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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Virginia

Tuesday, October 31, 2017

Florida Man Pleads Guilty to Credit Card Chargeback Conspiracy

RICHMOND, Va. – A Florida man pleaded guilty today to participating in a fraudulent credit card chargeback scheme that primarily targeted internet services businesses.

According to court documents, Gustavo Carvajal, 28, of Coral Springs, worked from June 2014 to May 2015 for a business named Smith Associates, which operated out of a strip mall location in Margate, Florida. Smith Associates targeted individuals who had attempted to set up their own online business, and incurred thousands in credit card bills in the process. Smith Associates advertised itself as a law firm that would conduct arbitration on behalf of these potential clients to win refunds of the money they had spent in attempting to create an online business. Smith Associates did not employ any lawyers, however, and never conducted any arbitration on behalf of its clients. Instead, Smith Associates simply filed chargebacks on their clients’ credit card expenses, and pursued those chargeback claims by creating and submitting fraudulent documents to their clients’ credit card banks. Smith Associates did not advise its clients it would be committing fraud on their behalf, and to avoid any chance their clients might learn of the fraud scheme, Smith Associates also created phone numbers that spoofed their clients’ actual numbers, using those spoofed numbers to contact the banks and impersonate the client. Smith Associates took a 40 percent cut of the refunds that it fraudulently obtained, and over the course of the conspiracy, defrauded more than 10 internet services businesses of nearly $9.5 million.

Carvajal pleaded guilty to conspiracy to commit mail fraud and faces a maximum penalty of five years in prison when sentenced on Jan. 25, 2018. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, Adam S. Lee, Special Agent in Charge of the FBI’s Richmond Field Office, Kimberly Lappin, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI), and Robert B. Wemyss, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement after U.S. Magistrate Judge David J. Novak accepted the plea. Assistant U.S. Attorneys Thomas A. Garnett and Katherine Lee Martin are prosecuting the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:17-cr-144.

Financial Fraud
Joshua Stueve Director of Communications
Updated October 31, 2017