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Eight People Plead Guilty in $1M Identity Theft Scheme That Preyed on Hundreds Of New York Consumers

(Source: AG Eric T. Schneiderman) - NEW YORK – Attorney General Eric T. Schneiderman, United States Attorney for the Southern District of New York Preet Bharara and Special Agent-in-Charge James T. Hayes, Jr., New York Office of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), today announce the guilty plea of Phillip Smith, the leader of an identity theft ring who faces up to 22 years behind bars. This guilty plea is the result of a two-year investigation led by the New York State Attorney General’s Office. Smith’s plea was executed today before U.S. District Judge John F. Keenan in Manhattan Federal Court.  The identity theft ring used the stolen identities of hundreds of innocent victims, produced fake driver’s licenses, and stole over $1 million in merchandise, gift cards and store credits at Home Depot, Sears, Kmart, Kohl’s and other retail stores.  Since October 3, seven other defendants have pleaded guilty to charges related to this case, including Eugene Smith and Winston Harris, who impersonated identity theft victims; Mahmoud Abdul Hussein, Ali Abdul Hussein, and Fadal Abdul Hussein – brothers who manufactured fake driver’s licenses; and Francis Hidalgo and Randy White, who bought and resold the illegally obtained store credits.

“For more than three years, these defendants methodically victimized hundreds of New Yorkers in an elaborate scheme to line their own pockets,” Attorney General Schneiderman said. “We will aggressively crack down on identity theft, and these guilty pleas send a message: Identity thieves will go to jail. ”

Manhattan U.S. Attorney Preet Bhararasaid, “Identity theft violates the privacy of its victims and can require countless hours and endless hassles to correct mistaken bills and rehabilitate destroyed credit ratings.  It also victimizes the retailers who are left holding the bag for purchases made by thieves.  Phillip Smith’s plea and conviction, along with those of his seven cohorts, should send a strong message that we will come down hard on those who engage in this conduct.”

HSI Special Agent-in-Charge James T. Hayes, Jr.said, “Today’s guilty pleas put an end to a scam that victimized hundreds of New Yorkers and defrauded retail stores of more than a million dollars. This case exemplifies HSI’s, and its law enforcement partners’ commitment to work as a unified force to disrupt criminal organizations bent on fraud to feed their greed.”

According to the Indictment, the Superseding Information and statements made during Court proceedings:

Since at least 2008, Phillip Smith obtained the personal identification information of thousands of innocent people, including their names and social security numbers. Smith exploited this information to identify victims with existing credit accounts at large retail stores.  Using this information, Mahmoud Abdul Hussein, Ali Abdul Hussein, and Fadal Abdul Hussein, who operated out of two storefronts in Greenwich Village, produced fake driver’s licenses in the names of victims but with photos of Eugene Smith, Winston Harris and another co-conspirator who impersonated the victims to steal goods and services.  Ring members travelled to stores in at least twelve states, including New York, New Jersey and Pennsylvania, where they charged expensive merchandise and gift cards to victims’ accounts.  These fraudulently obtained goods were then sold to other members of the ring, including Francis Hidalgo and Randy White, for approximately 60 percent of their face value.

In addition to his participation in this identity theft ring, Francis Hidalgo also converted two warehouses in the Bronx into hydroponic marijuana growing facilities as part of yet another criminal enterprise.  In June 2012, investigators seized over 400 marijuana plants from one of these warehouses.  This investigation has resulted in narcotics charges being filed against three additional individuals: United States v. Thomas Motley and Robert Burke,12 Cr. 604 (RA), which is scheduled for trial on March 4, 2013, and United States v. Amnon Filippi, 12 Mag. 2788.

These charges and allegations are accusations and these defendants are presumed innocent unless and until they are proven guilty.

* * *

Today, Phillip Smith, 55, a resident of the Bronx, New York, pleaded guilty to three counts; 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 with a mandatory minimum sentence of two years. Smith is scheduled to be sentenced on February 20, 2013.

Yesterday, Francis Hidalgo, 45, a resident of Pomona, New York, pleaded guilty to three counts; Conspiracy to commit Access Device Fraud, Conspiracy to Distribute or Possess With Intent to Distribute Over 100 Marijuana Plants and Theft of Public Funds.  This last charge involved Hidalgo’s submission of over $57,000 in false claims to the State of New Jersey’s Department of Labor and Workforce Development, Division of Unemployment Insurance, when in fact the investigation revealed that he was actually operating a construction company.  He faces a maximum potential sentence of 55 years in prison with a mandatory minimum sentence of five years.  Hidalgo is scheduled to be sentenced on February 20, 2013.

On November 5, 2012, Eugene Smith, 59, a resident of the Bronx, New York, pleaded guilty to three counts; 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 with a mandatory minimum term of two years. Smith is scheduled to be sentenced on April 17, 2013.

On October 25, 2012, Mahmoud Abdul Hussein, 28, Ali Abdul Hussein, 34, and Fadal Abdul Hussein, 23, residents of Seaford, New York, each pleaded guilty to one count of Conspiracy to Produce False Identification Documents.  They each face a maximum potential sentence of fifteen years. They are scheduled to be sentenced on April 10, 2013.

On October 15, 2012, Winston Harris, 57, a resident of Brooklyn, New York, pleaded guilty to three counts; 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 with a mandatory minimum term of two years. Harris is scheduled to be sentenced on January 23, 2013.

On October 3, 2012, Randy White, 57, a resident of the Bronx, New York, pleaded guilty to one count of Conspiracy to commit Access Device Fraud.  White faces a maximum potential sentence of five years. White is scheduled to be sentenced on February 7, 2013.

* * *

Attorney General Schneiderman praised the U.S. Attorney’s Office for the Southern District of New York, the New York State Department of Financial Services, ICE HSI and the New Jersey Department of Human Services Police for their excellent assistance in this investigation.

Attorney General Schneiderman thanked the NYPD, the New Jersey Department of Labor and Workforce Development, MAGLOCLEN, Home Depot, Citibank and Kohl’s for their valuable cooperation and support in this investigation.

The prosecution is being handled by Assistant U.S. Attorney Joseph P. Facciponti, Assistant Attorney General Meryl Lutsky, who has been designated a Special Assistant U.S. Attorney, and Assistant Attorney General Tyler Reynolds.  AAGs Lutsky and Reynolds work under the supervision of Bureau Chief Gail Heatherly of the Criminal Prosecutions Bureau and Executive Deputy Attorney General for Criminal Justice Kelly Donovan.


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