LOS ANGELES – Authorities have arrested five defendants – including several Southern California residents – for their alleged participation in a years-long scheme to steal millions of dollars from American consumers’ bank accounts, the Justice Department announced today.
The arrests follow a federal grand jury last week returning a seven-count indictment that charges a total of 14 defendants with conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.
According to the indictment, various members and associates of the alleged criminal enterprise created shell entities that claimed to offer products or services, such as cloud storage. Then, after obtaining identifying and banking information for victims, the enterprise allegedly executed unauthorized debits against victims’ bank accounts, which it falsely represented to banks were authorized by the victims.
Because some of the unauthorized debits resulted in returned transactions – which generated high return rates and could raise red flags at financial institutions – the indictment alleges the enterprise’s shell entities also generated “micro debits” against other bank accounts controlled by the enterprise. The micro debits allegedly artificially lowered shell entities’ return rates to levels that conspirators believed would reduce bank scrutiny and lessen potential negative impact on the enterprise’s banking relations.
The five defendants arrested Tuesday are:
- Edward Courdy, 73, of Hawaiian Gardens;
- Eric Bauer, 65, of Huntington Beach;
- Veronica Crosswell, 35, of Long Beach;
- Jenny Sullivan, 46, of Denver; and
- John Beebe, 52, of Honolulu;
Defendant Linden Fellerman, 67, of Las Vegas, has agreed to surrender himself on Friday, May 5, 2023 to authorities in Los Angeles.
Three other defendants have been summoned to appear in United States District Court in Los Angeles on May 24. Those defendants are:
- Michael Young, 41, of Hollywood, Florida;
- Randy Grabeel, 71, of Pittsburg, California; and
- Debra Vogel, 68, of Las Vegas.
Seven other defendants are currently fugitives being sought by federal authorities. They are:
- Guy Benoit, 68, a resident of Canada and Cyprus;
- Steven Kennedy, 54, of Canada;
- Sayyid Quadri of Canada;
- Ahmad Shoaib, 63, of Canada; and
- Lance Johnson, 52, of Laveen, Arizona;
In addition to the RICO offense alleged in the indictment, all of the defendants – except Grabeel and Vogel – are charged with at least one count of wire fraud.
Harold Sobel previously was convicted for his role in the scheme in Las Vegas federal court and sentenced to 3½ years in prison. In a related civil case also filed in Los Angeles federal court, injunctive relief and settlements totaling nearly $5 million were obtained against various persons, including several who are charged in this criminal indictment.
“This sophisticated scheme allegedly generated millions of dollars in revenue by using consumers’ personal information to fraudulently reach straight into the bank accounts of thousands of Americans,” said United States Attorney Martin Estrada. “The indictment alleges that an international network of fraudsters engaged in a wide-ranging scheme which sought to victimize consumers while concealing their activities from banks and law enforcement authorities. Thanks to law enforcement, the defendants’ alleged efforts to continue this scheme have failed.”
“The scheme alleged in the indictment involved an elaborate plot to reach into consumers’ bank accounts and steal their hard-earned savings,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice will use all of the tools at its disposal to prosecute such schemes.”
An indictment contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Some defendants made their initial court appearances yesterday. If convicted, each defendant faces a maximum penalty of 20 years in prison for racketeering conspiracy and, if applicable, 30 years in prison for each count of wire fraud.
The U.S. Postal Inspection Service is investigating the case.
Assistant United States Attorney Monica Tait of the Major Frauds Section, and Trial Attorneys Wei Xiang, Meredith Healy and Amy Kaplan of the Justice Department’s Consumer Protection Branch are prosecuting the case. The United States Attorney’s Office for the Southern District of Texas provided substantial assistance.
The Department of Justice urges individuals to be on the lookout for unauthorized debits to their accounts. Regularly check your bank, credit card, and other financial statements and contact your financial institution if you see a charge you do not recognize. Report any fraudulent debit you identify to law enforcement. Reports may be filed with the FTC at https://reportfraud.ftc.gov -- or at 877-FTC-HELP.
The Consumer Protection Branch, in conjunction with the U.S. Postal Inspection Service, is pursing wrongdoers who disguise the unlawful nature of business activities by, among other methods, artificially lowering financial account return rates. These tactics are designed to deceive banks, resulting in bank accounts remaining open and facilitating fraud schemes and other illegal activities, including schemes that debit consumers’ bank accounts without authorization, tech support scams, and subscription traps.