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National Insurance Crime Bureau

Leader of Cellphone Account Takeover Fraud Scheme Pleads Guilty

Justice.Gov, Press Release, October 4,2021


Defendant Impersonated Legitimate Accountholders and Charged Over Half a Million Dollars’ Worth of Devices to Victim Accounts
Audrey Strauss, the United States Attorney for the Southern District of New York, announced that defendant HENRY PEREZ pled guilty today to leading a multi-year cellphone account takeover fraud conspiracy.  PEREZ impersonated legitimate cellphone accountholders in order to fraudulently obtain smartphones and electronic devices that he charged to compromised accounts.  The fraud scheme also caused more than 300 victims across the United States to lose cellphone service for a period of time.  PEREZ pled guilty before U.S. District Judge Richard M. Berman, to whom the case is assigned.


Manhattan U.S. Attorney Audrey Strauss said: “As he admitted today, Henry Perez led a sophisticated fraud scheme that impersonated victims, changed victims’ account information so victims would not receive fraud alerts, charged purchases to victims’ accounts, and deprived victims of cellphone service.  Thanks to the dedicated work of our partners at Homeland Security, Perez stands convicted of this cellphone fraud scheme and now awaits sentencing for his crime.”
According to the allegations in the Indictment, public court filings, and statements made in court:
From June 2017 through December 2019, PEREZ was the leader of a criminal fraud ring that committed cellphone account takeover fraud and identity theft across the United States, including in the Southern District of New York.  The scheme’s primary objective was to obtain new, valuable electronic devices, including iPhones, and charge these purchases to victims’ accounts, without the knowledge or consent of the victim accountholders.  Over the course of the conspiracy, participants in the scheme attempted to fraudulently obtain more than $1 million worth of devices and, in fact, fraudulently obtained more than $530,000 worth of devices (e.g., iPhones, iPads, and AirPods), by charging purchases to victims’ accounts.
To conduct the scheme, members of the conspiracy, including PEREZ, used stolen identity information to impersonate victims who had cellphone accounts with a particular cellphone service provider (“Provider-1”).  Members of the conspiracy then called customer service representatives of Provider-1 and used social engineering techniques to take over accounts by making various misrepresentations, including impersonating accountholders and expressing a purported need to regain access to their accounts.  Through these misrepresentations, conspirators were able to gain unauthorized access to, and control of, accounts belonging to victim accountholders.  Once they gained access, members of the conspiracy made various unauthorized changes to victim accounts, so that fraud alerts and emails relating to account changes were sent to a conspiracy member, rather than to the legitimate accountholders.  Participants in the conspiracy then purchased new electronic devices, which they charged to victim accounts, without the knowledge or consent of the victims.


In many instances, conspirators arranged for the fraudulently ordered devices to be shipped to addresses under their control.  In other instances, members of the scheme, including PEREZ, personally entered stores operated by Provider-1 to pick up fraudulently obtained devices.  In total, participants in the conspiracy conducted in-store pickups of fraudulently obtained devices in at least 10 different states.


Once they had successfully exploited a particular victim’s account, members of the conspiracy typically relinquished control of that account, and moved on to exploiting other victim accounts.  During the period in which the conspiracy compromised, and retained control of, a particular victim’s cellphone account, that victim typically lost cellphone service.  In total, the scheme caused more than 300 victims across the United States to lose cellphone service for a period of time.
PEREZ was integrally involved in all aspects of the scheme, including using victims’ personal identifying information to dupe Provider-1; gaining unauthorized access to victim accounts; making unauthorized changes to victim accounts; receiving fraudulently obtained devices; and recruiting, directing, and paying a subordinate, including supplying that subordinate with victim information.
PEREZ, 33, of Fort Lee, New Jersey, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
PEREZ is scheduled to be sentenced by Judge Berman on January 18, 2022, at 10:00 a.m.  Under the terms of his plea agreement, PEREZ also agreed to pay restitution of $539,654.96 and forfeiture of $532,374.96.

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Ms. Strauss praised the New York Office of Homeland Security Investigations (“HSI”) and its El Dorado Task Force for its outstanding work on this case.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Michael D. Neff is in charge of the prosecution.
 

Press Release