Gift Card Re-encoder Sentenced to 13 Years
(Newport News, Va) - Jerry A. Diggs, 31, of Middletown, Delaware, was sentenced yesterday to 132 months on a charge of conspiracy to commit wire fraud, a consecutive 24 months on a charge of aggravated identity theft, followed by three years of supervised release and the requirement of restitution in the amount of $230,644.56 to over one hundred victims. Neil H. MacBride, Acting United States Attorney for the Eastern District of Virginia, made the announcement after Diggs’ sentencing before United States District Judge Raymond A. Jackson.
Diggs pled guilty on September 16, 2009 to one count of conspiracy to commit wire fraud and one count of aggravated identity theft. The plea resulted from the defendant’s participation in a large scale gift card re-encoding scheme. The investigation revealed that the defendant and other conspirators would purchase and/or steal gift cards issued by a number of vendors, including American Express, Visa, and other merchants. The conspirators would re-encode the gift cards with the credit account numbers belonging to actual credit card accounts of American Express card holders. In the course of doing so, approximately sixty-seven credit card accounts of other individuals were compromised. The defendant and other conspirators would travel within Virginia, Maryland, Delaware and other states, and purchase goods and services with the re-encoded gift cards. The re-encoded gift cards appeared normal and legitimate to merchants. The use of the re-encoded gift cards resulted in charges accruing to the accounts of the legitimate individual credit card holders.
An investigation conducted by American Express, revealed that the defendant and other conspirators were responsible for amassing $217,842.79 in fraudulent charges and an additional $356,627.57 in attempted or declined charges, over the time period of September, 2007 through October, 2008. The defendant sold some of the purchased goods over an eBay website.
On December 30, 2007, the defendant was arrested by York County, Virginia police. The defendant and the co-defendant, Freddy G. Herreida, were found in possession of eleven American Express gift cards, which had been re-encoded with real customer account information. The investigation revealed that the defendant and others had used re-encoded gift cards to make various purchases at the Great Wolfe Lodge, in Williamsburg, Virginia.
On October 14, 2008, the defendant was arrested in Newport News, Virginia, after attempting to purchase $300.00 worth of gift cards at a local restaurant with an American Express gift card that had been re-encoded. A search of the defendant’s vehicle revealed three American Express gift cards and fifteen Visa gift cards. Contact with representatives of American Express and Visa revealed that each of the gift cards had been fraudulently re-encoded with true customer information.
After the defendant was indicted on federal charges in December 2008, he was observed in Newport News, Virginia, on December 24, 2008. A Newport News police officer attempted to arrest the defendant when the defendant was entering the passenger side of a vehicle. The defendant fought with the officer and instructed the driver of the vehicle to drive away with the officer caught in the doorframe of the vehicle. The officer was dragged along the street and sustained injuries. The defendant was arrested on December 25, 2008, after fleeing to Delaware.
This case was investigated by the United States Secret Service and the Newport News Police Department. Assistant United States Attorney Brian J. Samuels prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.