Back in February, Josiah Boatswain, a 26-year-old from Flatbush, Brooklyn, and a few friends were pampering themselves at Fontainbleau: a $600-per-night resort that bills itself as the most luxurious hotel on the strip, promising high-end shopping, celebrities at every table, “24-7 glamour,” and an “expansive poolscape” on the stretch of Miami Beach known as Millionaire’s Row. Mr. Boatswain spent his vacation sipping Champagne, nibbling tiny chocolate cakes, and buying armfuls of couture, which he arranged in tableaux in his hotel room and photographed for his Facebook page.
In one picture, a silver wristwatch served as the understated centerpiece before a wall of Gucci and Salvatore Ferragamo boxes; another is simply a lineup of 11 shopping bags, like a Real Housewife’s walk-in closet. “My bro always want to do it big!” a friend commented approvingly.
According to the Manhattan District Attorney’s office, Mr. Boatswain, “Siah” or “Pepsi” to his friends, was financing his taste for Gucci and Moët with other people’s money, and not just any other people’s money, but that of billionaire investor Ira Rennert, former AIG chief Hank Greenberg’s Starr Foundation, and the Wasserman family trust, among other high-profile philanthropists, financiers and New York personalities. No fewer than 55 people were indicted and arraigned two weeks ago in a case the city and the police have dubbed “INSIDERS,” so named because low-level employees allegedly stole financial account information from patrons of four institutions, including about 150 donors to the United Jewish Appeal-Federation and about 900 customers of an Audi dealership in Coney Island. The case has not been tried and the proceedings will likely take more than a year. But according to the DA, the final victim list included Eric Zinterhofer, son-in-law to cosmetics heir Ron Lauder; Paula Sarnoff Oreck, the niece of former RCA head David Sarnoff and ex-wife of Oreck vacuum-cleaner big David Oreck; and, according to the New York Post, NBA commissioner David Stern.
Billionaires. Cyber crime. Insiders. Did the investigators realize they had a very sexy case right away? “Oh, yeah,” said Assistant District Attorney David Szuchman. “Very early on, when we realized there was an insider at UJA; we realized that the amount of information that was being compromised was large,” he said. “Then we realized that the group had to be working with others and it was a very, very large group to investigate. The fraud was so prolific.”
Basically, the cops were tipped off when the swindlers cashed one too many money orders. When you get access to a stolen debit card, one way to milk more cash out fast is to take it to the post office. With ATMs, you have withdrawal caps; money orders come in denominations of $1,000 and the fee is just $1.55.
Banks are hip to the money order racket, however. When debit cards that had been used to buy money orders were later flagged for fraud, the banks complained to the postal service. Mr. Szuchman couldn’t go into specifics, citing trade secrets of the cyber crime unit. But the gist is this: After the USPS saw about a dozen bogus money orders, mostly in Brooklyn and within a short time, the NYPD made a few arrests, which led to a search warrant for a cell phone or two, which led to the epiphany that the money orders were coming from high-profile philanthropists, which eventually led back to the UJA, where the investigators found their first “insider” in an elaborate plot that was as much a jackpot for the cops as it allegedly had been for the bad guys.
“We’re working a normal case and we’re going to handle it the same way either way,” Mr. Szuchman said. “But we were aware of some of the individuals that were named in the indictment as victims—we’re aware of the size of some of those donors.”
There are no signs, however, that Pepsi and his co-conspirators realized they were pilfering from the über-elite. The big-name victims are listed in the court filings alongside less fabulous surnames of unlucky doctors, lawyers and realtors. The thieves didn’t care if a particular UJA donor had ponied up $18 or a million-dollar check, as long as it was attached to a valid checking account number or credit card.
The alleged conspiracy appears to have been almost leaderless, and it’s still unclear who started the scheme. Most of the defendants are under 30, some have gang affiliations, and all but five are from Brooklyn. “It’s very hard for us to figure out who started it and when they started it,” Mr. Szuchman said. “We don’t really know.”
The list is an ethnic and demographic mix: a Polish bank teller, a 37-year-old Hispanic UPS worker, a 19-year-old from Florida. Five defendants are still unidentified, known just by their pseudonyms: “King Joffy,” “Michelle Brown,” “Paul None Livingston,” “Kevin None Rodriguez” and “Chuck.” The Post made much of the case’s alleged gang roots: “Street gangs target the charitable and rich,” the paper reported, but the defendants are associated variously with the Bloods, Crips and a hyperlocal East Flatbush gang called the Outlaws—suggesting it wasn’t an organized street crime operation, as gangs don’t typically collaborate. Two persons of interest turned up dead during the 18-month investigation, but there is no evidence that the murders were linked to the conspiracy or the investigation.
The main force behind the investigation, which involved multiple cell phone taps and subpoenas for text messages, was the District Attorney’s Cybercrime and Identity Theft Bureau, of which Mr. Szuchman is the chief. The former Eliot Spitzer acolyte took the job after a brief stint as head of the New Jersey State Division of Consumer Affairs under Jon Corzine. He now supervises a crack team of prosecutors, cyber-crime analysts and digital forensic analysts who snoop through confiscated iPads, smartphones and computers for a damning digital trail, things like the Google history of Justin Waller, a man who killed his roommate last year and reportedly searched, “How long does it take for a dead body to smell?”
“Cyber crime” generally calls to mind a cunning geek in a Guy Fawkes mask, typing out the recipe for a dangerous virus or phishing up Bank of America passwords from his parents’ basement. The perpetrators of the INSIDERS case had no such savvy (and indeed, neglected to make their Facebook photos private).
“This is a cyber crime because of the way the crimes were committed,” Mr. Szuchman said in an email. “BlackBerrys and smartphones were key components to committing the crimes from communicating to trafficking the personal identifying information.”
Even so, the investigators were arguably the ones doing most of the cybering. Investigators eavesdropped on the suspects’ phone calls, read their text messages and of course peeked at their social media profiles (with a bag of popcorn, we imagine, based on portraits of Pepsi pouring bottles of Champagne and liquor onto the floor at a night club). The indictment even cites emails the conspirators sent each other with credit card account numbers. “It’s a strong case,” Mr. Szuchman said.
Pepsi was one of seven accused “buyers,” who paid for the stolen personal data, then used it or resold it. These buyers, with nicknames like “Gucci,” “Chin,” “Tugs” and “Tigga,” tied together what would otherwise have been a set of similar but disconnected crimes.
The other commonality was the source of the credit information: lowly employees at institutions who happened to have access to the finances of strangers.
One of the reputed four key “insiders” was Tracey Nelson, a 24-year-old who pushed papers at the UJA. Ms. Nelson snapped pictures of donor information with her BlackBerry or simply walked out with papers in her purse; she sobbed openly during her arraignment.
Glenn Abolafia is the court-appointed attorney for Ms. Nelson, who pleaded not guilty. “We’re just at the beginning of the case and there is a lot of investigation to do to see if any of the accusations make any sense,” he said.
Ms. Nelson’s live-in boyfriend, Robbie Millar, 26, worked at Audi and was “a big player,” according to the DA. The other two, smaller fries, were Nicola Bennett, a pretty 30-year-old employee of residential property manager AKAM Associates, and Karen Chance, a 32-year-old teller at Chase Bank at 36th Street and Seventh Avenue.
The DA has divided the conspiracy by roles: insiders, identity buyers, accomplice recruiters, check-makers and collusive account holders. The thieves had to get access to a bank account or credit card information and then cash out as fast as possible before the account was flagged for suspicious activity. Therefore, some conspirators allegedly printed fake checks at home and forged signatures. Other defendants cashed counterfeit checks and accepted fraudulent transfers through their own legitimate bank accounts from sources that, to any observer, would seem incredibly unlikely. In a typical transaction from the indictment, an unnamed conspirator used a debit card belonging to a defendant to deposit a fake check for $9,536 from hedge fund Paulson & Co. on June 18, 2010. The American Institute of Certified Public Accountants paid out $2,769 to defendant Cassilda Mitchell via a counterfeit check; defendant Nicole Leach Vitalis received a phony $9,000 bank transfer from viral marketing company Oddcast. The crew also bought electronics and other big-ticket items, which they got cash for from their 33-year-old fence, Younis Abidar, who sold them on the black market.
Others like the appropriately named “Treasure,” one 25-year-old Umar Credle, cashed USPS money orders, the practice that eventually got the ring busted.
Insiders stealing identities got hundreds of dollars per account, although rates varied. Chase accounts could fetch a higher price because the ring had at least three insiders working behind the counter who ensured the fraud didn’t set off internal alarms. Collusive bank account holders got perhaps a $100 or $200 cut per transaction.
In the end, Mr. Greenberg, Mr. Rennert, Ms. Oreck and the estimated 200 or so victims were reimbursed by the banks for their losses. “The Manhattan DA’s office informed us that this type of breach can happen in any organization, no matter how stringent its controls,” UJA said in a statement issued after the indictment; the organization declined to elaborate beyond its press release to The Observer. Calls to Open Road Audi were not returned.
The 55 defendants are being charged with various degrees of conspiracy, possession of stolen property, grand larceny and identity theft. As the DA tells it, JP Morgan Chase, TD Bank, Citibank, Discover and American Express took the hit for the $2 million or so that paid for flights, movie tickets and electronics and kept the defendants in Louis Vuitton and Yves Saint Laurent. Prosecutors say they have stacks of evidence against the accused, whose first pretrial hearings are scheduled for February. If convicted, at least they got to do it big for a while.