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Defending Credit Card Fraud Conspiracy Charges November 27, 2010

Posted by jefhenninger in Articles.

As New Jersey Credit Card Fraud Defense Lawyer, I’ve seen many credit card fraud cases. Many small credit card fraud cases usually involve one person stealing a credit card or using one that they find on the floor. Depending on the jurisdiction and the attorney handling the case, the punishment can be relataviely minor. However, a vast credit card fraud conspiracy may be prosecuted on the federal level and as a result, can come with severe penalities. While there are many ways to defend such a case, the case of U.S. v. Samaria, 239 F.3d 228 (2nd Cir. 2001) provides an excellent starting point for attorneys.

Because this was a conspiracy case, the case is titled in the last name of Samaria but the main defendant at issue is named Frank Elaiho. The other two codefendants, Lance Samaria and Eric Rondell Glover pled guilty to participation in a complex criminal credit card fraud scheme. Over a several month period, Samaria and Glover stole credit card numbers, rented mailboxes from Mailboxes, Etc. and set up voice mail accounts. They changed the addresses and phone numbers corresponding to the credit cards numbers they had stolen, and requested credit-line increases for some of the cards. They then placed orders for expensive computer equipment and had the items mailed to Mailboxes etc. In furtherance of the scheme, they provided additional identifying information over the phone and faxed copies of fake drivers’ licenses they had obtained under the cardholders’ names. Eventually, the Secret Service started an investigation.

During the investigation, Secret Service agents observed Samaria loading a large box into Elaiho’s car. According to testimony at trial, one of the agents saw Elaiho “kind of looking around where other people [were] walking.” Of course, this was speculation but there is no indication if there was an objected. After Samaria finished loading the box into the car, the agent saw Elaiho sit in the passenger’s seat, with Samaria behind the wheel, and a third person, assumed to be Glover, in the backseat. The license plate number was later traced to Elaiho’s rental car.

A few days later, agents saw the same car pull up to the same Mailboxes, Etc. store with Elaiho driving this time. Samaria was in the passenger’s seat and Glover in the backseat. Samaria went inside and returned with two boxes. He hailed a cab and got in with the boxes. Elaiho testified that Glover told him to follow the cab which stopped a few blocks away. There, Samaria unloaded the two boxes from the cab at the curb and crossed the street toward some pay phones. Glover got out and stood by the boxes, and Elaiho remained in his car. Within minutes, all three were arrested at the scene. Inside the two boxes was found computer equipment purchased with a stolen credit card number.

The Government case against Elaiho consisted of assertions that he had (1) made false exculpatory statements when arrested; (2) observed the items themselves; (3) served as a “lookout” during the one delivery; (4) consciously avoided discovery of the nature of the conspiracy; (5) constructively possessed the stolen items; (6) rode as a passenger in his car during the first pickup and was present at the second pickup. The Appellate Court addressed each issue and this tearing apart of the circumstantial evidence is a vital exercise for every defense attorney to engage in.

1. When Elaiho was arrested, he stated that he did not know Samaria or Glover, had never been to the particular Mailboxes, Etc. prior to the date he ewas arrested, and had not lent his car to anyone else who could have driven it to that location for the first pick-up. Clearly, a jury could reasonably find these statements were false and made by Elaiho in an attempt to exculpate himself from involvement in criminality. However, the Court found that the statements do not by themselves supply the evidence of Elaiho’s knowledge and specific intent otherwise lacking from the evidence in the Government’s case. Although false statements may strengthen an inference already supplied by specific indicia of knowledge and intent, they do not, by themselves, prove that Elaiho knowingly and intentionally acted in furtherance of a conspiracy to receive or possess stolen property or engaged in, aided and abetted, or conspired to commit credit card fraud.

2. The government maintains that because Elaiho aided in the pickup of stolen goods, he intended to participate in the crimes charged. The Court noted that this argument rests upon the unproven assumption that Elaiho knew that the goods were stolen. That is because what Elaiho saw during these pickups was not necessarily or even reasonably indicative of any criminal activity at all, much less sufficient to support the conclusion that he knew that the goods were stolen or purchased through credit card fraud. Even if he suspected that the other two were involved in a criminal enterprise of some sort, the exterior appearance of the boxes was also consistent with any number of different criminal offenses such as receipt and possession of drugs, illegal weapons, counterfeit currency, or the receipt of legal goods such as drug paraphernalia that would later be employed in a criminal endeavor. Thus, a defense attorney must fight a prosecutor’s attempt to argue that because criminal activity took place, the defendant must have known and participated in the criminal activity. This circular logic must be vigrously fought.

3. As previously stated, the agent’s opinion that Elaiho acted as a lookout was riduclous. The Court found that there was no evidence that Elaiho was ever armed, or that he said or did anything in his role as “lookout” except, as the agent put it “kind of looked around where other people were walking. This should have been objected to preserve the issue for appeal. The prosecutor can make the argument to the jury but this is improper opinion testimony for the agent. There are many cases on lookout and conspiracy cases, but one of the more helpful ones to the defense is United States v. Dean, 59 F.3d 1479, 1487 (5th Cir.1995) in which the court held that “Evidence sufficient to support a reasonable inference that a defendant was knowingly acting as a lookout was insufficient support for the further inference that the defendant knew what he was protecting.”.

4. The conscious avoidance doctrine provides that a defendant’s knowledge of a fact required to prove the defendant’s guilt may be found when the jury “is persuaded that the defendant consciously avoided learning that fact while aware of a high probability of its existence.” United States v. Finkelstein, 229 F.3d 90, 95 (2d Cir.2000). In such circumstances, a conscious avoidance instruction to the jury “permits a finding of knowledge even where there is no evidence that the defendant possessed actual knowledge.” United States v. Ferrarini, 219 F.3d 145, 154 (2d Cir.2000). The Court found that even assuming that the conscious avoidance instruction given to the jury in this case was proper, any such inference could do no more than establish Elaiho’s knowledge of the criminal endeavor, not his specific intent to participate in the crimes charged.

5. Prosecutor’s love constructive possession and too many defense attorneys think that if something illegal is in the car and no one “owns up to it”, everyone is going down. The unexplained possession of recently stolen property may permit an inference that the possessor knew that the property was stolen. See Barnes v. United States, 412 U.S. 837, 845-46 (1973). “Constructive possession exists when a person has the power and intention to exercise dominion and control over an object.” United States v. Payton, 159 F.3d 49, 56 (2d Cir.1998). Thus, what most attorneys forget is that “mere presence at the location of contraband does not establish possession.” United States v. Rios, 856 F.2d 493, 496 (2d Cir. 1988). The Court found that the boxes were only in Elaiho’s car on the first occasion. Furthermore, he was there is no evidence that Elaiho handled any of the boxes or directed where they were to be taken or what was to be done with them. At all times, Elaiho appeared to follow the directions of Samaria and Glover. Elaiho did not, therefore, exhibit the dominion and control over the boxes necessary to find that he constructively possessed them.

6. The Court simply found that just by being in the car offers no indicia that Elaiho was aware of the specific crimes charged and that Elaiho had the specific intent to participate in those crimes.

The Court found that the evidence was insufficient to show that Elaiho knowingly and intentionally participated in a conspiracy to receive or possess stolen goods. Likewise, it was also insufficient to support a conviction on the fraud offenses. The government contended that “it was reasonable for the jury to infer that Elaiho knew that this merchandise had been purchased with a credit card since the merchandise was clearly purchased using mail-order delivery.” The Court found that without the knowledge that the boxes contained stolen goods, Elaiho could not have intended to engage in credit card fraud, conspire to commit such fraud, or aid and abet such a fraud. The government offered no evidence that Elaiho knew that he had parked near a Mailboxes, Etc. location, or that Elaiho, an immigrant from Nigeria, knew the significance of such a business for those interested in mounting a fraud scheme involving stolen credit card numbers. This topic, essential for the government’s case, was never broached during Elaiho’s extensive testimony and no other evidence was introduced to suggest that Elaiho possessed such knowledge outside of the agent’s testimony that Elaiho stood across the street from a Mailboxes, Etc. store on November 13, 1998.

While this exact fact pattern may not be present in most credit card fraud conspiraicies, the issues of specfic intent, being a look out, constructive possession and conscious avoidance may be present in many cases. Just like the Court in this case tore apart the Government’s case point by point, so must the defense attorney address each issue. Too many attorneys read a police report and view the case as a normal person. Hearing the Government’s side of the story, a lay person may have said that Elaiho is clearly guilty. However, a defense attorney cannot afford to think like a normal person. He or she must view the case in terms of admissible evidence and legal arguments. When this is done effectively, the Government may have a tough time proving a credit card fraud conspiracy.


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