Matthew Podolsky, the Acting United States Attorney for the Southern District of New York, announced that Brandon Becker, the former CEO of CardReady, LLC (CardReady), was sentenced Monday to seven years in prison for operating a credit card laundering scheme in which Becker and his co-conspirators stole over $19 million based on false promises that they could reduce thousands of customers’ debt burdens.
As part of this scheme, Becker and his co-conspirators created dozens of sham merchant accounts and false merchant applications, defrauding a credit card processing company and federally insured bank into processing victim payments.
Becker previously pled guilty before U.S. District Judge Loretta A. Preska, who also imposed today’s sentence.
According to the Superseding Indictment, court filings, and statements made in court, Becker was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry.
As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (ISO), referred to in the indictment as the ‘New York ISO’.
The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts for processing up the chain to Payment Processor-1 and to Bank-1. Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.
In or about 2012, Becker negotiated a deal with co-defendant Steven Short, the former head of Florida-based E.M. Systems & Services LLC and affiliated companies (collectively, E.M. Systems). Under this deal, CardReady would retain approximately one-third of E.M. Systems’ credit card sale transactions in exchange for providing E.M. Systems access to the credit card processing network.
For roughly the next two years, Short and telemarketers working in boiler rooms for E.M. Systems cold-called customers and offered services, including debt consolidation and interest-rate reduction, which were prohibited by the applicable guidelines from Bank-1 and other associated processing entities (the Guidelines), and which – as Becker knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.
In securing payment card processing for E.M. Systems, Becker concealed that E.M. Systems was the true underlying merchant. Instead, Becker and his subordinates and co-conspirators, created approximately 26 sham merchant companies, each headed by a “signer” (the Sham Merchants and the Sham Merchant Accounts).
The 26 signers for the 26 Sham Merchants typically had no business of their own, and lacked knowledge of E.M. Systems’ business. In return for signing the paperwork provided to them, the signers were paid a nominal fee from CardReady.
Becker and his co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1.
The merchant application for each Sham Merchant also concealed the Sham Merchant’s true association with E.M. Systems.
By steering E.M. Systems’s payment processing through these Sham Merchant Accounts, Becker accomplished a number of fraudulent purposes. First, the use of these Sham Merchant Accounts made it possible for E.M. Systems and other high-risk merchants to conceal their identities from Payment Processor-1 and Bank-1 and to maintain payment card processing.
This was particularly relevant, as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.
Becker then caused CardReady to quickly replace the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of E.M. Systems and other high-risk merchants.
Second, the fraudulent processing scheme enabled E.M. Systems and other high-risk merchants to spread out their charges, refunds, and chargebacks across multiple Sham Merchant Accounts. This enabled them to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.
Becker’s use of signers to deceive payment processors was not limited to the E.M. Systems scheme. Becker and his agents and employees at CardReady systematized the recruitment of over 270 signers and the creation of over 800 Sham Merchant Accounts to be used by more than 30 high risk clients other than E.M. Systems between approximately 2012 and 2016, both before and after the E.M. Systems scheme.
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BECKER, 53, of Los Angeles, California, pled guilty on August 30, 2024, to one count of conspiracy to commit wire fraud and bank fraud. In addition to the prison sentence, BECKER was sentenced to three years of supervised release and ordered to pay restitution in the amount of $1,910,600.05, and forfeiture of $ $11,405,964.00.
STEVEN SHORT, 48, of Tampa, Florida, pled guilty on August 16, 2022, to one count of conspiracy to commit wire fraud and bank fraud. On May 2, 2023, SHORT was sentenced to 78 months in prison and three years of supervised release and ordered to pay restitution in the amount of $1,910,600.05 and forfeiture of $8,833,889.69.
