fraud scheme ever charged. He was also ordered to pay more than $9.3 million in restitution for the losses caused by the scheme. JACQUET pled guilty in March 2012 to one count of conspiracy to commit bank fraud before United States Magistrate Judge Kevin Nathaniel Fox, and was sentenced today by U.S. District Judge Naomi Reice Buchwald.
Manhattan U.S. Attorney Preet Bharara said: “The accuracy of information maintained by credit bureaus is crucial to the proper functioning of consumer lending and our financial system as a whole. A fraud of this size and complexity deserves the substantial sentence handed out today and should signal to those who would interfere with the system of accurate credit reporting that their efforts will result in substantial punishment.”
According to the charge in the Indictment to which JACQUET pled guilty, statements made during his guilty plea and sentencing, and other court documents:
Consumer reporting agencies, commonly known as “credit bureaus,” are businesses that provide reports to third parties about the credit-worthiness of consumers. Credit bureaus gather information used to generate credit reports from many sources, including “furnishers.” Furnishers include entities that provide consumers with credit, such as credit card companies, mortgage lenders, automobile lenders, and department stores.
In September and October 2007, Highway Furniture, Inc. (“Highway Furniture”), a Brooklyn-based business that JACQUET managed, became a furnisher. In July 2008, New York Funding Group Inc. (“New York Funding”), a Long Island-based business that JACQUET helped to create, also became a furnisher. These businesses became furnishers by entering into various agreements with at least two credit bureaus that allowed Highway Furniture and New York Funding to furnish their customers’ data to the credit bureaus with which they had agreements.
From 2007 through 2009, through Highway Furniture and after that through New York Funding, JACQUET and others engaged in a scheme to fraudulently improve the credit histories and credit scores of thousands of individuals who purportedly were customers of the two entities (the “Purported Customers”). New York Funding and Highway Furniture obtained these customers principally by working through a network of brokers who promised the customers that the brokers could have their credit “repaired.” In exchange for thousands of dollars in fees, JACQUET and his co-conspirators provided credit bureaus with fictitious information showing that Highway Furniture and New York Funding had extended credit to the Purported Customers and that the loans had been, or were being, repaid. In fact, the individuals had never been extended credit by Highway Furniture or New York Funding. The purpose of providing the fraudulent information to the credit bureaus was to generate fake positive credit history and, in so doing, improve the credit scores of the Purported Customers.
Over the course of the scheme, JACQUET and his co-conspirators added nearly 3,000 fake lines of credit to the credit history of hundreds of Purported Customers of New York Funding and Highway Furniture. After having their credit fraudulently improved, the Purported Customers obtained more than $47.8 million in loans, including mortgages, car loans, student loans, and credit card loans. The losses sustained by those who lent money to those whose credit was fraudulently improved, and who could not repay the loans, totaled more than $9.3 million.
JACQUET and his co-conspirators also fraudulently improved the credit histories and credit scores of some of the Purported Customers by deleting accurate, but negative, credit information maintained by one or more credit bureaus. They did so by using a software tool that the credit bureaus made available to Highway Furniture called e-OSCAR, the purpose of which was to help resolve disputes about individuals’ credit histories. Instead, JACQUET and his co-conspirators used their access to e-OSCAR as part of the fraudulent credit repair scheme. Over the course of the scheme, JACQUET and his co-conspirators deleted or modified over 4,400 debts from the credit files of hundreds of people.
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In addition to the prison term and restitution, Judge Buchwald sentenced JACQUET, 39, of Brooklyn, New York, to three years of supervised release and ordered him to pay a $100 special assessment.
Two co-defendants of JACQUET, Edwin Mansour and Denise Hudson, both previously pled guilty before Judge Buchwald on October 10, 2012, and October 18, 2012, respectively. Mansour and Hudson are scheduled to be sentenced on February 13, 2013, at 4 p.m. and 4:30 p.m., respectively.
Mr. Bharara praised the outstanding efforts of United States Secret Service in the investigation. He also thanked Experian Information Solutions, Inc., and TransUnion LLC for their assistance in the investigation.
In sentencing JACQUET, Judge Buchwald noted that this was his third felony conviction and that he “earned a significant sentence.”
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Daniel W. Levy and Zachary Feingold are in charge of the prosecution.