Sacramento, California - A federal grand jury returned a 12-count indictment Thursday against Johnathon Ward, 40, formerly of Tracy; Monica Nunes, 39, formerly of Rancho Cordova; and Talalima Toilolo, 44, of Salt Lake City, Utah, charging them with conspiracy to commit bank fraud and bank fraud, U.S. Attorney McGregor W. Scott announced. The indictment also charges Ward and Nunes with aggravated identity theft.
According to court documents, Ward, Nunes, and Toilolo conspired to defraud financial institutions using a scheme called “refund fraud” or “force post refund fraud.” This scheme exploited the refund process used by businesses and retail establishments to pay back customers for returns, reimbursements, and erroneous charges. The defendants posed as merchants and executed fraudulent debit or credit card refunds, which caused the unauthorized transfer of money from a merchant bank account to an account under the defendants’ control.
The defendants allegedly committed this scheme by stealing or purchasing point-of-sale (POS) terminals that are used by businesses to process bankcard transactions. The defendants programmed each terminal to make it appear as if it was authorized by a particular merchant, connected the terminals to payment processing intermediaries, and executed refund transactions even though no purchases had been made. The payment processors, falsely believing the terminals were authorized, approved the refunds and caused the merchants’ banks to transfer funds to the defendants’ accounts. The defendants then drained the stolen funds from the accounts. The indictment alleges that this scheme caused at least $3.5 million in intended victim losses.
This case is the product of an investigation by the Regional Enforcement Allied Computer Team (REACT) Task Force, which includes investigators from the Santa Clara County District Attorney’s Office, and the Federal Bureau of Investigation. Special Assistant U.S. Attorney Robert J. Artuz is prosecuting the case.
Ward and Nunes are in custody, and Toilolo was arrested yesterday in Salt Lake City, Utah, on a criminal complaint filed in this district.
If convicted, Ward, Nunes, and Toilolo face a maximum statutory penalty of 30 years in prison and a $1 million fine for each count of bank fraud and conspiracy to commit bank fraud. Additionally, if convicted of aggravated identity theft, Ward and Nunes face a mandatory two-year prison sentence, to be served consecutive to any other sentence, and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.