Eight Arrested in Connection with Major Cleveland-Based Retail Fraud Ring

April 3, 2010 - C. Frank Figliuzzi, Special Agent in Charge of the Cleveland Division of the Federal Bureau of Investigation (FBI), and Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announce the arrests of the following individuals who are charged with conspiracy to commit wire fraud:

Andre Reese, age 36, of Cleveland, Ohio; Dimorio McDowell, age 33, of Trenton, New Jersey; Jeffery McClain, age 39, of Cleveland, Ohio; Kevin McBride, age 33, of Cleveland, Ohio; Michael Sailes, age 50, of Cleveland, Ohio; Edwin Peavy, age 51, of Cleveland, Ohio; Daniel Ashford, age 36, of Cleveland, Ohio; and Jay Paul Williams, age 27, of Cleveland, Ohio.

These charges are the result of a large-scale retail fraud scheme by which these individuals utilized “private label” credit card accounts which are accounts offered to consumers specific to a particular retail chain and are backed by independent financial institutions. The retail chains identified include Lowe’s, Home Depot, Staples, Best Buy, hhgregg, Macy’s, Nordstrom, Saks Fifth Avenue, and Sears. The financial institutions include GE Capital, Citigroup Financial, and HSBC. In this scheme, these individuals conspired together to contact creditor customer service departments and utilized a variety of tactics to obtain legitimate and active credit account information. This information was used to defraud employees of these customer service departments into adding an authorized user to an account, or change the account holder information to reflect that of individuals that were part of this conspiracy who would act as “runners.” After these “runners” were added as an authorized user, the “runner” along with one or two associates would then go to a victim retailer and request that a store employee look-up their account from personal identifiers that were obtained from the scheme. At times, the “runners” had to show their valid ID or recite the last four digits of the account holder’s social security number as proof they were authorized to use the account. The “runners” would then purchase items and charge them to the account. The individuals involved in this conspiracy had customers who would then purchase these items from them.

The victims of this scheme are the independent financial institutions who believe that they have suffered losses of approximately $500,000 to $1,000,000.

This case was investigated by the Bath Township Police Department, Stow Police Department, Mentor Police Department, Willoughby Police Department, Cleveland Heights Police Department, Cuyahoga County Sheriff’s Department, Bedford Heights Police Department, Strongsville Police Department, Richmond Heights Police Department, University Heights Police Department, Beachwood Police Department, Jackson Township Police Department, Cleveland Division of Police, United States Postal Inspectors, United States Bureau of Prisons, Newark Division - Trenton Resident Agency of the FBI, and the Cleveland Office of the FBI.

The United States Bureau of Prisons and the Trenton Resident Agency of the FBI had initiated an investigation to identify an inmate at Fort Dix Federal Correctional Institution in New Jersey who was conducting a fraud scheme via telephone. Law enforcement agencies here in Northern Ohio were also attempting to identify individuals involved in the aforementioned scheme and were looking to identify an individual using telephone communications to coordinate the operations here in Ohio from New Jersey. A joint investigation in New Jersey and Ohio led to the arrest of the aforementioned individuals.

These individuals will appear today in United States District Court, Cleveland, Ohio for their initial appearance on these charges.

Any questions regarding this news release can be directed to SA Scott T. Wilson at the Cleveland Office of the FBI, 216-522-1400.