Livingston Man, Go-Go Bar Owner, Led $9M Credit Card Scheme: Prosecutors

LIVINGSTON, NJ — Authorities arrested a Livingston man who owns a Roxbury go-go bar last week and charged him with leading an “elaborate” credit and gift card scheme that allegedly netted more than $9 million.

According to the NJ Office of the Attorney General, on July 28, investigators arrested Kevin Lipka, 61, of Livingston, the owner of She-Kev Inc., which does business as Smiles II, a strip-club bar on Route 46 West near Route 10 in Roxbury.

Authorities charged Lipka with racketeering (1st degree), money laundering (1st degree), conspiracy (2nd degree), theft (2nd degree), and credit card theft (3rd degree), alongside five other men:

• Peter Vasilipous, 71, of Elizabeth, a manager of Smiles II who allegedly partnered with Lipka to run the scheme
• Eric Olsen, 47, Roxbury, a second manager of Smiles II who handled finances for the business
• Kevin Bae, 28, of Edgewater, who allegedly partnered with Lipka in processing transactions with the stolen credit cards and illegally acquired gift cards
• Jordan Turner, 23, of Jamaica, N.Y., who allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits
• Kevin Rodriguez, 23, of Whitehall, Pa., who allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits

Lipka was also charged with misconduct by a corporate official (2nd degree) and failure to file a tax return (3rd degree), and Bae was charged with failure to file a tax return, prosecutors said.

In addition, Lipka’s wife, Shelly Lipka, 60, was charged by summons with misconduct by a corporate official and failure to file a tax return, prosecutors stated.

OPERATION SMILES

According to prosecutors, the alleged ring members were charged in a 10-month investigation called “Operation Smiles,” led by the Division of Criminal Justice Gangs and Organized Crime Bureau and the Roxbury Police Department.

Prosecutors said that Roxbury Police initiated the investigation and brought in the Attorney General’s Office, and the Livingston Police assisted in the arrests and execution of search warrants at Smiles II and other locations.

According to prosecutors, the investigation revealed that over a period of four years, the defendants allegedly conspired to steal more than $9 million by “defrauding retailers, banks, credit card processing companies and credit card holders.”

Prosecutors alleged that the scheme involved the use of stolen credit cards and fraudulently obtained credit cards, which were used to purchase pre-paid gift cards issued by credit companies such as Master Card and Visa at various retail stores including Target and Home Depot. The gift cards were allegedly later cashed in through phony transactions at Smiles II, and the proceeds were divided between the individuals who supplied the cards.

“At times, the credit cards were used directly for transactions at the go-go bar,” prosecutors stated. “The cards were then swiped through credit card processing devices to conduct fraudulent transactions which generated proceeds that went into the business accounts of She-Kev Inc.”

Prosecutors allege that Rodriguez, Turner and others also used allegedly stolen credit cards to buy “high-priced merchandise” at retail stores, including Home Depot.

“The merchandise was later returned for in-store credit that could be used later, or for in-store gift cards that could be exchanged for cash on the Internet,” prosecutors charged. “In other cases, the defendants allegedly purchased liquor for Smiles II using stolen credit cards or illegally acquired gift cards.”

In addition, the alleged ring members were charged with acquiring gift cards through various other criminal schemes, prosecutors stated.

“In one scheme, vehicles were fraudulently offered for sale through eBay and Craigslist,” prosecutors alleged. “Unsuspecting purchasers would be directed to pay for the vehicle with pre-paid gift cards from credit companies such as Master Card and Visa, and those gift cards also were allegedly processed through Smiles II.”

Those vehicles were never shipped to the victims, prosecutors stated.

In other instances, the defendants allegedly obtained gift cards through variations on the common “grandparent” scam, in which an elderly victim is contacted by someone posing as the grandchild or nephew of the victim and claiming to need bail money to be released from jail. The victim would be told to pay the bail by purchasing gift cards and providing the gift card information by phone to a “police officer’ involved in the arrest, prosecutors said.

Prosecutors said that the first-degree charges can carry a sentence of 10 to 20 years in prison and a fine of up to $200,000. The racketeering charge includes a mandatory period of parole ineligibility equal to 85% of the sentence imposed. The money laundering charge includes parole ineligibility equal to one-third to one-half of the sentence imposed, and carries a fine of up to $500,000 and an additional money laundering penalty of up to $500,000. Second-degree charges carry a sentence of five to 10 years in prison and a fine of up to $150,000, while third-degree charges carry a sentence of three to five years in prison and a $15,000 fine.

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