Former Raleigh Resident Sentenced to Eight Years for Conspiracy and Aggravated Identity Theft in Connection with Credit Card and Auto Loan Fraud Schemes

RALEIGH – The United States Attorney’s Office for the Eastern District of North Carolina announces that in Federal court in Greenville, Senior United States District Judge Malcolm J. Howard sentenced DEBORAH ROSE MCFADDEN, formerly of Raleigh, North Carolina, to 96 months imprisonment for her role in a complex fraud scheme to steal, exploit, and profit from the personal and financial information of victims in North Carolina and other states.  The Court ordered the term of imprisonment to be followed by 5 years of supervised release.  Among other terms of the judgment, MCFADDEN was also ordered to pay restitution to over a dozen financial institutions that suffered losses as a result of the scheme.

MCFADDEN was named in a 13-count Indictment filed in the United States District Court for the Eastern District of North Carolina on June 17, 2017.  On February 5, 2018, MCFADDEN pled guilty to the charged offenses of conspiracy to commit wire fraud and bank fraud, conspiracy to commit money laundering, and aggravated identity theft.

Laila Merchant and Malayna McFadden (MCFADDEN’s daughter), were two of MCFADDEN’s principal co-conspirators.  Malayna McFadden pleaded guilty to a Criminal Information on July 14, 2017.  On March 7, 2018, United States District Judge Malcolm J. Howard sentenced Malayna McFadden to 6 months imprisonment, among other terms of the judgment.  Laila Merchant pleaded guilty to a Criminal Information on April 17, 2018.  On May 3, 2018, United States District Judge Malcolm J. Howard sentenced Merchant to 42 months imprisonment, among other terms of the judgment. 

According to the charging instruments, statements made in court, and other public information, between at least May 2013 and September 2014, MCFADDEN, Malayna McFadden, and Laila Merchant engaged in a complex, multistate scheme to commit credit card fraud and loan fraud through the use of stolen victim identifiers, including dates of birth and Social Security numbers. 

As part of the credit card fraud scheme, the stolen identifiers were used to form sham companies and apply for merchant accounts with various credit card processors.  Upon establishment of the merchant accounts, MCFADDEN and her co-conspirators unlawfully obtained credit card numbers of other victims and ran the stolen numbers through the electronic point-of-sale systems issued to the sham companies.  The fraud proceeds were then laundered through dozens of bank accounts maintained and/or controlled by MCFADDEN.

As part of the bank fraud scheme, MCFADDEN and her co-conspirators submitted fraudulent auto loan applications to multiple financial institutions using stolen victim identifiers.  False and fraudulent documentation was used to deceive the targeted financial institutions and trigger the release of funds, including stolen VIN numbers, phony title documents and sales contracts from sham car dealerships, and counterfeit identification with victim identifiers.

Investigation of this case was conducted by the Department of Homeland Security – Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation.  Assistant United States Attorney Adam F. Hulbig prosecuted the case for the government.