Crescenta Valley Man Sentenced to More Than 5 Years in Prison for Fraudulently Obtaining Nearly $3 Million in COVID Relief Funds
LOS ANGELES – “Operation Urban Justice,” a large-scale law enforcement operation this week, has resulted in the arrest of 15 individuals who allegedly used information from “skimmed” electronic benefit transfer (EBT) cards to make unauthorized withdrawals of funds that had been disbursed to low-income individuals, the Justice Department announced today.
More than 300 law enforcement officers early Wednesday morning began monitoring about 20 ATM locations across the Los Angeles area and identified individuals who were making multiple cash withdrawals with cards encoded with information that had been stolen from cards used by the California Department of Social Services to provide CalFresh and CalWORKs benefits to qualified recipients.
Authorities made arrests after determining that the suspects at the ATMs were not entitled to access funds that had been deposited into beneficiary’s accounts. At this time, federal prosecutors have filed five criminal complaints charging defendants with the use of unauthorized access devices (the cards used to make the cash withdrawals) or possession of 15 or more unauthorized access devices, and they are expected to file additional cases later today and tomorrow. The defendants arrested, many of them Romanian nationals, are expected to begin making initial appearances this afternoon in United States District Court.
The Los Angeles Police Department started the investigation into the fraudulent withdrawal of benefits in August 2022, and the United States Secret Service soon after joined “Operation Urban Justice” as a joint partner.
A number of law enforcement agencies are providing significant support, which included participating in Wednesday’s takedown, including U.S. Customs and Border Protection, Homeland Security Investigations, U.S. Immigration and Customs Enforcement, the Glendale Police Department, the Los Angeles County Sheriff’s Department, the California Department of Social Services, the United States Department of Agriculture’s Office of Inspector General, and the Romanian Brigade for Combatting Criminal Organizations (which is part of the Romanian National Police).
Documents filed in federal court outline how the California Department of Social Services has identified more than $38.9 million in funds stolen from victims’ EBT cards. This fraud has targeted CalWORKs and CalFresh (previously known as “food stamps”), both of which are intended to help low-income beneficiaries purchase food and provide for basic needs.
The investigation has revealed that the fraudulent withdrawal of these benefits is done with “cloned” cards, which are debit cards, gift cards or other devices with magnetic strips that have been encoded with information from legitimate EBT cards. Court documents allege that at least some of those involved in the fraudulent withdrawals obtained stolen EBT card information from “skimming” devices that were installed on ATM machines.
“By stealing public benefits using counterfeit EBT cards, the defendant in these cases plundered the accounts of some of our community’s poorest residents—people who need these benefits to survive,” said United States Attorney Martin Estrada. “These actions are part of a larger assault on the EBT system, one which has caused tens of millions of dollars in losses. Working with our law enforcement partners who have devoted untold resources to combating this issue, my Office will continue to do everything in our power to stop criminals from victimizing people in our community, especially those who are most vulnerable.”
“Today’s successful operation demonstrates how a sophisticated and extensive criminal scheme can be disrupted and dismantled by a team of law enforcement professionals who approach their investigation with an even greater degree of cooperation,” said James Huse, Special Agent in Charge with the Los Angeles Field Office of the United States Secret Service. “The results of this investigation are a testament to strong partnerships across the law enforcement community. Our efforts today serve to protect the Electronic Benefits Transfer system and ensure that public funds reach those who need them without delay or distress.”
“On March 1, 2023, the Los Angeles Police Department's Commercial Crimes Division partnered with the United States Secret Service and other federal law enforcement agencies to conduct a collaborative enforcement operation targeting the State of California’s Electronic Benefits Transfer (EBT) fraud issue with losses in the tens of millions of dollars,” said Los Angeles Police Chief Michel Moore. “The operation involved numerous Los Angeles Police Department personnel and resulted in the recovery of 429 cloned state issued EBT cards, $129,000 in US currency unlawfully drawn from ATM machines at several Southern California banking institutions, as well as resulting in the arrests of 11 Romanian national individuals for EBT access card fraud with losses totaling over $1000-a federal felony. All of the individual cases will be filed by the United States Department of Justice (USDOJ), United States Attorney’s Office (USAO) for federal prosecution.”
On February 2, as part of Operation Urban Justice, three additional defendants were arrested after they allegedly withdrew funds from ATM machines in Hollywood and Tarzana with cloned EBT cards. All three were subsequently named in federal indictments that charge them with bank fraud (which carries a statutory maximum penalty of 30 years in federal prison), aggravated identity theft, unlawful use of unauthorized access devices and possession of 15 or more unauthorized access devices.
Criminal complaints and indictments contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The United States Secret Service and the Los Angeles Police Department are investigating these matters.
Assistant United States Attorneys Nisha Chandran and Joshua O. Mausner of the General Crimes Section are prosecuting these cases. Substantial assistance was provided by the following Assistant United States Attorneys, all from the General Crimes Section: Laura A. Alexander, Jeremy K. Beecher, Haoxiaohan H. Cai, Declan T. Conroy, Alexander S. Gorin, David C. Lachman, Kelly L. Larocque, Jena A. MacCabe, Angela C. Makabali, Sonya A. Nevarez, Daniel H. Weiner, and David W. Williams.
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