New Jersey Man Pleads Guilty In Manhattan Federal Court To Attempted Frauds Amounting To $3.5 Million

Preet Bharara, the United States Attorney for the Southern District of New York, Janice K. Fedarcyk, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Jacob Christine, the Special-Agent-in-Charge of the Newark Field Office of the United States Secret Service (“USSS”), announced that KHADDY GARCIA pled guilty yesterday in Manhattan federal court to one count of bank fraud and one count of wire fraud, in connection with a fraudulent scheme to withdraw funds from various business bank accounts, and a second fraudulent scheme to induce a venture capital fund to wire $2 million to an account GARCIA controlled. GARCIA pled guilty before U.S. District Judge Katherine B. Forrest.

Manhattan U.S. Attorney Preet Bharara said: “Khaddy Garcia’s attempts to dupe bank representatives into giving him online access to millions of dollars of other people’s money were ultimately foiled. But this case should serve as a reminder to every business of the critical need for well-developed human and technical security defenses to guard against cyber thieves.”

FBI Assistant Director-in-Charge Janice K. Fedarcyk said: “The defendant stole $200,000 – and attempted to steal a great deal more. He did it through social engineering, using a telephone as effectively as a burglar uses a blowtorch or a crowbar. Whatever the method, stealing money is a serious crime with serious consequences.”

USSS Special-Agent-in-Charge Jacob Christine said: “The Secret Service has a close working relationship with local and federal law enforcement partners as well as private sector entities that pays dividends in investigations such as this.”
According to the Information, the Complaint previously filed in the case, and statements made during yesterday’s guilty plea proceeding:

Between February 2011and January 2012, GARCIA called customer service representatives at various banks, falsely representing that he was the owner or agent of a particular business with an account at the bank, and claiming that he had “forgotten” the username and password needed to access the business’s bank account on-line through the bank’s Internet banking system. GARCIA sought to induce the representative to provide him with this information. On those occasions when GARCIA was successful, he used this access to withdraw funds from the compromised account by issuing checks and wire transfers to himself and to his co-conspirators. Through this scheme, GARCIA fraudulently obtained on-line access to more than 20 different business bank accounts from which he attempted to withdraw over $1.5 million, and ultimately succeeded in withdrawing over $200,000.
In December 2011, GARCIA engaged in a separate scheme to defraud a venture capital firm located in New York, New York (the “Venture Capital Firm”) of $2 million. Specifically, after learning that the owner of the Venture Capital Firm had initiated a wire transfer of $2 million to a bank account maintained for the Venture Capital Firm by a clearing firm (the “Clearing Firm”), GARCIA made numerous phone calls to the Owner and agents of the Owner, in which he falsely identified himself as a representative from the Clearing Firm. Over the course of these calls, GARCIA fraudulently represented to the Owner and his agents that the $2 million had been deposited into the wrong account at the Clearing Firm, and that the funds needed to be re-wired to a different account, for which GARCIA gave certain routing and account information. In fact, the routing and account information corresponded to an account controlled by GARCIA. The fraud was detected before any funds were transferred to the fraudulent account.
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GARCIA, 25, of North Bergen, New Jersey, faces a maximum term of 50 years in prison.

Mr. Bharara praised the investigative work of the FBI Cyber Crime Task Force and the USSS.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney
Serrin Turner is in charge of the prosecution.

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