SPECIAL/CREDIT CARD FRAUD
Massive credit card fraud racket rocks
New Jersey’s desi business hub
Reportage: Suman Guha Mozumder. Photographs: Paresh Gandhi
In one of the largest credit card frauds ever charged by the Department of Justice, federal
agents last week arrested 13 people —
most of them South Asians and
including six Indian Americans — for
stealing at least $200 million
through a sprawling criminal enterprise across dozens of states and
involving at least eight countries
In raids by hundreds of officers
from the Federal Bureau of
Investigation and the US Postal
Inspection Service, the defendants
were arrested from New Jersey, New
York, Pennsylvania, and Connecticut
from their homes and businesses.
The arrested included Raghbir
Singh, Vijay Verma, Sat Verma, Vinod
Dadlani and Tarshem Lal. Three of
the men operated jewelry stores in
what is known as Indian market on
Newark Avenue, Jersey City’s desi
Prosecutors alleged the jewelry or
other businesses were allegedly a
front behind which the defendants
hid their scheme to mint money
through credit card fraud, creating
dozens of sham companies that did little or no legitimate
business. They obtained credit card terminals for the companies before running up charges on the fraud cards, the
In April 2011, federal agents had raided and shut down
Ashu Jewelers, owned by Sat Verma. Two more stores on
the same block, including Raja Jewelers, were sealed and
shut down last week. Eye witnesses present late in the
evening when the raids took place said Dadlani was taken
away in handcuffs before agents took the boxes apparently
containing business documents and merchandize from his
The investigation that produced the arrests involved
cyber-crime investigators from the FBI and has been on for
more than 18 months. It previously resulted in the arrest of
four other people and the seizure of more than $2 million
in gold from a jewelry store in Jersey City.
The bank fraud count with which the defendants are
charged is punishable by a maximum penalty of 30 years in
prison, and a fine of $1 million.
According to the prosecution, which has charged 18 people in the multi-state fraud but is yet to arrest all, the
defendants allegedly fabricated identities to obtain credit
cards and doctored credit reports to pump up the spending
and borrowing power associated with the cards.
They would then borrow or spend as much as they could
based on their fraudulently obtained credit history and not
repay the debts, looting businesses and financial institutions of more than $200 million so far in confirmed losses.
The prosecutors said the ‘enormous size and scope’ of the
criminal fraud enterprise required the defendants and others to construct an elaborate network of false identities.
Across the country, the defendants and their co-conspirators maintained more than 1,800 ‘drop addresses,’ including houses, apartments, and post office boxes, which they
used as mailing addresses of the false identities.
Federal agents during the raids on jewelry shops at the Indian market on Newark Avenue in Jersey City, New Jersey
They created dozens of sham companies that obtained
credit card terminals for the companies and then ran up
charges on the fraud cards.
To accept payments in the form of credit cards, the indictment explained, a business must establish a merchant
account with a merchant processor that provides the business with equipment to process credit cards, receives payments from credit card companies for cards run at the
business, and deposits those payments, minus a fee, into
the business’s bank account.
The indictment added: ‘When the merchant processors
shut down accounts operated by the conspirators for fraud,
they would apply for new terminals and create new compa-
The sham companies also served as ‘furnishers,’ providing
the credit bureaus with false information about the credit
history of numerous false identities of people who purport-
edly worked at or owned the sham companies.
Prosecutors alleged that Babar Qureshi and Muhammad
Shafiq are the leaders of the fraud enterprise while Ijaz
Butt, Qaiser Khan and Habib Chaudhry worked with them.
The two Vermas, Lal and Dadlani ran complicit jewelry
stores where millions of dollars in fraudulent credit card
transactions were processed.
Virginia Adams, also named in the complaint, allegedly
helped in ‘pumping up’ or inflating the credit of the false
identities through manipulation of credit reports.
At a news conference US Attorney Paul Fishman detailed
a complex scheme that featured a combination of identity
theft and credit card fraud that was pulled off with great
precision. He said that in ‘pumping up’ the credit card limits, conspirators would sometimes make small charges on
cards, then pay those charges on time — raising the limit by
acting as responsible customers.
The Star-Ledger, quoting the prosecutors, said that as
part of the scheme the conspirators sometimes used the
names and information of real people who had left the
United States and were willing to sell their identities.
Several of the conspirators were accomplished fake ID
makers, and made hundreds of driver’s licenses and Social