IRVINGTON, NJ — The ringleader in a counterfeit check scheme, Harold Stephens, 32, of Elizabeth, pleaded guilty before Superior Court Judge Michael Toto in Middlesex County on Friday, Jan. 15, to conspiring with Michael Caldwell, 40, of Irvington, and Janilyn Roman, 32, of Orlando, Fla., and others to steal $620,000 from various banks by creating counterfeit checks. The two co-defendants pleaded guilty previously.
The state will recommend Stephens be sentenced to 11 years in state prison, six years on the theft charge and a consecutive term of five years for money laundering. According to the plea agreement, he also is jointly and severally liable with his two co-defendants for paying full restitution of $620,000.
Caldwell and Janilyn Roman each pleaded guilty before Toto on Monday, Aug. 3, to second-degree theft by deception for their roles in the counterfeit check scheme. According to their plea agreements, the state will recommend Caldwell be sentenced to seven years in state prison and Roman be sentenced to six years in state prison. Toto scheduled sentencing for Stephens, Caldwell and Roman for Monday, March 14.
Deputy Attorney General Jeffrey Manis, deputy chief of the Division of Criminal Justice Corruption Bureau, and Deputy Attorney General Mallory Shanahan prosecuted the defendants. Manis took the guilty plea on Friday, Jan. 15. Deputy Attorney General Cambridge Q. Ryan also assisted in the prosecution.
The defendants were indicted on Feb. 25, 2015, in an investigation by detectives and inspectors of the New Jersey State Police Official Corruption North Unit, the Division of Criminal Justice Financial and Computer Crimes Bureau, and the Newark Division of the U.S. Postal Inspection Service.
Between January 2012 and September 2014, Stephens, Caldwell, Roman and other participants in the scheme deposited roughly 300 counterfeit checks in amounts totaling more than $1.6 million into numerous third-party bank accounts at branch offices of five major banks in New Jersey, Pennsylvania, Delaware and Florida. Stephens, Caldwell and Roman then stole approximately $620,000 by withdrawing funds from the deposit of the counterfeit checks before the banks discovered the fraud.
“This trio used a computer graphics program to create counterfeit checks, which they quickly converted to cash by taking advantage of banks with customer-friendly policies on fund availability,” said acting Attorney General John J. Hoffman. “They were essentially printing money. Fortunately, as financial fraud has become more sophisticated, we have kept pace, bringing con artists like these to justice through cutting-edge investigations.”
“Financial fraud costs banks, credit card companies, retailers and private citizens many millions of dollars every year,” said Director Elie Honig of the Division of Criminal Justice. “With cases such as this one, we’re putting offenders on notice that the more they steal, the longer they’ll spend in prison.”
“Most large-scale financial crimes cross numerous jurisdictional lines as criminals seek to wash their cash through seemingly legitimate means. The strength of our partnerships with other agencies therefore determines the level of our success in tracking down the ringleaders and the networks they create,” said Col. Rick Fuentes, superintendent of the New Jersey State Police.
“Postal inspectors, along with other law enforcement agents, unraveled a sophisticated counterfeit check scheme that resulted in thousands of dollars in losses,” said Inspector in Charge Maria Kelokates, Newark Division of the U.S. Postal Inspection Service. “Postal Inspectors will continue to aggressively pursue investigations in which Postal Service products and the U.S. Mail are used to facilitate a crime.”
Stephens purchased legitimate checks from people for a small price, often targeting customers entering check cashing businesses. He then used a computer graphics program to print counterfeit checks which matched the legitimate checks but which were written for large sums payable to other persons. Stephens used Caldwell, as a “recruiter” to obtain bank account information, debit cards and pin numbers from people willing to be named as payees on the counterfeit checks. The defendants would then use the payees’ bank accounts to deposit the checks and withdraw the proceeds, a process Stephens referred to as “washing” the checks. The recruiters and payees were paid by the defendants for their roles in the scheme. Roman was involved in depositing counterfeit checks in Florida.
The defendants targeted banks that allow funds from deposited checks to be withdrawn by their customers the next day. In some instances, the payees would open a new account that would be used to “wash” counterfeit checks. To further launder the stolen funds, Stephens would use them to purchase money orders and gift cards for various stores.
Stephens and Caldwell were arrested at their homes on Aug. 6, 2014, by members of the investigating agencies. Roman was arrested on Aug. 7, 2014, by the Orlando Police Department. She was extradited to New Jersey with the assistance of the U.S. Marshals Service.