Two Bay Area Residents Charged In Nationwide Scheme To Engineer Fraudulent Credit And Debit Card Refunds
Defendants Allegedly Used Over 90 Credit Card Readers to Defraud Merchants, Including U.S. Army
SAN FRANCISCO – Robert Kohlman and Gabriel Riddle have been charged in a criminal complaint with wire fraud in connection with a scheme to use dozens of fraudulently programmed credit and debit terminals to make unlawful transactions, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The criminal complaint, filed August 19, 2020, was accompanied by an affidavit filed by an FBI agent. According to the affidavit, Kohlman, 38, and Riddle, 34, both of Novato, Calif., obtained more than 90 point-of-sale terminals, which are devices used by merchants to read and process credit or debit cards to accept payments for goods or services. Kohlman and Riddle then programmed the terminals to believe they were associated with an actual merchant, and then submitted requests for refunds even though there was no initial purchase. The merchant’s bank or processing company, believing a legitimate refund was being requested, then transmitted money to accounts controlled by Kohlman and Riddle. Kohlman and Riddle then depleted the accounts by making purchases, making ATM cash withdrawals, or purchasing money orders. The affidavit indicates that Kohlman and Riddle initiated at least 100 fraudulent refunds that transferred more than $400,000 to their personal bank accounts.
Kohlman and Riddle allegedly used this scheme to defraud numerous victims around the country, including a U.S. Army Hospital dining facility. The affidavit describes transactions involving the dining facility at the Winn Army Community Hospital at Fort Stewart in Fort Stewart, Georgia, which is operated by the United States Army. According to the affidavit, the dining facility was tricked into issuing a refund worth $7,925.03 on December 3, 2018, to a debit card controlled by Riddle and a second refund, on December 16, 2018, worth $9,989.39 to a debit card controlled by Kohlman.
The defendants were charged with wire fraud, in violation of 18 U.S.C. § 1343.
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law. The defendants face a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution if appropriate. 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.
Defendants were arrested on August 26, 2020 in Las Vegas, Nevada, and made their initial appearance in federal court there on August 27, 2020. They made their initial appearance in San Francisco on November 27, 2020. Defendants’ next scheduled appearance is on December 16, 2020 for a status conference before the Honorable Laurel Beeler, U.S. Magistrate Court Judge.
Assistant U.S. Attorneys Kevin Rubino and Ross Weingarten are prosecuting the case with the assistance of Morgan Byrne. The prosecution is the result of an investigation by the FBI, along with the Army Criminal Investigation Command, Major Procurement Fraud Unit, and the Marin County Coordination of Probation Enforcement Team.