December 1, 2008 FBI Press Release
Acting United States Attorney Julia C. Dudley announced today that Dereck Lorenzo Dunston, age 40, of Evington, Virginia was sentenced in the United States District Court for the Western District of Virginia in Lynchburg after previously pleading guilty to a variety of fraud charges related to a credit card mastering scheme that operated throughout the Western District of Virginia.
Dunston, Steve Black and Ronald Edward Black, age 26, were charged in a 25-count indictment in February of 2008 with various counts related to credit card fraud. In July, all three men pled guilty to one count of conspiracy to commit mail fraud, wire fraud, bank fraud, identity theft and credit card fraud, one count of bank fraud and one count of aggravated identity theft.
Today in District Court, Dunston was sentenced to 42 months of Federal incarceration. Steve and Ronald Black are scheduled to be sentenced later this month.
“This fraud was as wide-ranging and complex as the geography of the Western District itself. These individuals operated throughout the District, making it difficult for law enforcement to track their fraudulent activities,” Acting United States Attorney Julia C. Dudley said today. “However, thanks to the tireless work of the men and women who investigated these crimes, the fraud was discovered and this defendant has been brought to justice.”
The fraud perpetrated by Black, Black and Dunston involved taking legitimate access device, or credit card, account numbers and encoding them onto counterfeit access devices. The owners of the legitimate account numbers were unaware their information was being placed onto counterfeit devices.
In order to obtain counterfeit cards, Black, Black and Dunston either traveled to New York to pick-up counterfeit access devices personally or had them mailed to a variety of addresses within the Western District of Virginia.
Throughout the Western District of Virginia, Black, Black and Dunston, who were known as the “Gas Men,” used the counterfeit access devices to purchase goods and services from a variety of local merchants, including: 7-eleven, Amoco Oil, Exxon Mobil, Kroger, Sheetz, Shell Oil and Wilco Hess. Specifically, the fraudulent charges were made at locations in Altavista, Bedford, Forest, Harrisonburg, Lynchburg, Madison Heights, Roanoke and Salem.
Black, Black or Dunston would meet individuals at a Lynchburg area car wash and either follow or ride with those individuals to local gas stations. Once there, one or all of the defendants would utilize the pay-at-the pump feature and swipe a counterfeit access device as payment for the gasoline or merchandise just purchased. The defendants would then receive a cash payment for approximately half of the cost of the merchandise or gasoline charged to the counterfeit access devices. The proceeds of the transactions would then be split by Black, Black and Dunston.
As of January 2008, Capital One, the credit card company that had been defrauded the most, had more than 500 accounts compromised that accounted for more than 3,000 fraudulent transactions and over $131,000 in fraudulent charges to be made.
In the most egregious cases, the Sheetz store located at 14480 Wards Road in Lynchburg, received 1,198 fraudulent transactions in the six-month period between April and September of 2007. There were 620 fraudulent transactions made at the Wilco store located at 37332 Campbell Avenue in Lynchburg.
When arrested, Dunston was found to be in possession of eight counterfeit access devices on his person. Authorities found another 155 fraudulent access devices in various locations throughout his residence. Law enforcement officials also found an additional 50 counterfeit gift cards in a United States Postal Service 2-day priority mail envelope addressed to “Mr. Black” at Ronald Black’s home address. A total of 213 counterfeit access devices were found that day that represented a total of twenty different financial institutions from the United States and overseas.
The investigation of this case was begun by the Lynchburg Police Department and handled by the Central Virginia Computer Crimes Task Force, the Federal Bureau of Investigation, the United States Secret Service, the Virginia State Police, the Amherst County Sheriff’s Office, the Campbell County Sheriff’s Office and the Longwood University Police Department. Assistant United States Attorney Charlene R. Day is prosecuting the case for the United States.