ROXBURY TOWNSHIP, N.J. (Morris County) – Investigators have arrested the owner of a go-go bar in Roxbury, N.J., and five associates on charges including first-degree racketeering and money laundering for allegedly engaging in an elaborate scheme in which they used stolen credit cards – as well as gift cards that they purchased with the stolen credit cards or acquired through other criminal schemes – to steal more than $9 million, Acting Attorney General Christopher S. Porrino said.
The six men were arrested Thursday on charges of racketeering, money laundering, conspiracy, theft, and credit card theft. They were lodged in the Morris County Jail with bails ranging from $100,000 to $250,000.
Peter Vasilipous, 71, of Elizabeth, a manager of Smiles II, allegedly partnered with Lipka in the criminal enterprise. Eric Olsen, 47, of Roxbury, is a second manager of Smiles II who handled finances for the business and allegedly partnered in the criminal enterprise.
Kevin Bae, 28, of Edgewater allegedly partnered with Lipka in processing transactions with the stolen credit cards, illegally acquired gift cards, and failed to file a tax return. Jordan Turner, 23, of Jamaica, N.Y. and Kevin Rodriguez, 23, of Whitehall, Pa., allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits.
Lipka also is charged with misconduct by a corporate official and failure to file a tax return, and Bae is charged with failure to file a tax return. In addition, Shelly Lipka, was charged by summons with misconduct by a corporate official and failure to file a tax return.
The defendants were charged in a 10-month investigation called “Operation Smiles” led by the Division of Criminal Justice Gangs & Organized Crime Bureau and the Roxbury Police Department. The Roxbury Police initiated the investigation and brought in the Attorney General’s Office. The Livingston Police assisted in the arrests and execution of search warrants at Smiles II and other locations.
“These defendants allegedly racked up millions of dollars in illicit proceeds in the back room of a go-go bar, where they spent hours swiping stolen credit cards and ill-gotten gift cards,” said Acting Attorney General Porrino. “With these arrests, we have frozen their bogus credit and put a stop payment on their criminal schemes.”
“Most people think of gift cards as the perfect present when they don’t know what to give, but criminals think of them as a perfect way to launder money anonymously,” said Director Elie Honig of the Division of Criminal Justice. “Working with the Roxbury Police, we showed these alleged con artists that their perfect fraud scheme was not so perfect after all. They face the most serious financial charges provided for under state law.”
Roxbury Police Chief Marc Palanchi thanked the Division of Criminal Justice for assisting in the investigation: “It is because of the cooperation and efforts of these two agencies that we were able to build such a detailed case,” said Chief Palanchi. “I commend my officers and all officers involved for the successful culmination of this investigation and for dismantling such a sophisticated criminal organization. These arrests were a direct result of good, solid police work.”
The investigation revealed that, over a period of four years, the defendants allegedly conspired to steal more than $9 million by defrauding retailers, banks, credit card processing companies and credit card holders. The scheme involved the use of stolen credit cards and fraudulently obtained credit cards. The credit cards were used to purchase pre-paid gift cards issued by credit companies such as Master Card and Visa at various retail stores, including Target and Home Depot. The gift cards were later “cashed in” through phony transactions at Smiles II, and the proceeds were allegedly divided between the individuals who supplied the cards, including Rodriguez and Turner, and Lipka and his partners at Smiles II. At times, the credit cards were used directly for transactions at the go-go bar. The cards were swiped through credit card processing devices to conduct fraudulent transactions which generated proceeds that went into the business accounts of She-Kev Inc.
The investigation revealed that individuals including Rodriguez and Turner also allegedly used stolen credit cards to buy high-priced merchandise at retail stores, particularly Home Depot. The merchandise was later returned for in-store credit that could be used later, or for in-store gift cards that could be exchanged for cash on the Internet. In other cases, the defendants allegedly purchased liquor for Smiles II using stolen credit cards or illegally acquired gift cards.
The investigation further revealed that the defendants allegedly acquired gift cards through various other criminal schemes. In one scheme, vehicles were fraudulently offered for sale through eBay and Craigslist. Unsuspecting purchasers would be directed to pay for the vehicle with pre-paid gift cards from credit companies such as Master Card and Visa, and those gift cards also were allegedly processed through Smiles II. The vehicles were never shipped to the victims. In other instances, the defendants allegedly obtained gift cards through variations on the common “grandparent” scam, in which an elderly victim is contacted by someone posing as the grandchild or nephew of the victim and claiming to need bail money to be released from jail. The victim would be told to pay the bail by purchasing gift cards and providing the gift card information by phone to a “police officer’ involved in the arrest.
The case was investigated for the Roxbury Police Department by Detective Jack Sylvester and Lt. Dean Adone. Detective Chris Schell, Detective Patrick Sole, Lt. Brian Bruton and Deputy Attorney General Shontae Gray conducted and coordinated the investigation for the Division of Criminal Justice Gangs & Organized Crime Bureau. Acting Attorney General Porrino also thanked the Livingston Police Department, Woodbridge Police Department, Millburn Police Department, Cumru Township (Pa.) Police Department, Home Depot Corporate Security and Target Corporate Security for their valuable assistance in the investigation.
(Photo Courtesy: New Jersey Attorney General’s Office)