Thursday, June 19, 2014

Jewelry Store Owner Pleads Guilty in International $200 Million Credit Card Fraud Conspiracy

A New Jersey jewelry store owner who used his business to further one of the largest credit card fraud schemes ever charged by the Justice Department admitted his role in the scheme, the 17th conspirator to do so, New Jersey U.S. Attorney Paul J. Fishman announced.

Vinod Dadlani, 51, of Lyndhurst, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of conspiracy to commit bank fraud.

According to documents filed in this case and statements made in court:

Dadlani was indicted in October 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts—causing more than $200 million in confirmed losses to businesses and financial institutions. These debts were incurred at Dadlani’s jewelry store, among many other locations, where Dadlani would allow fraudulently obtained credit cards to be swiped in phony transactions.

The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus; pump up the credit of the false identity by providing false information about that identity’s creditworthiness to those credit bureaus; and then run up large charges.

The scope of the criminal fraud enterprise required Dadlani’s conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments, and post office boxes, which they used as the mailing addresses for the false identities.

During his guilty plea proceeding, Dadlani admitted he worked with other conspirators, who came to his Jersey City, New Jersey store and allowed them to swipe cards he knew did not legitimately belong to them. Dadlani would then split the proceeds of the phony transactions with the conspirators.

The count to which Dadlani pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine or twice the gain or loss caused by the offense.

Dadlani is scheduled for sentencing by Judge Thompson on September 24, 2014.

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