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Home Depot, Sears, Kmart, Best Buy and Kohl's Identity Theft Ring Headed To Prison
Written: November 19, 2012

Why pay retail?

This is an update of a Street Sweeper column that ran on January 13, 2012.

On January 12, 2012, Preet Bharara, the United StatesAttorney for the Southern District of New York; Eric T. Schneiderman, the New York State Attorney General; and James T. Hayes, Jr., the Special Agent-in-Charge of the New York Office of Immigration and Customs Enforcement’s Homeland Security Investigations, announced charges against seven members of an identity theft ring.  The Complaint alleged that no later than 2008, the defendants allegedly used the stolen identities of over 180 people with active store credit accounts at Home Depot, Sears, Kmart, Kohl’s,and other retail stores. The following seven defendants were arrested:

  • PHILLIP SMITH, 54, Bronx, NY, the ring’s leader;
  • MELISSA MORTON, 24, Bronx, NY, who allegedly impersonated female identity theft victims;
  • MAHMOUD ABDUL HUSSEIN, 27, ALI ABDUL HUSSEIN,33, and FADAL ABDUL HUSSEIN , 22, all residents of Seaford, NY – three brothers who allegedly manufactured fake driver’s licenses out of their storefront smoke shops in Greenwich Village; and
  • FRANCIS HIDALGO, 44, Pomona, NY, and RANDY WHITE, 56, Bronx, NY, who are alleged to have resold the illegally obtained store credits or used them to buy materials for home improvement projects for their businesses.

According to the Complaint, since the ring’s inception, Phillip Smith allegedly obtained stolen identities including the names and social security numbers of legitimate account holders at large retail chains, including Home Depot, Sears, Kmart, and Kohl’s. Smith then purportedly called the customer service numbers at the retail stores to confirm that the victims had credit accounts and to determine the available credit limit. That makes sense — if you’re going to go to all the trouble of stealing someone’s identity, you might as well make sure that they have some usable (or should I say “steal-able”) credit still available.  Not much point in trying to rip off the account of a dead-beat, right?

Fake Licenses

So, after confirming the financial good-to-go status of the marks, Phillip Smith allegedly got a hold of fake driver’s licenses in the names of the account holders but with photos of the individuals who would then impersonate them at the retail outlets. That’s a nice touch. Shows that they took the care to focus on the details. Nothing like customizing the bogus driver’s license with the right photo of the person going to run the alleged con. And who do we allegedly have to thank for this pride of workmanship?  According to the Complaint, the Hussein brothers, who operated out of two storefronts in Manhattan’s Greenwich Village.

Round One

Armed with the stolen info and the hot licenses, Smith allegedly drove Morton  to retail stores throughout New York, Connecticut, New Jersey, and Pennsylvania.  Upon arrival at the stores, Morton allegedly charged expensive merchandise and gift cards to victims’ accounts; but even this phase of the scam was carried off with a bit of elan. We have Morton, supposedly fumbling at the checkout line, telling the store clerks that, something along the lines of, gee, it should be in my bag but, damn, it’s not, you know what, I must have forgotten my store credit card.  Tell you what, honey, lemme give ya my driver’s license instead, and, how about I also give you my social security number. I don’t want ya to get in trouble or nuthin’.  Here’s my proof of my identity.

Resale

Of course, if the Complaint is correct, Morton had deceived the clerk into believing that she was the customer whose identity had been stolen and for whom a fake driver’s license was fabricated. Armed with all the merchandise obtained through this purported identity theft, Phillip Smith then allegedly drove Morton to other outlets of the previously targeted retailers.  Morton then entered these new locations and returned the same merchandise that she had previously purchased at the chain’s other store.  Now the defendant’s allegedly realized the first goal of their ring: They got a store credit or gift card.

Once the credits or cards were obtained,  according to the Complaint, defendants Hidalgo and White (among other members of the ring) bought the credits/cards for about 60% of their face value, and, thereafter, resold them for about 70% of the face value.

Wiretaps

Prosecutors alleged that during their investigation, they used court-authorized wiretaps to intercept telephone calls among the defendants. Allegedly, Smith and Morton are heard on some of the tapes speaking in a code – referencing the faked driver’s licenses and the targeted victims.  In one call, it is alleged that Smith warned White that some Sears store credits had a limited shelf life – they needed to be used “right away” before “they go bad.” In some other tapes, prosecutors alleged that Smith arranged to sell to Hidalgo Home Depot store credits for 60% of face value.  The ever resourceful Hidalgo allegedly managed to set up a quick flip by locating contractors with ready cash.  Finally, some tapes allegedly contain conversations of the the Hussein brothers discussing their manufacture of fake driver’s licenses.

Oh and another indication that a lot of the victims’ stolen identities went up in smoke, Hidalgo also used some of the proceeds and gift cards he obtained to purchase building materials so that he could convert two warehouses in the Bronx into marijuana grow-houses for a large marijuana distribution organization.

The Counts

The Complaint charged:

  • Smith, Morton, Hidalgo, and White: conspiracy to commit access device fraud, which carries a maximum term of five years in prison.
  • Smith, Morton, and the Hussein’s: a separate conspiracy to produce fake driver’s licenses, which carries a maximum term of 15 years in prison.
  • Smith and Morton: additionally charged with aggravated identity theft, which carries a mandatory two-year sentence if convicted.

UPDATE

Since this article first ran, there appears to have been an Indictment and a Superseding Indictment filed, and the name of Best Buy seems to have been added to the list of victimized retailers; and Winston Harris and EugeneSmith were added as defendants charged with using stolen identities to make purchases at the retail stores.

On October 3, 2012, White pled guilty to conspiracy to commit access device fraud. He faces a maximum potential sentence of five years in prison.

On October 15, 2012, Harris pled guilty to:

  • conspiracy to commit access device fraud,
  • conspiracy to produce false identification documents, and
  • aggravated identity theft.

He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years in prison.

On October 25, 2012, Mahmoud Abdul Hussein, Ali Abdul Hussein, and Fadal Abdul Hussein pled guilty  to conspiracy to produce false identification documents. Each faces a maximum potential sentence of 15 years in prison.

On November 5, 2012, Eugene Smith pled guilty to:

  • conspiracy to commit access device fraud,
  • conspiracy to produce false identification documents, and
  • aggravated identity theft.

He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years.

On November 15, 2012, Hidalgo plead guilty to:

  • conspiracy to commit access device fraud,
  • theft of public funds (in connection with the submission of false claims to the New Jersey Unemployment Insurance Fund), and
  • conspiracy to distribute or possess with intent to distribute over 100 marijuana plants.

He faces a maximum potential sentence of 55 years in prison years and a mandatory minimum sentence of five years in prison.

On November 16, 2012, Phillip Smith, deemed the ringleader by federal prosecutors, pled guilty to:

  • conspiracy to commit access device fraud,
  • conspiracy to produce false identification documents, and
  • aggravated identity theft.

He faces a maximum potential sentence of 22 years in prison and a mandatory minimum term of two years in prison.

Charges remain pending against defendant MortonNOTE: As to defendant Morton the charges are mere allegations and she is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.


 
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