UPDATE – Manhattan DA Takes a Bite Out of Crime: Steakhouse Credit Card Fraud & ID Theft Ring Served by Waiters, Grilled by Prosecutors

While they may be best known for serving choice cut steaks, a few of New York’s most famous steakhouses may need to add an arrest profile to their Zagat’s ratings. According to reports, Manhattan District Attorney Cyrus Vance, Jr.’s prosecutors busted a credit card fraud ring allegedly run by men and women whose day jobs were to serve as waiters at some of New York’s flagship restaurants. From Smith and Wollensky, Capital Grille and Wolfgang’s Steakhouse in Manhattan to Morton’s in Stamford and the Bicycle Club in New Jersey, it is alleged that more than two dozen arrested waiters dined on patrons’ credit card numbers as their unsuspecting customers grazed on filet mignon, porterhouse and the occasional rib eye (bone in, of course). Although the allegations have yet to fully materialize, it is alleged that these waiters stole approximately fifty account numbers from the high-end credit cards, including the fabled American Express Black Card, and used these account numbers to go on expensive shopping sprees.

The means by which these accused waiters perpetrated the Enterprise Corruption, Identity Theft (although not technically charged with this crime), Grand Larceny, Criminal Possession of a Forged Instrument and other crimes is clear. The alleged fraudsters used hand held skimming devices to kick off the alleged scam. Fairly easy to purchase online, these devices can be hidden in one’s palm and can scan a credit card in the time it takes to take one swipe. Once the reader glides over the magnetic strip, the account number is then stored for later use. Armed with the credit card numbers, the alleged defendants then encoded a new credit card with the stolen account number.

In two distinct twists that I have seen as a former Manhattan prosecutor and member of the Identity Theft Unit Major Case section, the fraudsters would encode either a completely fake credit card with the stolen account number or a “real” credit card that may have expired or is no longer legitimately being used. Depending how advanced or eager a team of thieves was, either a fraudulent identification was used to match the fake credit card or the legitimate matching identification was utilized where the credit card was a modified, yet properly issued, instrument. It is worth noting that in schemes such as these, a retailer or service provider who accepts the encoded credit card can often catch the fraudster if he or she is diligent. In many cases, a receipt that is printed contains the name of the proper or correct cardholder. While the name on an encoded card and fake identification will match, the name printed on the receipt will reflect the rightful accountholder.

In this arrest and indictment, the alleged credit card fraudsters used over $1,000,000 in ill-gotten gains to make purchases at high-end stores including Chanel. In fact, according to the Manhattan District Attorney’s Office press release “[s]earch warrants executed yesterday in conjunction with the investigation resulted in the seizure of luxury goods, including more than $1 million worth of luxury watches and a cache of expensive wine, and…$1.2 million in cash; as well as skimming devices and the equipment necessary to manufacture fraudulent credit cards and driver’s licenses.”

What will be interesting to learn as this case develops is what roles did each person have. Although prosecutors have alleged it existed, was this crew truly a criminal enterprise and therefore subject to Enterprise Corruption? Merely because prosecutors give titles to or characterize defendants as “manager,” “skimmer,” “shopper” and “complicit customers” does not automatically mean there is an ascertainable structure where the members all worked toward the single criminal goal. Certainly, if true, these defendants will face a significant risk of prison.

Additionally, what, if anything, did these defendants state when they were arrested? Do prosecutors have video surveillance of purchases, signatures on fraudulent receipts or records linking certain waiters serving customers whose cards were later compromised? While I have my ideas of possible means to defend against these allegations, what defense strategy will ultimately prevail? Again, many of the defendants are charged as part of the criminal enterprise and are facing mandatory state prison on a “B” felony if convicted. A defense needs to be identified and implemented soon.

Although many people may wish that it was, Identity Theft is not going away. While many New York’s may have been rightfully concerned when Jimmy McMillin preached during the gubernatorial election that the “rent is too damn high,” denizens of the Big Apple should have a much greater concern. Make no mistake. Identity Theft is too damn easy.

WHO: Approximately two dozen waiters at top New York City and suburban steakhouses including Smith and Wollensky, Capital Grille, Wolfgang’s, Morton’s and the Bicycle Club. Defendants include: RICHARD BERTELETTI, JACOB BLUMENFRUCHT, DANIEL BURNS, ELLE CHONG ROZAN a/k/a ELOISE A. CHONG, ANTHONY COFFARO, MICHAEL DEJESUS, JOSE FELIX FERNANDEZ, KENNETH FRANQUIZ, DAVOR GONCIN, IZAK IRWIN GUTMAN, LUIS DAMIAN JACAS, a/k/a DAMIEN JACES, EDDIE KYLE, ANTHONY MARRA, PETER McGUIRE, JENNIFER MORGAN, JAMES O’CONNELL, RICHARD REICHBACH, TASHA ROSENHAUS, MARTHA RUBIANO, SASHA SCOLLIN and BRIAN TORREY.

ALLEGATION: Swiping and stealing high-end credit card account numbers from patrons, encoding fraudulent credit cards with that information and using the credit cards to make purchases.

CRIMES: B felony of Enterprise Corruption. Minimum of one to three years and maximum of eight and one third to twenty five years in prison for a first time offender. C felony of Grand Larceny in the Second Degree. Potential punishment up to five to fifteen years for a first time offender. D felony of Criminal Possession of a Forged Instrument in the Second Degree. Potential punishment of up to two and one third to seven years in prison for a first time offender. E felonies including Conspiracy in the Fourth Degree, Scheme to Defraud in the First Degree and Grand Larceny in the Fourth Degree. Potential punishment of up to one and one third to four years in prison for a first time offender.

PROSECUTING AGENCY: Manhattan District Attorney (New York County)

To learn about the New York crimes of Enterprise Corruption, Identity Theft, the multiple degrees of Grand Larceny, Criminal Possession of a Forged Instrument and other offenses, please follow the highlighted links back to CrottySaland.Com. There you will also find links to the NewYorkCriminalLawyerBlog.Com where you will find analysis of not merely criminal statutes, but legal decisions interpreting those statutes and reviews of cases in the New York area news. In addition to these resources, the New York criminal lawyers at Crotty Saland PC anticipate that NewYorkTheftAndLarcenyLawyers.Com and associated blog at NewYorkTheftAndLarcenyLawyersBlog.Com will have further relevant and practical information on white collar theft offenses once they go “live” by the end of November 2011.

Founded by two former Manhattan prosecutors, Crotty Saland PC is a New York criminal defense firm representing those accused of white collar, theft and fraud crimes throughout the New York City region.

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