NYC 'Fraud Factory' Allegedly Stole $7M in Federal Benefits for Luxury Cars and Yemen Payments

A sophisticated fraud ring operating out of New York City allegedly stole $7 million in federal benefits by cloning Electronic Benefit Transfer (EBT) and Supplemental Nutrition Assistance Program (SNAP) cards. Prosecutors claim the illicit funds were used to purchase luxury vehicles and send payments to Yemen.

Eight alleged members of the scheme, which ran for approximately 18 months, were indicted on Thursday. The group, led by 34-year-old Belal Hauter, is accused of using electronic duping devices to extract funds from victims' benefit cards. The operation reportedly took place out of hotel rooms and the back of a deli in Yonkers.

Hauter is alleged to have directed co-conspirators to establish merchant processing accounts under the names of legitimate and fictitious bodegas and grocery stores. Following the creation of these accounts, the ring would use card skimming machines to capture victims' PINs and clone their EBT cards. Prosecutors stated that the cloned cards were used to drain the compromised accounts almost immediately after benefits were loaded.

The proceeds from these fraudulent transactions were transferred into bank accounts controlled by the conspirators. Court documents indicate that out of approximately ten investigated accounts, all but two were registered in Hauter's name.

Evidence presented by prosecutors suggests the stolen money was used to acquire several luxury vehicles, including a BMW. One alleged conspirator reportedly sent Hauter a photograph of a newly purchased car with a message crediting him for the purchase.

Thousands of dollars were also sent to Yemen, a country where Hauter has connections. Photographic evidence reportedly includes numerous point-of-sale systems, stacks of receipts, and dozens of cloned EBT cards.

Among those indicted alongside Hauter were Abdulla Aezah, 35, and Gregory Fabiani, 46, who are accused of assisting in opening accounts and providing technical support for the scheme. Prosecutors also believe that relatives of Hauter were involved and have since left the country.

Despite arguments from Hauter's defense attorney that his cooperation with law enforcement and his continued presence in the country demonstrated his intent to remain, Judge Melissa T. Lewis set bail at over $1 million. Aezah and Fabiani were also deemed flight risks due to strong international ties.

All three defendants pleaded not guilty to charges including grand larceny, conspiracy, and identity theft. They surrendered their U.S. passports to law enforcement. The group is scheduled to return to court on December 10.

Prosecutors estimate that the scheme may have been active for longer than the reported period and could potentially be linked to as much as $13 million in stolen benefits.