Credit Card Firms Claim Huge Fraud : Visa, MasterCard File Suit Over Alleged Nationwide Racket
Visa International and MasterCard International joined seven banks Monday in filing a multimillion-dollar lawsuit in U.S. District Court here against an alleged nationwide credit card racket that they say tricked thousands of people into revealing their credit card numbers by phone to “boiler room” solicitors.
Batteries of telephone operators in Los Angeles, Salt Lake City and Atlanta got these card numbers by calling at random and offering “travel club memberships,” the suit said.
Two leaders of the operation, both ex-convicts, then wrote fraudulent credit card sales drafts charging the unwary card holders $149 or more for “travel club memberships,” the suit said.
The suit identified the two as Bernd Udo Andreas Drisang--who has used the names Jason Drisang, Jason King and Stephen William Sturgis and is a West German citizen formerly of Los Angeles and now living in Atlanta--and Edward J. Kane of Santa Monica.
15,000 Fraudulent Drafts
Both are on probation from federal prison, where Drisang was serving time for having obtained a false passport and Kane for having made false statements to a federally insured bank, the suit said.
The two men and seven co-defendants laundered the drafts through a series of so-called travel clubs that they controlled, then deposited them in merchant accounts in 11 banks from California to Georgia, the suit claims.
According to the suit, the defendants obtained an estimated $2.5 million with 15,000 fraudulent drafts starting in 1982. Once individual credit customers complained of unauthorized charges, the banks sought refunds from the defendants. However, the suit said, the defendants would clean out their accounts in one bank, moving on to another and redepositing the fraudulent sales drafts.
An estimated $500,000 in false transactions apparently went unnoticed by credit card customers, according to William Neumann, security chief for Visa.
The 11 banks and their losses were listed in the suit as First Los Angeles ($315,000), Union ($406,750) and Cathay ($470,795), all of Los Angeles; American National of Bakersfield ($106,732); California First of San Diego ($233,517); First Hawaiian of Honolulu ($64,058); Yellowstone of Lander, Wyo. ($83,602); Capital City of Salt Lake City ($162,608); Bank of the South ($143,637) and Citizens & Southern National ($7,360), both of Atlanta, and Columbus Bank & Trust of Columbus, Ga. ($21,588).
Treble Damages Sought
Of these, all except First Los Angeles, Union, First Hawaiian and Yellowstone joined Visa and MasterCard in bringing the suit. Those four have provided information to the plaintiffs’ attorneys.
The suit seeks treble damages under the Racketeer Influenced and Corrupt Organizations law, as well as an unspecified amount of damage for harm to Visa’s and MasterCard’s reputations and $5 million in punitive damages.
Besides Drisang and Kane, the defendants are William Vasilios of Santa Monica; D. J. Harrington of Acworth, Ga.; Gerald Mahoney of Salt Lake City; John Wilson and Roger Kramer, both of Irvine, and David Hancock of Los Angeles. None of the defendants could be reached for comment.
The suit identified companies used in the alleged scheme as Market Force International, Hawaiian Sales Inc., Pan Oceanic Tours Inc., Travel Goods Inc., E.J.K. Travel Inc., Alliance Network Inc., Drisang Consulting Inc., Sentinel Motor Club Inc., Resource Associates Inc. and Riviera International Travel Inc. The firms also were named as defendants.
