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Financial Crimes
11/02/2012

Father, 2 sons charged in $10 million money order fraud scheme

PHOENIX – A man and his two sons were arrested by law enforcement authorities Wednesday, charged with operating a $10 million money order fraud scheme from a Chandler grocery store. The charges are the result of a joint investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Internal Revenue Service Criminal Investigation and Chandler Police Department.

Gjergj Kol Mihilli, 60, of Gilbert, and his two sons, Nikolas George Mihilli, 35, and Nino Joseph Mihilli, 31, were indicted by a federal grand jury Oct. 23 on conspiracy, bank fraud, money laundering and aggravated identity theft charges. The 46-count indictment alleges the trio operated a money order fraud scheme from the Mama Mia Panaderia & Market in Chandler, which is owned by Gjergj Mihilli. In addition to food sales, the store offered a variety of financial transaction services to customers, including money order sales.

According to the indictment, Gjergj Mihilli contracted with Merchants Bank of California in order for the store to sell the bank's Unigram money orders. The store also maintained two business accounts with Wells Fargo Bank. Beginning around May 2010, the trio is alleged to have conspired to operate a scheme in which the store issued thousands of false, worthless money orders, utilizing fictitious names. These false money orders were then deposited into the Wells Fargo business accounts, thus artificially inflating the account balances, so that funds were made available to pay Merchants Bank for issuing the money orders.

In order to perpetuate the scheme, the defendants were required to continually issue and deposit false money orders. The indictment alleges that the defendants issued and deposited more than 10,000 false money orders totaling approximately $10 million. A portion of those funds were unlawfully withdrawn by the defendants for their personal and business use.

The charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty. The case is being prosecuted by Assistant U.S. Attorney Raymond Woo of the U.S. Attorney's Office, District of Arizona.