10-23-2003 -- Qaraeen, Ali -- Guilty Plea -- News Release

Major Recruiter in Credit Card Fraud "Bust Outs" Pleads Guilty

NEWARK - An illegal alien from Jordan admitted today that he recruited dozens of others to commit fraudulent credit card "bust outs" in New Jersey over a seven-year span ending in mid-June 2002, U.S. Attorney Christopher J. Christie announced.

Ali Qaraeen, 49, who used dozens of aliases, resided at various times in Fort Lee, Secaucus, Clifton, and West Paterson since his arrival in the U.S. in late 1980s. Since 1995, Qaraeen recruited dozens of others to perpetrate credit card "bust out" schemes, resulting in approximately $6.8 million in fraudulent purchases of merchandise and cash advances, according to Robert Kirsch, the Assistant U.S. Attorney who is handling the case.

Qaraeen admitted before U.S. District Judge Faith S. Hochberg that he also committed "bust outs" in the names of his numerous aliases. Neither Qaraeen nor his co-schemers had the means or intent of ever making bonafide repayments for the purchased items or cash advances, Kirsch said.

On June 12, 2002, Qaraeen was arrested at his residence in Fort Lee by agents of the FBI and Secret Service. At the bail hearing held before the Magistrate Judge, Kirsch advised the court that Qaraeen has an outstanding arrest warrant for premeditated murder in Israel, as well as two fraud-related arrest warrants in Las Vegas. Qaraeen was ordered detained without bail then and will remain in custody until sentencing.

The defendant pleaded guilty to one count of credit card fraud, which carries a 10-year prison sentence and a $250,000 fine. Judge Hochberg scheduled the sentencing for Jan. 27.

According to a criminal complaint filed against Qaraeen in April 2002, Qaraeen and his recruits committed the fraudulent "bust out" schemes by opening numerous credit accounts, which typically over a span of only a few months were used to make large purchases and obtain substantial cash advances. When the credit limits on accounts were reached, Qaraeen and his recruits issued hundreds of checks to the companies for the purpose of obtaining immediate additional credit, knowing that these checks would soon be rejected for being drawn on accounts with insufficient funds, according to court documents. Then, after the fraudulent payments were posted to their accounts, but before the checks were returned, the defendants made additional purchases and took more cash advances.

According to the criminal Information filed today by the government, Qaraeen opened and directed his co-schemers to open more than 1,000 credit card accounts and other credit accounts in their names. To obtain higher credit limits on the accounts, and thus increase the purchasing capability, Qaraeen caused his recruits to inflate their annual income on credit card applications. Qaraeen admitted that he typically directed each recruit to open dozens of credit card accounts and credit accounts which were used to obtain millions of dollars in cash advances and merchandise, including jewelry, electronics, home furnishings, and airline tickets. Qaraeen admitted that he and his co-schemers divided the illegal proceeds.

In just one example, Qaraeen admitted that over an approximate six-month period from late 1998 through early 1999, he and one of his recruits, Ramzi Musa of Paterson, charged more than $270,000 in merchandise, including computers, electronic equipment, clothing, home furnishings, and other items. Qaraeen also admitted that, over this time-period, he and Musa obtained more than $150,000 in cash advances, and charged more than $25,000 for airline tickets. Qaraeen and Musa established dozens of credit card accounts in R.M.'s name with a wide variety of banks and other credit card companies, including 12 Visa, 16 Mastercard, and six Bell Atlantic Mobile, as well as separate charge accounts provided by a wide variety of retailers, including Bloomingdale's, Ethan Allen, Macy's, Kay Jewelers, and Home Depot, Kirsch said. Musa is presently serving a prison sentence of 14 months for a related charge of bankruptcy fraud, which was imposed by U.S. District Judge Dennis M. Cavanaugh in June 2003.

The U.S. Attorney's Office has prosecuted at least a dozen of Qaraeen's "bust out" recruits, and other investigations are continuing.

U.S. Attorney Christie credited Special Agents of the FBI, under the direction of Special Agent in Charge Louis S. Allen; Special Agents of the U.S. Secret Service, under the direction of Special Agent in Charge Jan Gilhooly; and Postal Inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector In Charge Martin Phanco, for their successful investigation. Christie also credited the staff of the Office of the United States Trustee, under the direction of Roberta DeAngelis, acting U.S. Trustee. The Trustee's office handles the administration of bankruptcy cases. The Government is represented by Assistant U.S. Attorney Kirsch, of the Securities and Health Care Fraud Unit of the U.S. Attorney's Office in Newark.

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Counsel for Ali Qaraeen: Laurie Fierro, Esq. Hackensack