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August 9, 2018New York, NY, United StatesFinancial Crimes

12 charged in nationwide cellphone fraud scheme which caused million dollar losses

NEW YORK — Twelve charged in New York, Ohio and Pennsylvania Thursday after a fraud investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in New York’s El Dorado Task Force (EDTF). This investigation, worked by HSI special agents and taskforce members from the New York City Police Department (NYPD) and the Westchester County District Attorney’s Office, revealed twelve individuals involved in a nationwide fraud conspiracy from 2014 to the present: Isaac Concepcion Aquino, a/k/a “Kaka,” Mario Diaz, a/k/a “Memin,” Tomas Guillen, a/k/a “Diddy,” Ronnie De Leon, Jose Argelis Diaz, Joel Pena, Jhonatan Diaz, a/k/a “Nino,” Eddy Morrobel, Ruddy Sanchez, Michael Roque, Rayniel Robles, and Joandra Tejada Gonzalez. In connection with the fraud, the defendants and their associates improperly accessed more than 3,300 customers’ cellphone accounts, fraudulently obtained more than 1,200 cellphones, and caused losses exceeding $1 million.

“Those arrested today were allegedly part of a fraud network operating in New York, the Dominican Republic and the Darknet. Their activities left a trail of unsuspecting victims across the United States and cost businesses significant losses. They traveled to 30 states to obtain cellphones that were later sold through fencing operations in the Bronx,” said Angel M. Melendez, special agent in charge of HSI New York.  “Telecommunications fraud is a huge business and where there is a profit to be made by criminals, HSI’s longstanding El Dorado Task Force will follow the money to bring those perpetrators to justice.”

“The defendants allegedly engaged in a sophisticated nationwide conspiracy to hack into the accounts of ordinary people and exploit those accounts for their own gain, obtaining valuable electronic devices at others’ expense. The defendants allegedly perpetrated their scheme through various means, including buying victims’ account information over the dark web. Thanks to the dedicated work of our partners at HSI, this alleged ring of cellphone fraudsters will now face the call of justice,” said U. S. Attorney for the Southern District of New York, Geoffrey S. Berman.

According to the allegations in the complaint, from at least 2014 to the present, a group of individuals (the “Fraud Ring”) perpetrated a wide-ranging scheme to obtain valuable, new electronic devices – primarily iPhones, but also iPads, tablets, and watches – at others’ expense. During the course of the conspiracy, the Fraud Ring fraudulently obtained more than $1 million worth of devices. To facilitate the scheme, the Fraud Ring traveled to at least 30 different states, but often brought or shipped the fraudulently obtained cellphones back to the Bronx, where they regularly sold them.

The Fraud Ring regularly engaged in intrusions into existing customers’ accounts with cellular service companies and obtained new phones or “upgrade” phones by paying only a small fee in the store, while charging the vast majority of the purchase price to existing customers’ accounts, without the consent or knowledge of these existing customers. The scheme’s victims therefore included both customers, whose identities were stolen and/or whose accounts were accessed without authorization, and cellphone service providers, which typically bore financial losses for fraudulently obtained devices.

The Fraud Ring used various mechanisms to perpetrate their scheme, including: buying cellphone customers’ personal identifying information (“PII”) over the dark web; phishing, in which the Fraud Ring sent a link to cellphone customers that, if pressed, allowed the Fraud Ring to hack into the customer’s account; using fraudulent identifications to persuade retail store employees that conspirators were someone else; and opening accounts using social security numbers that appeared to match conspirators’ names but in fact belonged to victims.

During the course of the investigation, HSI executed a search warrant on a suspected hub of the Fraud Ring in Mt. Vernon, New York (the “Residence”). Law enforcement encountered six of the 12 charged defendants in the Residence and seized (among other things) approximately 47 electronic devices, including 12 computers. Two IP addresses associated with the Residence were used to access at least approximately 3,300 cellphone company customer accounts, and to fraudulently purchase at least approximately 1,294 cellphones. The seized computers contained various indicators of involvement in the fraud, including:

  • A 15-minute long “How-to” video, which detailed the steps necessary to commit cellphone fraud, including how to use victim PII to fraudulently purchase devices;
  • Many indicators that the computers had accessed the darkweb, several websites where victim PII is sold (sometimes for as little as $3), and cryptocurrency exchanges, including for Bitcoin; and
  • Numerous Google searches in furtherance of the fraud (e.g., “best buy upgrade checker phone,” “att activate phone,” “ check order status,” “check my order status sprint,” “add authorized user last name,” “California driver license number format,” “Utah driver license photo,” and “most common last names for Spanish rich people”).

Each of the 12 defendants is charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of twenty years’ imprisonment, and one count of aggravated identity theft, which carries a mandatory minimum penalty of two years’ imprisonment, which must run consecutively to any other term of imprisonment imposed. The maximum and mandatory minimum 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.

This case is being handled by the SDNY’s General Crimes Unit. The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The El Dorado Task Force is headquartered at the HSI New York Special Agent in Charge Office and at other locations in the New York/New Jersey Metropolitan area. Task force agents educate the private financial sector to identify and eliminate vulnerabilities and promote anti-money laundering legislation through training and other outreach programs. Prosecutors use a full range of criminal and civil laws to prosecute targets and forfeit the proceeds of their illicit activity. Since its inception, the Task Force has branched out to address all financial crimes--evolving into the largest, most successful financial crimes task force in the world.