Ringleader In Identity Theft Scheme That Targeted Over 180 Customer Accounts At NYC Retail Stores Pleads Guilty In Manhattan Federal Court
More Than $1 Million in Merchandise, Gift Cards, and Store Credits Fraudulently Obtained
Defendant is Eighth of Nine Defendants Originally Charged to Be Convicted
Preet Bharara, the United States Attorney for the Southern District of New York, Eric T. Schneiderman, the New York State Attorney General, and James T. Hayes, Jr., the Special Agent-in-Charge of the New York Office of Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), today announced the guilty plea of PHILLIP SMITH, the ringleader of an identity theft ring that used fake driver’s licenses, as well as the stolen identities of over 180 people, to purchase over $1 million in merchandise and gift cards at Home Depot, Sears, Kmart, Kohl’s, Best Buy, and other retail stores. SMITH pled guilty today in Manhattan federal court to identity theft and fraud charges before U.S. District Judge John F. Keenan. Over the preceding weeks, seven other defendants originally charged in this case also pled guilty before Judge Keenan. They include Winston Harris and Eugene Smith, who used stolen identities to make purchases at the retail stores; Mahmoud Abdul Hussein, Ali Abdul Hussein, and Fadal Abdul Hussein, three brothers who manufactured fake driver’s licenses out of their storefront smoke shops in Greenwich Village; and Francis Hidalgo and Randy White, who resold the illegally obtained store credits. Hidalgo also used credits to purchase building materials to convert two warehouses into marijuana grow-houses.
Manhattan U.S. Attorney Preet Bharara said: “Identity theft violates the privacy of its victims and can require countless hours and endless hassles to correct mistaken bills and rehabilitate destroyed credit ratings. It also victimizes the retailers who are left holding the bag for purchases made by thieves. Phillip Smith’s plea and conviction, along with those of his seven cohorts, should send a strong message that we will come down hard on those who engage in this conduct.”
New York State Attorney General Eric Schneiderman said: “For more than three years, these defendants methodically victimized hundreds of New Yorkers in an elaborate scheme to line their own pockets. We will aggressively crack down on identity theft, and these guilty pleas send a message: Identity thieves will go to jail.”
HSI Special Agent-in-Charge James T. Hayes, Jr. said: “Today’s guilty pleas put an end to a scam that victimized hundreds of New Yorkers and defrauded retail stores of more than a million dollars. This case exemplifies HSI’s, and its law enforcement partners’ commitment to work as a unified force to disrupt criminal organizations bent on fraud to feed their greed.”
The following allegations are based on the Complaint, the Indictment and the Superseding Informations filed in this case, and statements made during court proceedings:
Since the ring’s inception in 2008 or earlier, PHILLIP SMITH obtained stolen identities, including the names and social security numbers of legitimate account holders at Home Depot, Sears, Kmart, Kohl’s and other retail chains. After obtaining the stolen identities, PHILLIP SMITH called the customer service numbers at the retail stores to confirm that the victims had credit accounts and to determine their available credit limits. Once that information was obtained from the stores, PHILLIP SMITH acquired driver’s licenses from the Hussein brothers, who operated out of two storefronts in the Greenwich Village area of Manhattan. The licenses used photos of Harris and Eugene Smith, but the names, addresses, and other information belonged to the identity theft victims. With the licenses in hand, PHILLIP SMITH drove Harris and Eugene Smith to retail stores throughout New York, Connecticut, New Jersey, and Pennsylvania, where they charged expensive merchandise and gift cards to victims’ accounts. He then drove them to branches of the retailers in other locations where they returned the fraudulently acquired merchandise for store credits. The credits were then sold to other members of the ring – including Hidalgo and White – for approximately 60 percent of their face value. Hidalgo and White then resold some of the store credits and gift cards to others, usually for 70 percent of their face value. Hidalgo also used some of the proceeds and gift cards he obtained through the identity theft scheme to purchase building materials so that he could convert two warehouses in the Bronx into marijuana grow-houses for a large marijuana distribution organization.
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PHILLIP SMITH, 55, of Bronx, New York, pled guilty to conspiracy to commit access device fraud, conspiracy to produce false identification documents, and aggravated identity theft. He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years in prison. SMITH is scheduled to be sentenced on February 20, 2013.
Francis Hidalgo, 45, of Pomona, New York, pled guilty yesterday to conspiracy to commit access device fraud, theft of public funds (in connection with the submission of false claims to the New Jersey Unemployment Insurance Fund), and conspiracy to distribute or possess with intent to distribute over 100 marijuana plants. He faces a maximum potential sentence of 55 years in prison years and a mandatory minimum sentence of five years in prison. Hidalgo is scheduled to be sentenced on February 20, 2013.
Eugene Smith, 59, of the Bronx, New York, pled guilty on November 5, 2012, to conspiracy to commit access device fraud, conspiracy to produce false identification documents, and aggravated identity theft. He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years. Smith is scheduled to be sentenced on April 17, 2013.
Mahmoud Abdul Hussein, 28, Ali Abdul Hussein, 34, and Fadal Abdul Hussein, 23, of Seaford, New York, pled guilty on October 25, 2012, to conspiracy to produce false identification documents. Each faces a maximum potential sentence of 15 years in prison, and they are scheduled to be sentenced on April 10, 2013.
Winston Harris, 57, of Brooklyn, New York, pled guilty on October 15, 2012, to conspiracy to commit access device fraud, conspiracy to produce false identification documents, and aggravated identity theft. He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years in prison. Harris is scheduled to be sentenced on January 23, 2013.
On October 3, 2012, Randy White, 57, of Bronx, New York, pled guilty to conspiracy to commit access device fraud. White faces a maximum potential sentence of five years in prison, and is scheduled to be sentenced on February 7, 2013.
All eight of these defendants pled guilty before Judge Keenan, who will also preside over their sentencings.
Charges remain pending against a ninth defendant, Melissa Morton, and they are merely allegations. Morton is presumed innocent unless and until proven guilty.
Mr. Bharara praised New York Attorney General’s Office, ICE HSI, and the New Jersey Department of Human Services Police for their excellent assistance in the investigation of this matter. He also thanked Home Depot and Kohl’s for their continuing vigilance and cooperation in the investigation.
The case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Joseph P. Facciponti, Assistant Attorney General Meryl Lutsky, who has been
designated a Special Assistant U.S. Attorney, and Assistant Attorney General Tyler Reynolds.