LOS ANGELES – A federal grand jury has returned an indictment charging six defendants for their participation in a years-long scheme to steal millions of dollars from American consumers’ bank accounts, the Justice Department announced today.
According to court documents, Henry LoConti, 63, of Chardon, Ohio; John Flynn, 43, of Canada; Shoaib Ahmad, 64, of Canada; Timothy Munoz, 57, of Wilmington, California; Eric Crespin, 61, of Canada; and Lezli St. Hill, 53, of Canada, were members and associates of a racketeering enterprise that unlawfully debited money from the bank accounts of unknowing U.S. consumer-victims.
“Criminals are utilizing technology to devise increasingly sophisticated methods to steal from victims,” said United States Attorney Martin Estrada. “My office will continue to use all available tools to prosecute and apprehend these fraud networks, but I also urge everyone to regularly check your accounts for any unauthorized activity – no matter how small. Prevention is key.”
“The scheme alleged in the indictment involved an elaborate plot to steal consumers’ hard-earned savings directly from their bank accounts,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will use all of the tools at its disposal to prosecute such schemes.”
Through various members and associates, the enterprise obtained identifying and banking information for victims, and created shell entities that claimed to offer products or services, such as cloud storage. The enterprise then executed unauthorized debits against victims’ bank accounts, which it falsely represented to banks were authorized by the victims. Some of the unauthorized debits resulted in returned transactions, which generated high return rates. To both conceal and continue conducting unauthorized debits, the enterprise’s shell entities also generated “micro debits” against other bank accounts controlled and funded by or for the enterprise. The micro debits artificially lowered shell entities’ return rates to levels that conspirators believed would reduce bank scrutiny and lessen potential negative impact on the enterprise’s banking relations.
Combined with a prior indictment, 19 conspirators are currently charged in the Central District of California for their participation in the scheme. Three other defendants have been convicted and/or sentenced in the District of Nevada, Southern District of California, and District of Maryland.
“The U.S. Postal Inspection Service (USPIS), along with our partners, remain committed to shutting down these types of scammers,” said Inspector in Charge Eric Shen of USPIS’ Criminal Investigations Group. “Dismantling this syndicate, and the arrests and prosecutions of those involved, should send a clear message that fraudulent schemes that exploit innocent victims, many of whom have suffered not only financial losses but also emotional distress and a breach of trust, will not be tolerated. The Postal Inspection Service will make sure that justice is served and that those responsible for these types of crimes feel the full weight of justice.”
All six defendants are charged with racketeering conspiracy and wire fraud. Some defendants made their initial court appearances yesterday. If convicted, each defendant faces a maximum penalty of 20 years in prison for racketeering conspiracy and 30 years in prison for each count of wire fraud. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Ahmad was separately charged in a second indictment with conspiracy to commit bank and wire fraud related to his participation in a similarly-structured conspiracy that also stole money from U.S. consumer-victims.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The department urges individuals to be on the lookout for unauthorized debits to their accounts. Regularly check your bank, credit card, and other financial statements and contact your financial institution if you see a charge you do not recognize. Report any fraudulent debit you identify to law enforcement. Reports may be filed with the FTC at www.reportfraud.ftc.gov or at 877-FTC-HELP.
USPIS is investigating the case.
Assistant United States Attorney Monica Tait of the Major Frauds Section and Justice Department Trial Attorneys Wei Xiang, Meredith Healy and Amy Kaplan of the Civil Division’s Consumer Protection Branch are prosecuting the case.
The Consumer Protection Branch, in conjunction with the USPIS, is pursing wrongdoers who disguise the unlawful nature of business activities by, among other methods, artificially lowering financial account return rates. These tactics are designed to deceive banks, resulting in bank accounts remaining open and facilitating fraud schemes and other illegal activities, including schemes that debit consumers’ bank accounts without authorization, tech support scams and subscription traps.
For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch.
