Guilty Plea in a Refund Fraud Scheme Conducted from Hotels and Motels Throughout Northern California
SACRAMENTO, Calif. — A Salt Lake City man pleaded guilty Thursday to a conspiracy to commit bank fraud that attempted to defraud financial institutions of more than $1.5 million, U.S. Attorney McGregor W. Scott announced.
According to court documents, between June 2018 and February 2019, Talalima Toilolo, 44, conspired with Johnathon Ward and Monica Nunes, to defraud financial institutions using a scheme that exploited the merchant refund process used by businesses and retail establishments to pay back customers for returns, reimbursements, and erroneous charges.
The defendants committed this scheme by stealing or purchasing point-of-sale (POS) terminals used by businesses to process bankcard transactions. The defendants programmed each terminal to make it appear as if it was authorized by a particular merchant, connected the terminals to payment processing intermediaries, and executed refund transactions even though no purchases had been made. The payment processors, falsely believing the terminals were authorized, approved the refunds and caused the merchants’ banks to transfer funds to the defendants’ accounts. The defendants then drained the stolen funds from the accounts. The indictment alleges that this scheme caused at least $3.5 million in intended victim losses.
This case is the product of an investigation by the Regional Enforcement Allied Computer Team (REACT) Task Force, which includes investigators from the Santa Clara County District Attorney’s Office and the Federal Bureau of Investigation. Special Assistant U.S. Attorney Robert J. Artuz is prosecuting the case.
Nunes has pleaded guilty and is scheduled to be sentenced on Aug. 6. Charges are pending against Ward. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Toilolo is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on Sept. 17. Toilolo faces a maximum statutory penalty of 30 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.