3 Charged with Forced Posting Credit/Debit Card Fraud. Technique that overrides bank charge “denials.”

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WPCNR FBI WIRE. Special to WPCNR from the Federal Bureau of Investigation. July 31, 2018:

Editor’s Note: This news report from the FBI gives another example of the way the pickpockets of the internet and the telephone scams are using technology to clean out bank accounts of the unsuspecting consumer across the country. It is another “wake-up call” to how the cashless society is creating windfalls for the sophisticated internet/phone scammer. As Woody Guthrie once wrote: “Some people rob you with a six-gun, others do it with a telephone call.:” The following report tells you exactly the flaws in how your credit card number is processed that makes it imperative you do not give credit card information of any kind over the telephone.)

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging three defendants with allegedly engaging in conspiracy to commit wire fraud and wire fraud in a scheme known as “forced posting.”

Two defendants, LATOYA ROBINSON and DASHAWN JOHNSON, were arrested and presented last week before United States Magistrate Lisa Margaret Smith.  Defendant TANYA HATWOOD remains at large.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants took advantage of a security feature of the debit card processing system, which allowed for nearly $1 million in fraudulent merchandise charges.  Thanks to our federal and local law enforcement partners, the scam is over and the defendants face significant criminal charges.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “As technology continues to evolve, the complexity of fabricated schemes evolves almost faster than humans can keep up.  Nevertheless, the FBI remains committed to investigating fraud in its many facets. By allegedly using fictitious codes in the attempt to take more than $900,000 in merchandise, the defendants believed their scheme would go undetected.  However, now that the two defendants are facing federal charges today, it is clear that their misguided criminal behavior was wrong.”

As alleged in the Complaint unsealed in White Plains federal court[1]:

When a customer presents a debit card to purchase merchandise at a store and the card is swiped at an electronic card reader maintained by the merchant, electronic signals are routed from the merchant to the brand of the customer’s debit card, and then routed to the underlying bank that issued the debit card.  The bank then verifies whether the customer has sufficient funds in the account to cover the requested transaction, which is then relayed back to the merchant.  When there are insufficient funds on the debit card presented by the customer, the card reader will display a message that the transaction request was denied.  

Many card readers have a functionality, though, that allows someone to input a code that serves to take the card reader offline, overriding the denial message and verifying the transaction. 

Malign actors can take advantage of this functionality by inputting a fictitious code not provided by the issuing bank under the guise of entering a pin code or other authorization code, which could cause the card reader to show that the transaction was authorized.  

The merchant may then let the customer leave with any merchandise the customer attempted to purchase; the merchant would not learn that the code was fictitious and the transaction invalid until days or even months later.  

The process by which a customer could take advantage of the functionality is called “forced posting” or “forcing the off.”

Bank records, corroborated by interviews with more than 30 merchants, show that from 2013 up to May 2018, LATOYA ROBINSON, DASHAWN JOHNSON, and TANYA HATWOOD, together and separately, performed forced posting on dozens of occasions, and schemed to take or attempt to take more than $900,000 in merchandise in total. 

*                *                *

ROBINSON, 29, of the Bronx, JOHNSON, 25, of Manhattan, and HATWOOD, 27, of the Bronx, are each charged with one count of conspiracy to commit wire fraud and one count of wire fraud.  Each count carries a maximum sentence of 20 years.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI, the Yonkers Police Department, the New York City Police Department, and the Nassau County Police Department.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Samuel L. Raymond is in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

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25 with Russian and Eastern European Roots WITH MASSIVE INTERNET WIRE FRAUD, MONEY LAUNDERING LOOTING THE UNWARY, the NAIVE, THE RICH THROUGH INTERNET ADS

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WPCNR FBI WIRE. Special to WPCNR from the Federal Bureau of Investigation. July 31, 2018:

(Editor’s Note: Returning to the Great Northeast,and listening to NPR and Bloomburg at the few radio oases to be found driving up the great eastern seaboard, the themes I heard were how Facebook would recover from their present difficulties with failure to vet Facebook content.

Imagine my surprise when I received the FBI report below this morning. The arrests those pending made by the FBI detailed below show a glaring weakness of websites in general in vetting the credentials of their advertisers not just political posters. The internet is the wild west and it is out to get you. This single ring described below shows how sophisticated unscrupulous cyber criminals have taken advantage of the naivete of consumers in the United States, and the false security of financial institutions that process internet transactions. It is worth noting the nationalities of those charged.)

Co-Conspirators Posted Fake Advertisements for Cars, Tricking Victims Nationwide Into Wiring More Than $4.5 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging Diyora Ashirova, Elvin Baghir-Pur, Kirill Dedusev, Roman Eliozashvili, Sarkhan Imamverdiyev, Mikheil Inadze, Aziza Jalolova, Elvin Javadzade, Igor Kalinitchev, a/k/a “Irvin Kalinitchev,” Tengiz Khukhiashvili, Yelena Kudaibergenova, Mishel Levinski, Stanislav Lisitskiy, a/k/a “Giedrius Girnius,” Aleksei Livadnyi, Durra Mehdiyeva, Mikhail Morozov, Ielyzaveta NAzina, Gocha Paposhvili, Matiss Puke, Ketevan Sepiashvili, Aleksandr Starikov, Igor Stasovskiy, Nikolay Tupikin, Karlis Vitols, and Melvut Yazici with conspiracy to commit wire fraud and conspiracy to commit concealment money laundering.

Editor’s Note: As the roster of those charged indicates below, 17 live in Brooklyn, 4 live in Los Angeles, 2 in Delray Beach (FL) and 2 in Moscow. 7 are described as Russian in nationality; 5 from Georgia(formerly a USSR satellite, 1 from the United States, 4 from Azerbaijan, 3 from Kazakhston, 2 from Latvia, 1 from Turkey.)

Eleven of the defendants were arrested on these charges July 24 in New York.  These defendants were presented and arraigned before United States Magistrate Judge James L. Cott in Manhattan federal court.  BAGHIR-PUR was arrested in Miami and will be there presented.  KHUKIASHVILI is in custody on state charges in Alachua County, Florida, and PUKE and VITOLS are in custody on state charges in Charlevoix County, Michigan.  All three will be transferred to federal custody.  DEDUSEV, ELIOZASHVILI, KUDAIBERGENOVA, LISITSKIY, LIVADNYI, MOROZOV, STARIKOV, and TUPIKIN remain at large.  The case has been assigned to United States District Judge George B. Daniels.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants participated in a nationwide scheme to defraud, duping victims who responded to fake internet advertisements designed to resemble advertisements posted by legitimate merchants.  Then the defendants allegedly created dozens of shell companies to receive victim payments and withdrew the funds and sent them out of the country.  Thanks to the hard work of the FBI, these defendants will now face prosecution.”

FBI Assistant Director William F. Sweeney Jr. said:  “Trusting that they were conducting legitimate business with automotive dealers, these victims lost over $4 million as a result of this scheme.  While allegedly operating under this façade, the defendants were diligent in the theft of the funds, but showed no regard to the financial impact on the victims. As shown by the charges brought today, the FBI will continue to work tirelessly with our law enforcement partners to uncover duplicitous conspiracies, regardless of the vast intricacy of their cover-ups.”

According to the allegations in the Indictment and statements made during court proceedings in this matter[1]:

From November 2016 through July 2018, the defendants carried out a wide-ranging fraudulent scheme that typically involved impersonating legitimate sellers of cars, tricking victims into providing payment for those cars, withdrawing the funds from banks around the country using efforts designed to evade scrutiny, and wiring the proceeds outside the United States.

The fraud most commonly operated as follows: first, co-conspirators impersonated automotive dealers and collectors and claimed to be selling classic cars on various well-known internet auction and trading websites.  Victims responding to the ads were in fact corresponding with a fraud scheme participant.  After the victims and co-conspirators came to terms on a sale price, including down payment and shipping costs, victims were next directed to purported automotive transportation companies and were told that these companies would accept payment and transport the cars.  These companies were in fact shell corporations established by the conspiracy to help perpetrate the fraud, whose corporate bank accounts were established and controlled by the defendants, awaiting wired funds from the fraud’s victims.  After victims had wired payment, the defendants went to the banks to drain the victim’s funds, often starting the same day payment had been transmitted. 

The defendants would draw money from different bank branches in numerous withdrawals on the same day, in denominations that were varied and often kept to an amount they believed would prevent the financial institutions from recording and reporting the fraud. 

The co-conspirators then sent the fraud proceeds outside the United States to Eastern European countries, from where many of the conspirators originated.  Victims never received the goods they believed they had purchased, and many were unable to recover their money or were left paying loans for cars that were never truly for sale.  The defendants’ scheme defrauded victims of more than $4.5 million.

*                      *                      *

Each of the defendants is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison, and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. The table below lists the name, age, nationality, and residence of each defendant.

Mr. Berman praised the outstanding investigative work of the FBI, Customs and Border Protection, the New York Police Department, and U.S. Immigration and Customs Enforcement’s Enforcement and Removal Operations.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Jeffrey C. Coffman, Thane Rehn, and Matthew J.C. Hellman 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.

Name

Age

Nationality

Residence
ASHIROVA

27

 Kazakhstan Brooklyn
BAGHIR-PUR

24

 Azerbaijan Brooklyn
ELIOZASHVILI

44

 Georgia Brooklyn
IMAMVERDIYEV

30

 Azerbaijan Brooklyn
INADZE

37

 Georgia Brooklyn
JALOLOVA

23

 Kazakhstan Brooklyn
JAVAZADE

30

 Azerbaijan Brooklyn
LEVINSKI

23

 United States Brooklyn
KHUKIASHVILI

63

 Georgia Brooklyn
KHUDAIBERGENOVA

48

 Kazakhstan Brooklyn
KALINITCHEV

62

 Ukraine Brooklyn
MEHDIYEVA

23

 Azerbaijan Brooklyn
NAZINA

29

 Ukraine Brooklyn
PAPOSHVILI

43

 Georgia Brooklyn
SEPIASHVILI

64

 Georgia Brooklyn
STASOVSKIY

58

 Russia Brooklyn
YAZICI

36

 Turkey Brooklyn
PUKE

31

 Latvia Delray Beach, FL
VITOLS

29

 Latvia Delray Beach, FL
DEDUSEV

29

 Russia Los Angeles
LISITSKIY

30

 Russia Los Angeles
LIVADNYI

39

 Russia Los Angeles
TUPIKIN

32

 Russia Los Angeles
MOROZOV

29

 Russia Moscow
STARIKOV

34

 Russia Moscow

[1]   As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

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Good Bye: The Fixer and Mr. Coverup Gets 7 Years.

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WPCNR FBI WIRE. Special to WPCNR From the Federal Bureau of Investigation. July 31, 2018:

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced Friday that former New York State Assembly Speaker SHELDON SILVER was sentenced to seven years in prison after having been found guilty a second time by a federal jury of using his official position to obtain nearly $4 million in bribes in exchange for his official acts and obtaining another $1 million through laundering the proceeds of his crimes.

SILVER had previously been found guilty of the same offenses by a jury in November 2015, but the conviction was overturned by the U.S. Court of Appeals for the Second Circuit as a result of the Supreme Court’s decision in McDonnell v. United States.

SILVER was sentenced in Manhattan federal court by U.S. District Judge Valerie E. Caproni, who also presided over the two-week jury trial.

U.S. Attorney Geoffrey S. Berman said:  “When he assumed his powerful position at the top of New York State government, Sheldon Silver took an oath to do the work of the people.  Instead, he leveraged his tremendous influence to pad his bank account and line his pockets.  Sheldon Silver has been given a lengthy sentence of seven years in federal prison.

We hope today’s fittingly stiff sentence sends a clear message: brokering official favors for your personal benefit is illegal and will result in prison time.  I thank the career prosecutors of this Office for their perseverance in this important case for the people of New York.”

According to the evidence introduced at trial, court filings, and statements made in Manhattan federal court:

For more than two decades, SHELDON SILVER served as Speaker of the New York State Assembly, a position that gave him significant power over the operation of state government.

SILVER used this immense power – including, in particular, his power over the real estate industry and his control over certain health care funding – to unlawfully and corruptly enrich himself.

Among other things, SILVER unlawfully solicited and obtained client referrals worth millions of dollars in exchange for his official acts, and attempted to disguise this money as legitimate outside income earned from his work as a private lawyer.

In particular, SILVER claimed, on financial disclosure forms required to be filed with New York State and in public statements, that the millions of dollars he received in outside income while also serving as Speaker of the Assembly came from a Manhattan-based law firm, Weitz & Luxenberg P.C., where SILVER claimed to work representing individual clients in personal injury actions.

These claims were materially false and misleading – and made to cover up unlawful payments SILVER received due to his official power and influence as an elected legislator and the Speaker of the Assembly.

The schemes provided SILVER with two different streams of unlawful income: (i) approximately $700,000 in kickbacks SILVER received by steering two real estate developers with business before the state legislature to a law firm with which he was associated, and (ii) more than $3 million in asbestos client referral fees SILVER received by, among other official acts, awarding $500,000 in state grants to a university research center of a physician who referred patients made ill by asbestos to Weitz & Luxenberg.

Unlawful Income From a Real Estate Law Firm

SILVER, a lawyer, entered into a corrupt relationship with Jay Arthur Goldberg, P.C., later known as Goldberg & Iryami, P.C., which specialized in making applications to New York City to reduce taxes assessed on properties.

Beginning in at least approximately 2000, SILVER approached a prominent developer of residential properties in Manhattan, Glenwood Management Corp. (“Glenwood”), and later approached another developer, The Witkoff Group LLC (“Witkoff”), and asked them to hire Goldberg & Iryami.

The developers – both of whom lobbied SILVER and others on real estate issues because their businesses depended heavily on favorable state legislation – agreed to use Goldberg & Iryami as SILVER had requested.  Over the years, Witkoff and Glenwood paid millions of dollars in legal fees to Goldberg & Iryami.

SILVER received a cut from the legal fees amounting to nearly $700,000.  SILVER had no public affiliation with Goldberg & Iryami and performed no legal work to earn those fees, which were payments for SILVER having arranged the business through his official power and influence.

While continuing to receive the fees and in furtherance of the scheme, SILVER took official action beneficial to Glenwood and Witkoff.  For example, while SILVER was publicly associated with advocating for tenants, a proposal that benefitted Glenwood was in substantial part enacted in real estate legislation in 2011 with SILVER’s support.  SILVER also approved more than $1 billion dollars in state financing for Glenwood.

Unlawful Income From Asbestos Client Referrals

SILVER also entered into a corrupt arrangement with Dr. Robert Taub, who was a leading physician specializing in the treatment of asbestos-related diseases, through which SILVER issued state grants and otherwise used his official position to provide favors to Dr. Taub and his family so that Dr. Taub would refer and continue to refer his patients to SILVER at Weitz & Luxenberg, a firm with which SILVER was affiliated as counsel.  Specifically, SILVER arranged for New York State to fund two grants – each for $250,000, and paid out of a then-secret and un-itemized pool of funds controlled entirely by SILVER – for a research center Dr. Taub had established.  SILVER used his official position to provide Dr. Taub with other benefits as well, including helping to direct $25,000 in state funds to a not-for-profit organization for which one of Dr. Taub’s family members served on the board, and asking the CEO of a second not-for-profit to hire a second family member of Dr. Taub.

From approximately 2005 until his arrest, SILVER received more than $3 million from legal fees Weitz & Luxenberg received from patients Dr. Taub had referred to SILVER at the firm while SILVER was agreeing to and taking official actions to benefit Dr. Taub.  SILVER did no legal work whatsoever on these asbestos cases, his sole role having been to use his official position and access to state funds to induce Dr. Taub to provide him with these lucrative referrals.

Silver’s Efforts to Cover Up the Schemes

SILVER took various efforts to disguise his unlawful outside income and prevent the detection of his criminal schemes.  For years, SILVER listed on his official public disclosure forms that his outside income consisted of “limited practice of law in the principal subject area of personal injury claims on behalf of individual clients,” which was false and misleading.  Beginning in 2010, SILVER’s disclosures changed to state that the source of his legal income was a “Law Practice” that “includ[ed]” being of counsel to Weitz & Luxenberg.  SILVER never disclosed his relationship with Goldberg & Iryami or any work beyond what he claimed was a “personal injury” practice.

SILVER also repeatedly made false and misleading statements about his outside work and income in his public statements, including the following:

  • SILVER claimed he performed legal work consisting of spending several hours each week evaluating legal matters brought to him by potential clients and then referring cases that appeared to have merit to lawyers at Weitz & Luxenberg.  In fact, SILVER did no such work on the asbestos cases and obtained those referrals to Weitz & Luxenberg based on his corrupt arrangement with Dr. Taub.
  • SILVER claimed his law practice involved the representation of “plain, ordinary simple people.”  In fact, SILVER steered legal work to Goldberg & Iryami for some of the largest real estate developers in the state, for which favorable state legislation was critical to their business interests.
  • SILVER claimed through his spokesperson that SILVER principally found clients by virtue of his having been a “lawyer for more than 40 years,” in a manner that was “not unlike any other attorney in this state, anywhere.”  In fact, SILVER received money from referring his lucrative asbestos and real estate developer clients solely by virtue of his official position.
  • SILVER stated through his spokesperson that “[n]one of his clients have any business before the state.”  In fact, SILVER’s outside income included millions of dollars of fees obtained through Glenwood and Witkoff, both of which had significant business before the state, and Dr. Taub, to whose benefit SILVER provided state funding and other benefits related to SILVER’s official position.

In addition, SILVER attempted to thwart the Moreland Commission to Investigate Public Corruption, by filing legal motions on behalf of the Assembly and taking other action to block the Moreland Commission’s investigation into legislators’ outside income.

Finally, SILVER laundered part of crime proceeds through private investment vehicles, not available to the public, which yielded him another $1 million in ill-gotten gains.

*                      *                      *

In addition to the prison sentence, SILVER, 74, of New York, New York, was sentenced to three years of supervised release.

SILVER was found guilty by a unanimous jury on May 11, 2018, of two counts of honest services wire fraud, two counts of honest services mail fraud, two counts of extortion under color of official right, and one count of engaging in illegal monetary transactions.

U.S. Attorney Berman praised the work of the Special Agents of the United States Attorney’s Office and the Federal Bureau of Investigation, which jointly conducted this investigation.

This case was prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Daniel C. Richenthal and Damian Williams are in charge of the prosecution.

 

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THE MARCH OF THE MILLENNIALS INTO WHITE PLAINS CANNOT BEGIN UNTIL THE NEW BUILDINGS ARE BUILT.

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WPCNR NEWS & COMMENT. MID-YEAR REVIEW III. By John F. Bailey Updated 7/31 with WP Pavilion new design revelation:

Time is running out on The Millennial March the City of White Plains expects will lead to an end to the revenue blues the city has been experiencing since 2008.

In 2008 the city earned $45.5 Million in sales tax revenues. Ten years later at the close of business June 30, 2018, that important barometer has grown to $50.1 Million a gain of $500,000 over 2008 after 10 years of inflation of about 2% a year. That shows a very stagnant downtown business climate.

If the city just kept pace with inflation in their business transactions, they should have gained $9.1 Million in sales tax receipts by this year for a total of $59 Million in sales taxes, even without compounding.

In fact the city hit an all time high in sales taxes in 2013-14 of $51.9 Million, then slumped the last four years finally posting a gain to $50.1 Million ended June 30.

Let me clarify: If the city economy had kept pace the city should have taken in $59 Million this year based on inflation alone over a decade. But, it has not.

Now it is imperative that the four stalled apartment projects being counted on to bring in the millennial big spenders into White Plains have to start going up and pronto.

The second tower of 55 Bank Street is presumably soon to be started, but not the White Plains Mall rebuild. The apartments behind the Mamaroneck Avenue restaurants between East Post Road and Miller Place are supposedly starting, but I saw no evidence of it last week. What’s the delay?

The 52 North Broadway Good Counsel apartment complex may be finally approved shortly. That’s a good four years away and that’s being optimistic.

The White Plains Pavilion rebuild is stalled out for site plan revision. We do not have proposals yet for the city-owned properties adjacent the east side of the railroad. That whole thing is a good 6 years away at the present snail’s pace.

(Commentator’s  Update Note: on Monday evening, July 30, Lennar, the developer of the White Plains Pavillion site told the Common Council whey could not get financing for the project at its present level of retail. They presented a slim design of two buildings with 814 apartments, to be built in two phases, first one building then the other. Their plan is to pitch the new design of the project two restaurant on recreational retailers, gauge the interest, then get financing from sources. The expected start if all goes well and the city approves is Spring, 2019, with first one building being built then the next.)

The Requests for potential developers for the train station area owned by the city were sent out a year ago and they supposedly had some interest. We do not know who the firms are, and what proposals they may have sent the city.

These four projects have to start now, folks to give us those millennial hives by 2023! The slow pace is killing the city vision. What is behind this slow pace?

The city has to be wary of the sudden insurgence of New Rochelle that has 22 projects supposedly starting now.

The site plans for the city “visions” must be approved like now while the financing is available, if indeed it is.

As the developer Louis Cappelli once told me, “Now is the time to build, Mr. Bailey.”

Had the City Center and Ritz Carlton complex not been built in two years each, back to back, by Mr. Cappelli there would have been no Renaissance 14 years ago in White Plains.

Can the developers the city has tapped and customized zoning on request get their site plans together for swift approvals needed by the end of 2018?

It is a Common council responsibility to pay attention here and get the story of whether once again we have given approvals to developers unable to deliver in a timely manner.

The city future depends on the creation of these buildings the city assumed would be there to fulfill the Roach Administration dream of a Millennial Metropolis to bring the big spenders to town.

But they will not becoming to White Plains if New Rochelle’s “Age of Enlightenment” beckons first with buildings that are move-in ready in 4 years.

Time waits for no one and it won’t wait for White Plains or its developers of choice who are under pressure to deliver. Or should be put under pressure by the Common Council.

By the way the departure of Walmart is not going to help the city sales tax revenues the first of the year either. That is a blow. It has to be the busiest department store in White Plains, don’t you think?

 

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