Wednesday, August 6, 2008
Authorities in Sacramento, Calif., recently busted a gift card scam that netted over $1 million worth of merchandise from big box retail stores in Northern California. The six women arrested in the case all had ties to Richmond, Calif., and were dubbed The Richmond Girls.
The women, ranging in age from 21 to 37, traveled up and down Interstate Highway 880 in the East Bay and along Interstate Highway 80 as far north as Sacramento. Along the route they hit big box retail stores with fraudulent, network-branded gift cards.
With the gift cards re-encoded with stolen account numbers, the women bought electronics, like flat screen TVs and video game systems, and high-end apparel, such as designer jeans, Dooney & Burke purses and Nike shoes. Of the total fraudulent purchases the authorities know about, $540,000 occurred at Target Corp. and Wal-Mart Stores Inc. outlets.
In late December 2007, investigators at a Target store in Sacramento recognized Shilo Cross, 23, from prior video surveillance footage and detained her until the Sacramento City Police arrived to take her into custody. In the parking lot of the store, the police also arrested Dawn Edward, 31.
At this point, the Sacramento Sheriff's Department Identity Task Force joined the case. In January 2008, the task force arrested Cherice Dempsey, 37, inside another Sacramento Target store. They arrested her alleged accomplice, Melissa Anderson, 29, in the parking lot.
Subsequently, Davina Hollier, 27, was arrested in February 2008 for alleged fraudulent purchases at Wal-Mart stores. In April, Ebony McDowell, 21, met the same fate.
The task force obtained search warrants for bank account records and public storage facilities in San Lorenzo, Calif., and Pittsburg, Calif., where investigators found about $80,000 in merchandise, including items from Nordstrom Inc., Gap Inc. and Bed Bath & Beyond Inc. stores.
The task force seized over $45,000, $43,700 of which came from Anderson's bank account; they also confiscated a loaded TEC-9 semiautomatic assault weapon.
In total, The Richmond Girls were charged with over 180 felony counts related to identity theft and credit card fraud. Three of the women have pled guilty to their roles in the scam and could be sentenced to four to six years in prison. The cases against the other three women are working their way through the court system.
In the course of the investigation, the task force recovered over 65 re-encoded gift cards and evidence that the scam was enabled by stolen card numbers obtained from sources in Russia and Ukraine. In excess of $120,000 in wire transfers were made to individuals located in those two Eurasian countries – allegedly as payment for the card numbers the gift card scammers re-encoded on the gift cards.
Detective Sean Smith of the Task Force surmised that the actual cards were initially purchased or stolen off the shelf by The Richmond Girl operation. The cards were then activated and, using an inexpensive mag stripe writer, reincoded with the stolen account numbers they received from their overseas suppliers.
The task force has identified over 400 victims of the scam. They are cardholders in the United States and abroad who had their account numbers stolen from foreign bank issuers like Barclays Bank PLC of the UK, National Bank of Greece S.A., and Züercher Kantonalbank in Zurich, Germany. Banks in Switzerland, Sweden, Italy and Japan were also affected.
The Richmond Girls case is "one of the larger, more sophisticated cases that I'm personally aware of," said Smith. "As far as organization and just these gals relentlessness, and going out there and doing this. I mean it was real shocking to see."
Smith said the women would sometimes stop at six stores a day.
"You could almost set your clock to it," Smith said. "They would just drive one place, hit the stores – in and out – get back in the car, go to the next off ramp down the road."
The women wore disguises when they shopped. "That was part of the m.o.," Smith said. "They would go into different stores wearing different clothing, different wigs, trying to disguise themselves."
The women would carry several re-encoded cards when they shopped, he said. If one card didn't work, the women would use another. Cards wouldn't be accepted at the POS because the accounts had been shut down due to fraudulent use.
Checkout attendants would not suspect foul play because the cards were gift cards and treated the same as cash, he said. It is common for shoppers to try a second gift card if the first one doesn't work.
Once the women purchased the goods, they would then dump the merchandise in the storage lockers.
"When we first went in there we saw all these hefty garbage bags, and they weren't itemized as far as x amount of purses or clothes," Smith said. "But all of the high-end clothing were in bags, mostly jeans but shirts in there, too – $100, $150, $200 pairs of jeans and shirts in there – and they're folded and stacked. Those bags were just full."
Smith assumed the goods were being stored until the women – and most likely others – decided how they were going to fence the merchandise.
Once in custody, the women were uncooperative. "One person talked but didn't talk about how the organization was set up or how they got the numbers," Smith said. "The other gals didn't speak; they're a very tight-lipped group.
"They're not going to talk about how the scam worked. It just seemed to be very much a risk-reward venture for them. You know, you're going to do this, you're going to make money. Then at some point you get caught. Then you just do your time and go on from there."
Smith conceded the bust only scratched the surface of the scam's time frame and parameters. "There's evidence to show that it's been at least a year this thing has been going on with this particular organized group, but probably I would say longer than that," he said.
Since authorities do not know all the stores that were targeted or how long the scam had been in effect, the financial losses businesses incurred and the amount of cardholders victimized by identity (ID) theft in this case are probably significantly higher, Smith said.
Although Smith and his colleagues have no hard evidence at present that the scam is gang-related, Smith would not be surprised were he to find out it was.
"That's the thing about ID theft," he said. "It's so enticing to them because they can make so much money. It's really easy. We've seen a trend of gangs going toward this type of financing for their organizations just because you don't have to fight for territory like selling drugs. The globe is your territory, basically.
"And you can go just go out there and make money and, typically, for white collar crimes, you don't get the sentences you do with other violent types of incidences."
On the international angle, the task force is working with bank investigators overseas to track down the hacking ring. The U.S. Secret Service is also involved in the case.
In Sacramento, the investigation into the scam continues. Since the women have remained uncooperative, the investigation id proceeding slowly. By arresting The Richmond Girls, "we didn't cut the head of the snake off," Smith said. "And we have some leads as far as people further up in the hierarchy.
"I can't go into any details on that," he said.
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