1 Million Credit Card

[Michael]

TahirLodhi, 56, of Hicksville, N.Y., previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging him with one count of conspiracy to commit bank fraud. Judge Thompson imposed the sentence today in Trenton federal court.

Lodhi directed the activities of a number of other conspirators in fabricating more than 7,000 false identities to obtain tens of thousands of credit cards. They doctored credit reports to pump up the spending and borrowing power associated with the cards. Lodhi and others 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.

Lodhi and his conspirators also relied upon complicit businesses, including several jewelry stores in the Jersey City, N.J., area, to extract money from the fraudulent cards. The complicit businesses would allow certain conspirators to conduct sham transactions on the phony cards and would then receive the proceeds from the credit card companies and split them with the other conspirators. These complicit businesses maintained multiple credit card merchant processing accounts at the same time. By operating dozens of accounts, these businesses furthered the conspiracy by allowing more fraudulent transactions to be processed before the merchant processors shut down the account. The proceeds from these merchant terminals were deposited into various business checking accounts, and the money was paid out to the owners of the complicit businesses, along with other conspirators.

Lavish Spending

The activity described in a Complaint unsealed today describes a sprawling criminal enterprise that stretched across dozens of states and numerous countries. The defendants charged in the Complaint allegedly fabricated identities to obtain credits cards and doctored credit reports to pump up the spending and borrowing power associated with the cards. They would then borrow or spend as much as they could based on their fraudulently obtained credit history and not repay the debts, looting businesses and financial institutions of more than $200 million in confirmed losses.

This morning, hundreds of law enforcement officers from the FBI and the U.S. Postal Inspection Service arrested 13 defendants and searched 13 locations in New Jersey, New York, Pennsylvania, and Connecticut. All of the defendants are charged with one count of bank fraud. The defendants are scheduled to appear later today before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.

Some defendants created and sold fake lines of credit for false identities made up by other defendants. These fraudulent primary tradelines were then used to increase the credit limits on Fraud Cards, so that the defendants could reap even larger profits. Defendants used the authorized user tradelines to create new identities.

The defendats also relied upon complicit businesses, including several jewelry stores in the Jersey City, N.J., area, to extract money from the Fraud Cards. The complicit businesses would allow the defendants to conduct sham transactions on the Fraud Cards and would then receive the proceeds from the credit card companies and split them with the other conspirators. These complicit businesses maintained multiple credit card merchant processing accounts at the same time. By operating dozens of accounts, these businesses furthered the conspiracy by allowing more fraudulent transactions to be processed before the merchant processors shut down the account. The proceeds from these merchant terminals were deposited into various business checking accounts, and the money was paid out to the owners of the complicit businesses, along with other defendants and conspirators.

Lavish spending

The defendants also moved millions of dollars through accounts under their control, and wired millions of dollars overseas. An analysis of 169 bank accounts of the defendants, sham companies, and complicit businesses has identified $60 million dollars in proceeds that flowed through the accounts, much of it withdrawn in cash. The conspirators wired millions of dollars to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan. Due to the massive scope of the conspiracy, which involved over 25,000 fraudulent credit cards, loss calculations are ongoing. Final figures may grow beyond the present confirmed losses of more than $200 million.

Right in the middle of holiday shopping season, some 40 million credit and debit card numbers were stolen in a major breach of Target customer data. The thefts occurred in stores, not online. Target says it's working with a forensics company to investigate and prevent similar data thefts from occurring in the future. Security experts say one way to limit them is to switch from magnetic stripes on cards to embedded chips.

MELISSA BLOCK, HOST: Security analysts are asking what Target should be doing differently after it suffered one of the biggest consumer data breaches in history. The retailer says at least 40 million credit cards are at risk of fraud. This, after thieves hacked into Target's payment system during the heart of the holiday shopping season. As NPR's Elise Hu reports, these types of breaches are raising big questions about the technology used to power our purchases.ELISE HU, BYLINE: Swiping that magnetic stripe to pay at the register may be simple but not always secure. Data from every credit card swiped at Target between Thanksgiving and December 15th got into the hands of sophisticated thieves.BRIAN KREBS: If they have the data that's on that stripe, they can take that and re-encode it onto anything else with a mag stripe. And all of a sudden, voila, they have a credit card they can use.HU: Cybersecurity journalist Brian Krebs first broke news of the breach on his site krebsonsecurity.com. He says banks haven't seen fraudulent purchases made from these compromised cards yet, but the scope of this breach has the industry scrambling.KREBS: So it's not like you can - you know, the bankers can go, OK, you know, cancel all the cards of people who've shopped at Target. Well, that's probably, you know, that's - well, we already know, right, that's 40 million people.HU: So Target and the banks say look closely at your credit card statements and report bogus purchases if you find them. At a Washington, D.C. Target store this morning, the news hadn't seemed to slow the holiday bustle. But shoppers said they felt uneasy.BETTY SINGLETERRY-FLYTHE: It makes me a little, you know, concerned about using my credit.HU: Betty Singleterry-Flythe says she only pays with cards.SINGLETERRY-FLYTHE: I always use, you know, credit because I don't carry cash with me because I'm a senior citizen. So I want to feel secure when I'm shopping.HU: Twenty-three-year-old Danielle Hanlon said she wants to see a more secure way to pay.DANIELLE HANLON: Definitely, there should be something that's really safe but I couldn't tell you what it is.HU: Which gets us back to the old magnetic stripe. It really is pretty old, a 30-year-old technology. Visa and Mastercard are now pushing American retailers to upgrade to a chip-and-PIN system by 2015. It's used in Europe, where microchips with encryption on them are built into credit cards. Instead of signing for your purchase, you put in a PIN.KREBS: The beauty of this approach is it simply raises the cost for the bad guys. It's not that they can't break the system. I think they've already shown that they can. It's just considerably more expensive for them to fabricate these cards.HU: But it's costly to change the entire system of how we make purchases.KREBS: You know, small mom and pop stores, there's the rub, right, because these upgrades are expensive. They have to replace all their hardware, all their software, and who's gonna pay for that?HU: For now, compromised companies and banks are paying for the cleanup that comes after big breaches of this type. Thieves stole data from 90 million cards from shoppers of the T.J.Maxx chain in 2007, and prosecutors are still going after a ring that stole 160 million card numbers over the last several years.For its investigation, Target has the help of the Secret Service and the card companies to find out how the bad guys broke in and how to prevent it from happening again.KREBS: Competitors of Target and, you know, other stores like it are going to be, you know, taking a hard look at their systems, going, you know, could this be us?HU: A security breach stunning in scope during a time Americans are doing a lot of holiday swiping. Elise Hu, NPR News.

Kalinin: haha they had hannaford issue on tv news?Gonzalez: not hereGonzalez: I have triggers set on google news for things like "data breach" "credit card fraud" "debit card fraud" "atm fraud" "hackersGonzalez: I get emailed news articles immediately when they come out, you should do the same, its how I find out when my hacks are found :)Gonzalez: hannaford lasted 3 months of sales before it was in the news, im trying to figure out how much time its gonig (sic) to be alive for

The super rich use a variety of different credit cards, many of which have strict requirements to obtain, such as invitation only or a high minimum net worth. Such cards include the American Express Centurion (Black Card) and the JP Morgan Chase Reserve.

Yes, the rich have credit cards and use them for the same purposes that everyone does; they come with perks, they provide a variety of services, and they remove the need for carrying large amounts of cash. High-net-worth Americans hold at least two to four credit cards.

American Express does not publish its requirements for receiving a Black Card, though it has been said that it requires individuals to have spent between $350,000 and $500,000 on all of their American Express cards in a calendar year.

The attorneys general will be distributing the settlement to eligible consumers through Epiq Class Action & Claims Solutions, Inc., a settlement administrator. Consumers do not need to take any action to receive their funds, which will be sent as checks to eligible consumers in the middle of 2021. Only those Citi credit card customers who meet certain criteria set by the settling states will receive a refund check. Consumers who have questions can call: 855-914-4657.

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