- The Washington Times - Thursday, January 30, 2003

Federal agents yesterday disrupted what they called a $5 million credit card scheme involving more than two dozen Pakistani nationals, all targeted in a Northern Virginia undercover investigation known as "Operation Swipe Out."

U.S. Attorney Paul J. McNulty said that while no specific evidence tied the suspects to known international terrorists, an investigation by the Credit Card Fraud Task Force was continuing and a possible terrorism link had not been ruled out.

"They made $5 million and we just don't see it in lavish lifestyles or expensive toys," Mr. McNulty said, noting that task force investigators were concerned about a lack of tangible evidence to show how the credit card ring spent its illicit profits.

"We know that terrorists need to conceal their identities to be able to strike, and we know credit card fraud is one of the ways they do it," he said. "There are a number of factors that raise questions in this case that we need to pursue."

Mr. McNulty said the man suspected of being the ringleader, Shah Nawaz, fled to Pakistan with others named in the scheme. He said some of the ring's profits were transferred to banks in Pakistan and Canada, noting that investigators traced $100,000 to specific outlets in those two countries.

He said the scheme operated mostly on the East Coast, from Virginia to New York, and primarily focused on credit card, Social Security and immigration fraud.

In addition to executing arrest warrants, Mr. McNulty said, federal agents raided two businesses suspected of being used in the scheme: Metro International Travel of Alexandria and Super Travel Agency of Arlington County.

Metro International also does business as Eastern Times, a bilingual newspaper published for Pakistani nationals here. Telephone calls to the two firms went unanswered.

Mr. Nawaz, a U.S. citizen, lived in Alexandria with his wife, Shahzia, who also is charged in the scheme. No one answered the telephone yesterday at his home.

Mr. McNulty said a dozen persons were arrested yesterday in an initial sweep by task force members, and that at least 13 more were being sought. They are in addition to eight suspects taken into custody last year, who have since been sentenced or have pleaded guilty.

If convicted, the suspects face from five to 30 years in prison and fines ranging from $250,000 to $1 million.

Mr. McNulty said that at the heart of what is suspected of being a conspiracy was a credit card "bust out" scheme in which Mr. Nawaz purportedly recruited a number of "brokers" who obtained credit cards in other people's names.

He said the cardholders were either fictitious or individuals who had been paid a nominal fee for the use of their names or had been compensated with "immigration benefits," including phony identification cards, false work authorizations or false Social Security numbers.

Some of those involved with the ring fraudulently obtained U.S. citizenship, he said.

Mr. McNulty said the brokers used the fraudulent cards to make purchases, paying the monthly bill to establish a higher credit limit. He said the broker then took the card to a merchant involved in the scheme, who agreed to process a number of bogus sales until the card's new credit limit had been reached.

He said the merchants received a payment of 10 percent of the value of the transactions, although no goods or services were ever exchanged.

"But the credit card company has no way of knowing these charges are fraudulent. So they wire funds to the merchants to reimburse them for the charges as they do under normal business practices," Mr. McNulty said. "When the merchants receive payment, they keep their 10 percent and pay the remaining 90 percent to the brokers."

The task force probe began after Fairfax County police Detective John Gordon found in November 2000 that American Express had a large number of discrepancies in cards accepted by county merchants. An undercover inquiry led him to discover that some of the merchants were fake.

The U.S. Secret Service was notified and, eventually, the investigation spread in the summer to the federal task force.

Mr. McNulty called credit card fraud, identity theft and immigration fraud growing problems, all of which "open the door for possible terrorism."

"Our job is to disrupt any criminal activity that has potential benefit to terrorist organizations," he said. "We know terrorists are routinely funded from revenue derived from white-collar crime schemes in the United States."

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