September 9, 11

NEWS / Marlborough Man Admits Role in Multi-Million-Dollar Bank Fraud Conspiracy

The United States Attorney for the District of Connecticut announced that MIRZA H. BAIG, 48, of West Street, Marlborough, pleaded guilty today before United States District Judge Janet Bond Arterton in New Haven to one count of conspiracy to commit bank fraud stemming from his involvement in a multi-million-dollar bank fraud scheme.

According to court documents and statements made in court, BAIG worked for Branford-based New England Cash Dispensing Systems, Inc. (“NECDS”), which was in the business of operating a network of automated teller machines (“ATMs”). Beginning in approximately March 2000, NECDS entered into an agreement with Domestic Bank of Cranston, Rhode Island, whereby NECDS would supply ATM services in conjunction with Domestic Bank, the victim in this case. The ATMs in the network were stand-alone machines located in various commercial establishments, such as convenience stores and gas stations, and other locations throughout several northeastern states, including Connecticut. While all of the ATMs in the NECDS network bore the logo of Domestic Bank, NECDS was responsible for contracting with merchants and placing the ATMs in their establishments, and would perform maintenance on the ATMs. Ultimately, there were three funding sources for ATMs within the NECDS network: Domestic Bank provided the cash for specified ATMs in the network, NECDS supplied cash for other ATMs in the network, and certain merchants supplied cash for other ATMs. Over the course of time, the number of ATMs in the network that were funded by Domestic Bank increased, while the number of ATMs funded by NECDS decreased.

In pleading guilty, BAIG admitted that he and others engaged in a conspiracy to defraud Domestic Bank of cash the bank supplied for use in the ATM network. As part of the scheme, BAIG and other NECDS personnel ordered excess cash from Domestic Bank and then diverted the cash, which was meant to be used to refill Domestic Bank ATMs, to refill ATMs that would otherwise have been refilled with NECDS’s funds. BAIG and others also engaged in a “cover-up” to prevent the bank from recognizing that money was missing by “floating” Domestic Bank’s money. Specifically, NECDS personnel involved in the conspiracy often would order extra money for an ATM that was funded by Domestic Bank, knowing that the extra cash would be used to fill another ATM that previously had been shorted cash. This was done regularly over several years, and resulted in Domestic Bank receiving false information through the periodic replenishment process indicating that its cash was appropriately accounted for.

Domestic Bank ultimately lost approximately $4.8 million in funds that it had supplied to NECDS. In pleading guilty today, BAIG admitted that he personally stole approximately $2 million in cash, which he used for his own personal enrichment.

Judge Arterton has scheduled sentencing for March 16, 2012, at which time BAIG faces a maximum term of imprisonment of 30 years. In addition, in lieu of forfeiture, BAIG has agreed to pay a money judgment in the amount of $1 million prior to the date of his sentencing. BAIG also faces a restitution order of up to approximately $4.8 million at the time of his sentencing.

Joseph Sarlo, the former chief executive officer of NECDS; John DeMilo, the former general manager of NECDS; and Gary Vestuti, an NECDS employee, have each previously pleaded guilty to one count of conspiracy to commit bank fraud stemming from this scheme. Each awaits sentencing.

This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Paul Murphy.

http://www.fbi.gov/newhaven/press-releases/2011/marlborough-man-admits-role-in-multi-million-dollar-bank-fraud-conspiracy

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