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Financial Crimes
02/15/2011

Queens resident admits to stealing more than $200,000 in credit card "bust out" scam

HARTFORD, Conn. - A citizen of China, who last resided in Bayside, Queens, N.Y., pleaded guilty Tuesday in U.S. District Court to one count of access-device fraud stemming from a credit card "bust out" scheme. The scheme defrauded financial institutions of more than $200,000. David B. Fein, U.S. Attorney for the District of Connecticut, announced the guilty plea in a case investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), with the cooperation of federal, state and local law enforcement.

According to court documents and statements made in court, Guang Ming Zhao, 34, advertised in the "credit" section of the World Journal, a Chinese language newspaper based in New York, offering to help individuals obtain money from their bank or credit card accounts. In July 2010, an individual working with law enforcement answered the advertisement, and Zhao confirmed that he would be able to assist the individual in obtaining a cash advance from a credit card account that had charges up to its limit and therefore had no funds available. Zhao and the individual then agreed to meet in Connecticut at the MGM Grand at the Foxwoods Resort and Casino.

In the early morning hours of July 28, 2010, Zhao and the individual met at the MGM Grand.   At Zhao's request, the individual provided Zhao with a credit card and other identifying information, including a driver's license. The credit card account provided to Zhao had current charges up to its maximum, and therefore had no additional funds available. Zhao then wired $15,706 to the individual's credit card account from an account at TD Bank that Zhao knew had insufficient funds to support the wire transfer. The $15,706 that was credited to the credit card account made it appear that the account balance had been paid, and that there was money available in the account to support cash advances.

On July 30, 2010, at about 2:35 a.m., Zhao and the individual again met at the MGM Grand and, over the next five hours, Zhao directed the individual to obtain three cash advances from the credit card account in the amounts of $4,800, $4,700, and $2,800. Zhao then directed the individual to pay him a percentage of each of the cash advances.

In pleading guilty, Zhao admitted that he assisted at least 25 individuals in obtaining fraudulent cash advances using this scheme, and that he defrauded several financial institutions of at least $227,597. Zhao also admitted that he used the credit card account described above to make two payments, one to the World Journal in the amount of $1,255, and one to Countrywide Insurance in the amount of $1,000, causing an additional loss of $2,255.

Judge Chatigny has scheduled sentencing for May 5, 2011, at which time Zhao faces a maximum term of imprisonment of 10 years and a fine of up to $250,000. Zhao has been detained since his arrest on July 30, 2010.

U.S. Attorney Fein commended the substantial efforts and cooperation of several organizations assisting in the investigation, including the Mashantucket-Pequot Tribal Office of Inspector General and Surveillance Department; the Connecticut State Police Casino Unit; the U.S. Citizenship and Immigration Service's Office of Fraud Detection and National Security; and the loss prevention departments of J.P. Morgan Chase, Citibank, Capitol One and Bank of America and Global Cash Access Inc. This case is being prosecuted by Assistant U.S. Attorney David E. Novick.