CEO Of Credit Card Processing Company Charged In $19 Million Credit Card Laundering Scheme

[nitpicker]

https://www.justice.gov/usao-sdny/pr/ceo-credit-card-processing-company-charged-19-million-credit-card-laundering-scheme

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Friday, October 11, 2019

CEO Of Credit Card Processing Company Charged In $19 Million Credit Card Laundering Scheme

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced a superseding indictment today against BRANDON BECKER, the former CEO of CardReady, LLC (“CardReady”), on charges of fraudulently operating a credit card laundering scheme that enabled access to the credit card system for certain deceptive businesses, including an underlying telemarketing scheme. From about 2012 through 2015, according to the Indictment, the telemarketing scheme raised over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens for fees of up to $1,495. The scheme resulted in many complaints of fraud and deceptive tactics and requests for millions of dollars in refunds and chargebacks. The charges include that, from approximately 2012 through 2015, BECKER and his co-conspirators enabled the scheme by creating dozens of sham merchant accounts and false merchant applications, defrauding an associated credit card processing company and a federally insured bank into processing more than $19 million in payments for the scheme.
(snip)

BECKER, was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry. As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (“ISO”), referred to in the Indictment as the “New York ISO.” The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts for processing up the chain to Payment Processor-1 and to Bank-1. Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.

In or about 2012, BECKER negotiated a deal with the principal of Telemarketer-1 to provide credit card processing for Telemarketer-1. Under this deal, CardReady would retain approximately one-third of Telemarketer-1’s credit card sale transactions in exchange for providing Telemarketer-1 access to the credit card processing network. For roughly the next two years, Telemarketer-1 was engaged in a marketing scheme in which it cold-called customers and offered services, including debt consolidation and interest-rate reduction, which were prohibited by the applicable guidelines from Bank-1 and other associated processing entities (the “Guidelines”), and which – as BECKER knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

In securing payment card processing for Telemarketer-1, BECKER concealed that Telemarketer-1 was the true underlying merchant. Instead, BECKER and his co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”). The 26 signers for the 26 Sham Merchants typically had no business of their own, and lacked knowledge of Telemarketer-1’s business. In return for signing the paperwork provided to them, the signers were paid a nominal fee from CardReady. BECKER and his co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1. The merchant application for each Sham Merchant also concealed the Sham Merchant’s true association with Telemarketer-1.

By steering Telemarketer-1’s payment processing through these Sham Merchant Accounts, BECKER accomplished a number of fraudulent purposes. First, the use of these Sham Merchant Accounts made it possible for Telemarketer-1 and other high-risk merchants to conceal their identities from Payment Processor-1 and Bank-1 and to maintain payment card processing. This was particularly relevant, as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services. BECKER then caused CardReady to quickly replace the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of Telemarketer-1 and other high-risk merchants. Second, the fraudulent processing scheme enabled Telemarketer-1 and other high-risk merchants to spread out their charges, refunds, and chargebacks across multiple Sham Merchant Accounts. This enabled them to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.
(snip)

[Sherman A1]

1. I hope that this "Charming Little Fellow"

And his playmates get to refund every single dime plus interest and penalties to those defrauded then spend time in jail.