Suffolk County District Attorney Timothy D. Sini has announced the guilty plea of a Great Valley man and three corporate defendants in connection with a nation-wide operation to create and use synthetic identities to commit fraud, which resulted in the theft of more than $1 million from financial institutions.
“Mr. Arena played a key role in this national fraud ring. He opened shell corporations for the sole purpose of improving credit scores for these fake identities, allowing them to borrow large amounts of money in loans that they would never pay back,” District Attorney Sini said. “Our message to fraudsters is that no matter how sophisticated you think your operation is, you can’t outsmart the law. The prosecutor and investigators on this case left no stone unturned in unraveling this scheme, and today’s plea ensures that these perpetrators are held accountable.”
Adam D. Arena, 44, of Great Valley, pleaded guilty yesterday to two counts of Grand Larceny in the Second Degree, a class C felony; Grand Larceny in the Third Degree, a class D felony; Criminal Possession of Forged Instrument in the Second Degree, a class D felony; Money Laundering in the Fourth Degree, a class E felony; and Scheme to Defraud in the First Degree, a class E felony. Arena previously lived in Corona, California.
Corporate defendants GFS Auto Sales, LLC; SBC Software, LLC; and ADA Auto Group each pleaded guilty to one count of Money Laundering in the Fourth Degree, a class E felony.
Pursuant to the plea agreement, Arena is expected to be sentenced to an indeterminate sentence of four to 12 years in prison. Arena and the corporations will also be required to pay restitution in the amount of approximately $523,000 through restitution judgment orders to the financial institutions impacted by this scheme.
In August 2018, the Suffolk County District Attorney’s Office’s Financial Investigations & Money Laundering Bureau and the Suffolk County Police Department’s Financial Crimes Unit began an investigation into suspected identity fraud at several banks and credit unions on Long Island. The investigation revealed evidence that more than 20 synthetic identities had been created and used in Suffolk County to fraudulently obtain loans and credit card accounts from 19 different financial institutions.
Participants in the scheme would create synthetic identities by associating a stolen Social Security number with a different name, address and date of birth. The stolen Social Security numbers belonged to individuals with no existing credit history or those who were unlikely to be monitoring their credit history, such as children, recent immigrants, deceased individuals, elderly individuals, and incarcerated individuals.
In furtherance of the scheme, Arena created shell corporations that then falsely reported the synthetic identities to the credit reporting agencies as though they were customers of the corporations, thus providing the synthetic identities with corporate tradelines that further boosted their credit ratings. Arena fraudulently backdated the information to make it appear as though the synthetic identities had good credit histories over the course of several years.
Participants in the scheme also took numerous steps to make the synthetic identities appear legitimate and to fraudulently build credit for the synthetic identities, including adding the synthetic identities as authorized users on an existing individual’s credit card.
Once the synthetic identities accumulated positive credit reports, participants in the scheme fraudulently obtained loans and credit card accounts from financial institutions using those synthetic identities. The accounts would be used to the maximum amount allowed and then the balances on the accounts were never paid, a scheme commonly known as a credit “bust out.”
Arena and the corporate defendants were charged as part of a 108-count indictment charging 13 individuals and the three corporations in February 2020. This prosecution represents one of the first of its kind to target this new type of criminal scheme in which perpetrators create synthetic identities and use them to defraud financial institutions out of millions of dollars, harming individual victims in the process.
Arena is scheduled to be sentenced on May 3 in front of Suffolk County Supreme Court Justice Timothy Mazzei.
District Attorney Sini thanks the Suffolk County Police Department; U.S. Social Security Administration’s Office of Inspector General; U.S. Secret Service; Equifax, Experian and TransUnion credit bureaus; the U.S. Postal Inspection Service; and the Riverside District Attorney’s Office and Riverside Sheriff’s Office in California for their assistance with the investigation.
This case is being prosecuted by Assistant District Attorney Jessica Lightstone, of the Financial Investigations & Money Laundering Bureau.
