Manhattan U.S. Attorney Charges 14 Defendants In Connection With $8 Million Bank Fraud Scheme

James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), today announced charges against 14 defendants for engaging in a bank fraud scheme involving deposits of thousands of counterfeit checks and withdrawals of at least $8 million in fraudulent proceeds. Seven defendants were arrested this morning and are expected to be presented in Manhattan federal court before U.S. Magistrate Judge Kevin Nathaniel Fox this afternoon. Two additional defendants were arrested – one in Buffalo, New York, and one in Lawrenceville, Georgia. Defendants HAMID KHAN, AKTHER RAHMAN, ABDUR RAZZAK, KHAIRUL ISLAM and MD REZA are still at large.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, for three years the 14 defendants charged in this multimillion-dollar check-kiting scheme attempted to fly under the radar and conceal their illicit activity through false identification documents, counterfeit checks, and sham companies. But law enforcement uncovered their alleged bank fraud, and now they will be made to answer for their actions.”

ICE HSI Special Agent-in-Charge James T. Hayes, Jr. said: “The defendants arrested today are alleged to have perpetrated a scheme involving the theft of at least $8,000,000 from 15 financial institutions. HSI New York’s El Dorado Task Force, the largest financial investigation task force in the world, partners with prosecutors and law enforcement agencies every day to detect and dismantle transnational criminal organizations working to steal from financial institutions and disrupt America’s economic system.”

The following allegations are based on the Indictment unsealed today in Manhattan federal court:

From approximately June 2009 through November 2012, the defendants and their co-conspirators allegedly engaged in a bank fraud scheme in which they created counterfeit checks, deposited those counterfeit checks into bank accounts they had opened in the names of sham companies in order to fraudulently inflate the balances in those accounts, and then withdrew funds from those bank accounts before the financial institutions were able to determine the fraudulent nature of the checks. The scheme entailed the deposit of thousands of counterfeit checks into bank accounts at approximately 15 different banks, resulting in aggregate losses to those banks of at least $8 million.

As part of the scheme, the defendants incorporated sham companies and then opened bank accounts in the names of those sham companies. The individuals opening the accounts (the “accountholders”) often used false identities, including names and social security numbers, and presented false identification documents, including fake United States visas. The accountholders were generally instructed to make small legitimate deposits at first so that the banks would make funds immediately available upon future fraudulent deposits.

The defendants obtained copies of legitimate checks and then used the payor account information that appeared on those checks to create counterfeit checks made payable to the sham companies they had incorporated as part of the scheme. The accountholders deposited the counterfeit checks into the sham company bank accounts at various banks. The accountholders often made deposits at numerous branches of the same bank on the same day. These deposits often were made on a Thursday or Friday so that the defendants could withdraw the illegal proceeds over the weekend when the banks were closed and were less likely to determine that the checks were counterfeit.

Once the defendants confirmed that funds from the counterfeit checks were available for withdrawal, the accountholders were directed to withdraw the funds from the counterfeit checks, typically over the weekend and often in amounts just under $10,000. The defendants often withdrew the funds from global cash access machines at casinos in Atlantic City, New Jersey, which did not have daily withdrawal limits. The accountholders often used false identification documents, including fake United States visas, when making the withdrawals.

Each of the defendants was charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison. Certain of the defendants were also charged with one count of conspiracy to commit fraud in connection with identification documents, which carries a maximum sentence of 15 years in prison. A chart listing the age, place of residence, and charges for each of the 14 charged defendants is attached.

In addition to the defendants charged in the Indictment unsealed today, six other defendants have been charged and have pled guilty in connection with the scheme.

Manhattan U.S. Attorney Bharara praised the investigative work of ICE HSI. He also thanked the Queens County District Attorney’s office, the New Jersey State Police, the New York City Police Department, the New York State Police, the United States Secret Service, and the New York City Taxi and Limousine Commission for their assistance in the matter.

The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorneys Lisa Korologos and Elisha Kobre, and Special Assistant United States Attorney Jason Wong, are in charge of the prosecution.

The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

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U.S. v. Zaman Mahabub, et al. Indictment 13 cr 908.