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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

Tuesday, November 25, 2014

Ninth Defendant In Massive International Credit Card Fraud Conspiracy Pleads Guilty In Manhattan Federal Court

The Defendants Are Responsible For Stealing Hundreds Of Thousands Of Consumers’ Bank Account Information, And Using It To Steal Tens Of Millions Of Dollars From At Least Nineteen Different Countries

Preet Bharara, the United States Attorney for the Southern District of New York, and Robert J. Sica, the Special Agent-in-Charge of the New York Office of the United States Secret Service, announced today that ALI REZA KANUGA pled guilty yesterday in Manhattan federal court to conspiracy to commit access device fraud and aggravated identity theft. KANUGA is the ninth defendant to plead guilty as part of an international investigation into a massive credit card fraud ring, which was responsible for stealing the personal financial information of hundreds of thousands of consumers, and using it to steal tens of millions of dollars worldwide. KANUGA, who was extradited from the United Kingdom in February 2012, pled guilty yesterday before U.S. Magistrate Judge Michael H. Dolinger.

Manhattan U.S. Attorney Preet Bharara said: “Ali Reza Kanuga and his co-conspirators stole sensitive bank account information around the globe, travelling from one country to the next to victimize consumers and financial institutions alike. Because of the wide-ranging investigation conducted by this Office and the U.S. Secret Service, together with our international partners, this global criminal organization has been dismantled, and its leaders are either behind bars or are fugitives from justice.”

Chart of Defendants

Secret Service Special Agent-in-Charge Robert J. Sica said: “The arrest of Ali Reza Kanuga is yet another example of how the Secret Service continues to successfully combat data theft and financial crimes. The Secret Service utilized state-of-the-art investigative techniques to dismantle this criminal network. Our success in this case and other similar investigations is a result of the extraordinary work of our cyber investigators and our close work with our extensive network of law enforcement partners.”

According to the allegations contained in the Indictment filed on November 15, 2012, and other court documents:

From at least 2007 until at least the summer of 2011, the Khan Family Organization was an international criminal organization principally in the business of stealing credit card, bank account, and related financial information from consumers at retail establishments; using the stolen account information to extract cash from automated teller machines (“ATMs”) using counterfeit ATM cards; and laundering the proceeds of the scheme back to its organizers. The Khan Family Organization (or the “Organization”) – which has at various times been based out of the United Kingdom, the United Arab Emirates, and the Netherlands – developed an especially sophisticated method of fraudulently obtaining customer account data from retail locations. At the time of the arrest of its leader, Irfan Khan, a/k/a “Superman,” in or about March 2010, the Organization was one of the largest, if not the single largest, credit card skimming syndicates throughout the world. As described below, members and associates of the Organization were dispatched throughout the United Kingdom, mainland Europe, and elsewhere to install credit card reader devices that had been customized to steal users’ account information, through the addition of particularly advanced “skimmers.”

The Organization’s leadership then dispatched members and associates throughout the world – including to New York City, the United Kingdom, mainland Europe, Southeast Asia, the Middle East, Africa, the Caribbean, South America, Australia, and elsewhere – to create counterfeit ATM cards using the stolen account information and fraudulently to withdraw cash from victims’ accounts. Members and associates of the Organization then laundered the proceeds of the fraud back to its leadership through various means, including by physically carrying cash internationally; through structured Western Union or similar transactions; and through the informal system of banking known as hawala or its functional equivalent.

Using extraordinarily sophisticated technology, the Organization began to mass produce its skimmers for installation into bank-card readers (also known as PIN Entry Devices, or “PEDs”) in retail locations throughout Europe. The Organization operated on a massive scale:

● In 2008, a member of the Organization’s leadership contacted various electronics and software purveyors in Britain to source component parts to manufacture the Organization’s skimmers, ordering, for example, 900 modems and 1,300 circuit boards.

● Between April 2008 and March 2009, a secure FTP site used by the Organization to receive text messages containing stolen accounts and PINs received approximately 350,000 transfers of data, representing approximately the number of accounts compromised by the Organization over that period.

● In early 2009, a pair of police seizures from the Organization’s premises in London resulted in the seizure of almost a thousand PEDs in various stages of alteration.

● In early 2010, two co-conspirators were arrested in the Netherlands carrying a memory device that contained, among other things, approximately 186,000 unique stolen bank account numbers and their associated PINS.

● In April 2011, three co-conspirators were arrested in the Netherlands carrying a laptop computer that contained, among other things, approximately 15,000 unique stolen bank account numbers and their associated PINS.

KANUGA was responsible for leading a group of conspirators – including co-defendants Ujval Jethwa and Michaela Jo Berney – in installing the Organization’s custom-made PEDs in at least 15 retail locations in the Netherlands. In March 2010, data stolen from the Dutch skimmers was disseminated to members and associates of the Organization throughout the world, who used it to create counterfeit ATM cards, which they then used at local banks and other ATM locations. For instance, Jethwa, co-defendant Asif Khan, and another co-conspirator travelled from the United Kingdom to New York City. On just two days, March 6-7, 2010, Jethwa and other co-conspirators, including Timothy Guvercin, engaged in at least 1,110 transactions at approximately 95 locations in Manhattan, resulting in the theft of approximately $260,000 in cash. During the same two days, different co-conspirators were using the same stolen data in at least 18 other countries. Asif Khan then assisted with laundering those fraud proceeds back to the Organization’s leadership in Europe and the Middle East through the use of hawala bankers.

At around the same time, Irfan Khan and another co-conspirator, Zeshan Mian, were arrested in Amsterdam, the Netherlands, and were charged with possession of stolen bank data. They had, among other things, a memory card containing approximately 186,000 unique stolen bank card numbers and their associated PINS, along with an illustrated, step-by-step manual to creating the Organization’s skimming device, which Irfan Khan and Mian had created.

While in prison, Irfan Khan continued to run the Organization. For example, in April 2011, co-defendants Mohammed Shabaz Khawar, Abdul Qayam Durrani, Fassel Azim, and David Ashley Smith travelled to the Netherlands from the United Kingdom to install additional PEDs at retail outlets in and around Rotterdam. Khawar, Durrani, and Smith were arrested by Dutch authorities, in possession of a laptop computer that contained financial information about more than 15,000 back accounts, as well as skimmers built to the Organization’s specifications. The group also possessed a “top up” card to add credit to an illicit pre-paid cellphone that Irfan Khan was using in his Dutch prison to direct the Organization.

KANUGA, 32, of London, England, pled guilty to one count of conspiracy to commit access device fraud and one count of aggravated identity theft. The conspiracy count carries a maximum sentence of seven and a half years in prison, a maximum fine of $250,000, or twice the gross gain or loss from the offense, and forfeiture of the proceeds of the offense. The aggravated identity theft count carries a mandatory two-year sentence, which must run consecutively to any other sentence imposed. The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. A chart reflecting the status of the other charged defendants is attached. KANUGA is scheduled to be sentenced in February 2015.

Mr. Bharara praised the investigative work of the United States Secret Service. He also thanked the Politie Amsterdam Amstelland, the Arrondissementsparket Amsterdam, the Metropolitan Police Service, the City of London Police, and the Dedicated Cheque and Plastic Crime Unit for their help in the investigation.

This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Matthew L. Schwartz and Negar Tekeei are in charge of the prosecution.

Press Release Number: 
Updated May 15, 2015