Alameda Resident Sentenced To Two-And-A-Half Years In Prison And Ordered To Pay Nearly $1.5 Million In Restitution To Victims Of His Ponzi Scheme
SAN JOSE, Calif. – Vernina Adams pleaded guilty in federal court in San Jose yesterday to one count of wire fraud and one count of aggravated identity theft, United States Attorney Melinda Haag announced.
In pleading guilty, Adams admitted that, beginning in March 2010 and continuing to approximately June 2010, she carried out a scheme to defraud Paymate, a credit card processing company located in Woodside, Calif., that processes payments for individuals who buy and sell goods on the Internet. Adams admitted that she created several fictitious businesses on the Internet using the names of other individuals, several of whom she knew to be real people. The fictitious businesses included slickmix.net, opened in the name of victim M.T.; and nicksonrental.com, opened in the name of victim T.N. In order to give the appearance of legitimacy to the fictitious Internet businesses, Adams opened e-mail accounts in those victims’ names with Internet service providers such as Yahoo!.
In addition, Adams admitted that she opened Paymate and bank accounts with MetaBank for each fictitious business in the victims’ true names and, using their identities, linked those bank accounts to designated Paymate accounts. For example, Adams admitted that she knew that victim T.N. was a real person, and she used T.N’s true name, social security number and date of birth to open a Paymate account that was linked to the fictitious business nicksonrental.com. After opening Paymate and bank accounts, Adams admitted that she used her own debit and credit cards as well as debit and credit cards belonging to her relatives and friends to pretend to purchase goods and services in amounts ranging from $1,000 to $7,000 from the fictitious businesses.
Adams admitted that, after Paymate deposited funds from the fictitious sales into the bank accounts associated with the businesses, she immediately withdrew the fraudulently-acquired funds from various automated teller machines in Pennsylvania. After several weeks, she contacted the credit card companies for the credit card that she used to initiate the fraudulent transaction to report that she had not received the goods or services. She also instructed her friends and relatives to report to credit card companies for the cards that were used to initiate the fraudulent transactions that they had not received the goods or services. The credit card companies then initiated a charge-back on the credit cards. When Paymate attempted to reclaim the funds from the bank accounts associated with the fictitious businesses, there were insufficient funds in the accounts because Adams had withdrawn all of the money from the purported sales.
Furthermore, Adams admitted using e-mail accounts linked to the fictitious businesses to communicate with Paymate regarding, among other things, payments from fictitious sales. Specifically, on July 7, 2010, she posed as victim M.T., whose name she had used to create the fictitious business slickmix.net, and e-mailed Paymate employee G.Q. using e-mail address email@example.com. Adams admitted making false statements in the e-mail to induce Paymate to make payments on fraudulent transactions associated with slickmix.net.
Finally, Adams admitted that she conducted approximately 15 other fraudulent transactions involving Paymate, and agreed that the loss to Paymate was over $70,000, but less than $120,000.
Adams, 31, of Philadelphia, Penn., was indicted by a federal Grand Jury on July 25, 2012. She was charged with five counts of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of aggravated identity theft, in violation of 18 U.S.C. §§ 1028A(a)(1)(A) and 1028A(c)(5). Under the plea agreement, Adams pled guilty to one count of wire fraud and one count of aggravated identity theft.
The sentencing of Adams is scheduled for April 24, 2013, before Judge Lucy H. Koh in San Jose. The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C. § 1343 is 20 years in prison, and a fine of $250,000 plus restitution. The maximum statutory penalty of each count of aggravated identity theft, in violation of 18 U.S.C. §§ 1028A(a)(1)(A) and 1028A(c)(5) is a mandatory consecutive sentence of two years in prison, and a fine of $250,000 plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Susan Knight is the Assistant U.S. Attorney who is prosecuting the case with the assistance of legal techs Elise Etter and Kamille Singh. The prosecution is the result of a one-year investigation by the Federal Bureau of Investigation.