3 Arrested in $600,000 Credit Card Theft

Fraud Scheme Used Well Know Financial Institutions to Fraudulently Obtain Credit

LOS ANGELES – Three Southland men have been charged in United States District Court on charges of money laundering, bank fraud and identity theft related to a scheme in which they used fraudulently obtained credit cards in the names of real and fictitious individuals and business entities to make unauthorized withdrawals and purchases.

The three defendants who were arrested in February by special agents with IRS-Criminal Investigation and inspectors from the United States Postal Inspection Service pursuant to a criminal complaint filed with the court are:

Johnny Stewart, 49, of Marina Del Rey;
Dexter Hardy, 45, of Los Angeles County; and
Clayton Stewart, aka “Douglas Blackburn,” 45, of Bellflower.

A 26-count indictment returned by a federal grand jury last week charged the three defendants with conspiracy, bank fraud, access device fraud, aggravated identity theft, and money laundering.

Beginning in January of 2011, defendants Johnny Stewart, his brother Clayton Stewart, and Dexter Hardy allegedly contacted Chase Bank USA, Bank of America, and Capital One Bank, and other institutions and requested that credit cards in the names of real and fictitious people be sent to addresses that the individuals controlled. In other instances, the defendants established fictitious business accounts that were paired with the name and other personal profile information of a victim primary cardholder. Once the defendants caused the financial institutions to send the credit cards to the requested addresses, the defendants used the credit cards to make unauthorized withdrawals and purchases. The dollar loss associated with the scheme is estimated at $600,000 at this time.

According to the indictment, defendants Johnny Stewart and Clayton Stewart further created sham business entities for which they opened merchant processing accounts and bank accounts. Through these sham business entity accounts, defendants Johnny Stewart and Clayton Stewart processed fraudulent transactions with credit cards that they had obtained from Chase and further made withdrawals and transfers from those sham business entity accounts. The individual transactions charged in the indictment range from $103 to $6,400.

According to documents filed with the court, Clayton Stewart pleaded guilty to a similar access device fraud scheme and was sentenced in US District Court in February of 2008 to 37 months in federal prison. Clayton Stewart was released from federal custody on September 17, 2010. Search warrant records from the previous scheme uncovered letters from Johnny Stewart to Clayton Stewart on how to commit different types of fraud without being detected by law enforcement. In those letters, Johnny Stewart instructed Clayton Stewart how to conduct bank transactions on the home computer so that Clayton Stewart did not need to go to the bank and risk being detected.

All three defendants are charged in the current scheme with bank fraud conspiracy and one count of access device fraud. Johnny Stewart is additionally charged with five counts of bank fraud, one count of aggravated identity theft, four counts of money laundering, and money laundering conspiracy. Clayton Stewart is additionally charged with three counts of bank fraud, one count of aggravated identity theft, six counts of money laundering, and money laundering conspiracy. Dexter Hardy is additionally charged with four counts of bank fraud.

In conjunction with the indictment, IRS-Criminal Investigation and the US Postal Inspection Service are seeking to forfeit property allegedly obtained with the proceeds of the illegal identity theft scheme and used to facilitate the scheme. The property to be forfeited includes approximately $22,572 in cash and an assortment of computer equipment.

If convicted of the fraud charges alleged in the indictment, the statutory maximum sentence each defendant could receive is 292 years for Johnny Stewart, 252 years for Clayton Stewart, and 160 years for Dexter Hardy.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The investigation in this case is being conducted by the US Postal Inspection Service and IRS-Criminal Investigation.