A U.S. citizen who previously resided in Ukraine was sentenced to 42 months in prison and five years of supervised release for conspiracy to commit bank fraud.
According to court documents, Harold Sobel, 69, was a member of an international criminal enterprise that unlawfully debited money from the bank accounts of unknowing U.S. victims.
Members of the criminal enterprise created shell companies for the purpose of receiving victim funds and created fake websites for the shell companies that claimed to offer products or services, such as cloud storage.
The thieves then executed unauthorized debits against victims’ bank accounts, while falsely representing to banks that the debits were authorized by the victims.
“The department will vigorously pursue and prosecute individuals who steal from American consumers’ bank accounts and deceive U.S. banks to conceal and continue their schemes,” said Principal Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s sentence demonstrates our commitment to bringing fraudsters to justice, even when they commit their crimes from foreign countries.”
“The Justice Department and our law enforcement partners will investigate and prosecute offenders who defraud Americans and U.S. financial institutions,” said U.S. Attorney Jason M. Frierson for the District of Nevada. “Our office will diligently work with the Department’s Consumer Protection Branch and law enforcement to use every tool at our disposal to hold fraudsters accountable regardless of where they reside and to bring justice for victims.”
“Global criminal enterprises that span multi-continent distances and operate from beyond our borders might feel they are safe from the reach of U.S. Postal Inspectors. But they are wrong,” said Postal Inspector in Charge Eric Shen of Criminal Investigations. “Scammers who defraud American citizens and banks are in our sights. Working with our partners in the Department of Justice, we will track them down and bring them to justice.”
Unauthorized debits against victim accounts, caused by the conspirators, resulted in returned transactions and high return rates that often generated scrutiny from the banks.
To both conceal and continue making these unauthorized debits, members of the criminal enterprise made misrepresentations to the financial institutions about the transactions, claiming that they were authorized.
In some cases, members of the criminal enterprise caused the accounts used by the criminal enterprise to also make “micro debits” against other bank accounts controlled and funded by or for the criminal enterprise.
The “micro debits” were used to artificially lower the return rates to levels that conspirators believed would reduce bank scrutiny and thereby lessen the likelihood of closure of the accounts used by the criminal enterprise.
The criminal enterprise also operated a call center that fielded complaints from victims of these unauthorized debits in order to dissuade them from reporting thefts to the banks or government agencies.
As part of the enterprise, Sobel opened bank accounts in the United States at the direction of a co-conspirator who organized and conducted the affairs of the enterprise from outside the United States.
For example, on or about Oct. 16, 2019, Sobel opened four business deposit accounts at a bank branch in Las Vegas, Nevada.
Sobel opened the accounts for a shell company called “Silver Safe Box” and listed himself as the sole member and authorized signer in the account opening documentation. The criminal enterprise then funded “micro debits,” designed to lower return rates through the Silver Safe Box accounts.
Between December 2019 and January 2021, the Silver Safe Box accounts funded over 800,000 “micro debits” in amounts ranging from $0.99 to $1.85.
Sobel also recruited at least two associates in the United States to help the foreign co-conspirator, among other things, open additional bank accounts and register shell companies.
Sobel’s participation also involved providing support for the activities of the criminal enterprise’s call center in Ukraine.
Sobel devised a script to be used in response to complaints from victims by the call center’s personnel to retain as much of the criminal enterprise’s proceeds as possible and – only on those occasions where those efforts failed – to then issue full refunds, in order to dissuade victims from making reports to the victims’ banks and government agencies.
Sobel also devised a metric by which he and the foreign co-conspirator could evaluate the effectiveness of the call center’s personnel.
As part of his guilty plea, Sobel admitted that more than $1.5 million in victim debits were reasonably foreseeable to him.
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