Nationwide Cellphone Fraud Ring Busted In The Hudson Valley

MOUNT VERNON, NY — With the arrest of seven people Thursday, federal officials say they have cracked a 4-year scheme to steal cellphones and other electronic devices so sophisticated that its leaders created a how-to video for their co-conspirators. It played out nationwide with a hub in Mount Vernon, New York.

Prosecutors accuse 12 people in a conspiracy to steal cellphones, iPads and other small electronic devices by hacking into more than 3,300 customers’ accounts and stealing their identities to get new "upgrades" for small upfront fees.

The victims included both customers, whose identities were stolen and/or whose accounts were accessed, and cellphone service providers, which typically bore the financial losses.

The conspirators operated in New York and the Dominican Republic and on the Darknet, prosecutors said.

"They traveled to 30 states to obtain cellphones that were later sold through fencing operations in the Bronx," Angel M. Melendez, the Special Agent in Charge of the New York Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, said in the announcement. “Their activities left a trail of unsuspecting victims across the United States and cost businesses significant losses."

The operation ran from 2014 to 2018, said Geoffrey S. Berman, the United States Attorney for the Southern District of New York.

The Fraud Ring used various mechanisms to perpetrate their scheme, including buying cellphone customers’ personal identifying information over the dark web; phishing, in which the Fraud Ring sent a link to cellphone customers that, if pressed, allowed the Fraud Ring to hack into the customers’ accounts; using fraudulent identifications to persuade retail store employees that conspirators were someone else; and opening accounts using social security numbers that appeared to match conspirators’ names but in fact belonged to victims.

According to the allegations in the Complaint unsealed today:

From at least 2014 to the present, a group of individuals (the “Fraud Ring”) perpetrated a wide-ranging scheme to obtain valuable, new electronic devices – primarily iPhones, but also iPads, tablets, and watches – at others’ expense. During the course of the conspiracy, the Fraud Ring fraudulently obtained more than $1 million worth of devices. To facilitate the scheme, the Fraud Ring traveled to at least 30 different states, but often brought or shipped the fraudulently obtained cellphones back to the Bronx, where they regularly sold them.

The Fraud Ring regularly engaged in intrusions into existing customers’ accounts with cellular service companies and obtained new phones or “upgrade” phones by paying only a small fee in the store, while charging the vast majority of the purchase price to existing customers’ accounts, without the consent or knowledge of these existing customers. The scheme’s victims therefore included both customers, whose identities were stolen and/or whose accounts were accessed without authorization, and cellphone service providers, which typically bore financial losses for fraudulently obtained devices.

During the course of the investigation, HSI executed a search warrant on a suspected hub of the Fraud Ring in Mount Vernon, New York. Law enforcement encountered six of the 12 charged defendants in the residence and seized (among other things) about 47 electronic devices, including 12 computers. Two IP addresses associated with the residence were used to access at least 3,300 cellphone company customer accounts, and to fraudulently purchase at least 1,294 cellphones. The seized computers contained various indicators of involvement in the fraud, including:

• A 15-minute-long “How-to” video, which detailed the steps necessary to commit cellphone fraud, including how to use victim PII to fraudulently purchase devices;
• Many indicators that the computers had accessed the darkweb, several websites where victim PII is sold (sometimes for as little as $3), and cryptocurrency exchanges, including for Bitcoin; and
• Numerous Google searches in furtherance of the fraud (e.g., “best buy upgrade checker phone,” “att activate phone,” “verizon.comcheck order status,” “check my order status sprint,” “add authorized user last name,” “California driver license number format,” “Utah driver license photo,” and “most common last names for Spanish rich people”).

"Telecommunications fraud is a huge business," said Melendez.

Each of the 12 is charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum penalty of two years in prison, which must run consecutively to any other term of imprisonment imposed. The maximum and mandatory minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

They are:

Isaac Concepcion Aquino, also known as "Kaka; Mario Diaz, also known as "Memin"; Tomas Guillen, also known as "Diddy"; Ronnie De Leon; Jose Argelis Diaz; Joel Pena; Jhonatan Diaz, also known as "Nino;" Eddy Morrobel; Ruddy Sanchez, Michael Roque; Rayniel Robles; and Joandra Tejada Gonzalez.

Six of them were arrested in New York and will be presented today before Magistrate Judge Katharine H. Parker: Mario Diaz, Guillen, Jose Argelis Diaz, Jhonatan Diaz, Morrobel, and Robles.

De Leon was arrested Thursday morning in Ohio.

Five remain at large, prosecutors said: Aquino, Pena, Sanchez, Roque and Gonzalez.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Michael D. Neff and Brett M. Kalikow are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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