Authorities allege defendants added one another and sham businesses as authorized users on credit card accounts, giving more people access to good credit. They received credit card machines with the scam businesses and paid themselves with the cards, Fishman said, and three jewelry stores in Jersey City were allegedly complicit in the scheme.
The defendants then maxed out the cards, buying electronics, jewelry and luxury cars. They also took out loans or cashed the checks and never paid back the money, authorities said.
Authorities found $68,000 in an oven during a raid.
Fishman said some of the defendants didn't have jobs and spent their time perpetrating the fraud. One man unemployed man allegedly withdrew or wired $1.5 million from his bank accounts, prosecutors said.
Authorities did not directly say how the fraud came to light, but a co-conspirator was named in court-documents, indicating that someone may have been cooperating.
Pascual said it would be very unlikely for credit bureaus would have caught a fraud like this if the cards were initially being used responsibly and paid off. Red flags also would not have been raised if accounts were opened using legitimate social security numbers that did not have any prior credit accounts, like a child.
"The activity itself shouldn't have garnered any notice until they stopped paying the bills," Pascual said.
And even when they stopped paying the bills, credit card companies often write that off as bad debt, Litan said.
"Finding them probably wasn't as hard as putting it all together," she said.
A spokesman for Fishman declined to further elaborate on the case because the investigation is ongoing.
Fifteen people have been arrested, including a ringleader who was apprehended at John F. Kennedy Airport preparing to board a flight to Pakistan.
One of the defendants pleaded guilty to one count of wire fraud and one count of aggravated identity theft last month. Verlina Adams admitted in federal court in San Jose, Calif., that she tried to defraud a credit card processing company by creating fake businesses.
Doug Johnson, vice president of risk management at the American Bankers Association said the industry is working to crack down on electronic fraud, much like they did with check and debit card fraud.
"We're going to see the same thing in the electronic environment," Johnson said. "Over time we're going to get smarter about how to prevent these losses."
Acne Scar repair, Remove Wrinkles and Tighten Skin all in One!