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Prosecutors Peel Black Market Apple Ring

By DNAinfo Staff on February 2, 2011 3:43pm

The scammers purchased almost $1 million in Apple computers and other devices with stolen credit card information, prosecutors said.
The scammers purchased almost $1 million in Apple computers and other devices with stolen credit card information, prosecutors said.
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By Shayna Jacobs

DNAinfo Reporter/Producer

MANHATTAN — Prosecutors revealed additional details Wednesday about the elaborate identity fraud and theft ring they say targeted Apple stores around Manhattan where thieves bought Macbooks, iPods and iPhones for resale on the black market.

Officials announced a massive two-part indictment Tuesday against 27 alleged thieves who racked up $1 million in illicit profits by selling the ill-gotten items between June 2008 and December 2010, before being brought down this week by a joint investigation by the Secret Service and the Manhattan District Attorney's office.

On Wednesday, prosecutors shed new light on the behind-the-scenes of the crime ring, starting with the way the alleged thieves got hold of stolen credit numbers to supply their plot.

Local map of Apple retail stores targeted in the alleged conspiracy.
Local map of Apple retail stores targeted in the alleged conspiracy.
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Manhattan District Attorney's Office

The scammers allegedly purchased stolen credit card numbers at a cost of $5 to $10 apiece from identity thieves overseas — and then imprinted the numbers on to phony credit cards using encoding machines, which are often legitimately used to create corporate ID cards.

The counterfeit cards were encoded with real account data matching hundreds of victims in the U.S. and overseas, officials said, but the name on the bogus credit cards was the name of the criminal planning to use them at the store. Because they were using real account information juxtaposed with the name of the criminal, Apple employees did not immediately catch on to the fraud, authorities said.

"What the clerk can't see is that the magnetic strip on the back of the credit card is charging the purchase to the unsuspecting victim," said Manhattan District Attorney Cy Vance Jr., whose office teamed up with the Secret Service to bring down the ring.

Fraudulent purchases were made at all four Apple retail stores in Manhattan as well as shops in cities nationwide including in Las Vegas, Orlando and St. Louis.

Members of the first alleged enterprise went by the name "S3" which was a name coined by the leader, Shaheed Bilal, 28 of Brooklyn. Bilal was arraigned yesterday and ordered held on $1 million bail.

Bilal allegedly iniatiated the scam and then kept it going even after he was arrested on an unrelated charge and sent to Rikers, officials said. His girlfriend Ophelia Alleyene, 29, allegedly worked on his behalf while he was in jail.

Alleyene and Bilal's brothers Isaac, 25, Ali, 23 and Rahim, 21, all played roles in the organized operation, Vance said Wednesday.

The brothers allegedly recruited "shoppers" to buy goods at Apple retail stores in Manhattan and around the country using the phony cards, in order to sell them for profit on the black market, Vance said. 

"This was in essence a family affair," Vance said of the first conspiracy, which grew to include 17 members, all of whom have been charged.

The scheme was allegedly so successful, it spawned a copycat plot created by one of Bilal's crew's former cronies, who allegedly initiated his own crime ring. Anthony Harper allegedly got his start as a "shopper" in Bilal's crew, prosecutors said.

Many of the shoppers and other associates known as "fences," or black market buyers, were charged.

Police arrested 27 defendants yesterday, nine of whom were arraigned on a host of charges including grand larceny, conspiracy and possession of forged instruments. It was unclear if any additional individuals will be charged.

Authorities say the case shows how identity theft has evolved from "dumpster digging," in which thieves steal credit card numbers from thrown-away receipts or credit card statements, to current-day identity theft, in which thieves can hack into online accounts through transactions.

"Today this is all done quietly, secretly, anonymously," said Brian Parr, Special Agent in Charge of the New York Field Office of the U.S. Secret Service, which partnered with with the Manhattan District Attorney's on the investigation.

Manhattan's hallmark Apple store on Fifth Avenue was one of the local targets of a conspiracy involving identity theft and credit card fraud.
Manhattan's hallmark Apple store on Fifth Avenue was one of the local targets of a conspiracy involving identity theft and credit card fraud.
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