Alleged California-Las Vegas swindle probed

Thursday, May 31, 2001 | 10:39 a.m.

Federal authorities and Metro Police are hoping to make additional arrests in an unusual caper that allegedly involved the illegal wire transfer of $373,000 from California bank accounts to Las Vegas casinos.

Michael Gant, 40, of San Pedro, Calif., and Sherman Eugene Smith Jr., 41, of Pomona, Calif., were indicted Wednesday by a federal grand jury in an identity theft case that involved the use of fake California drivers' licenses. Both men were arrested earlier this month in Las Vegas by Metro Police.

The case was turned over to the U.S. Secret Service and remains under investigation.

Both the alleged unauthorized use of wire transfers from a bank and the amount of money involved make this case unusual, local law enforcement officials said.

"It's extremely difficult to do," Metro Detective Alan Hepp of the forgery unit said. "A wire transfer from a bank requires intimate knowledge of a person's banking background. You have to know that the money is in there."

Both Gant and Smith, who are free on bond and await preliminary hearings before federal magistrates in Las Vegas, were indicted on two counts of wire fraud and aiding and abetting charges. They could receive up to 60 years in prison and $2 million in fines for the wire fraud counts if found guilty, though those terms could change, based on federal sentencing guidelines.

Special Agent Joe Saitta, head of the Secret Service office in Las Vegas, said other arrests are also possible and that there may be a New Jersey connection, since the Metro arrests were the result of a tip from a New Jersey law enforcement officer.

"As the investigation moves on we're hopeful that additional arrests will be effected," Saitta said.

A complaint filed in U.S. District Court alleged that Gant and Smith used phony drivers' licenses in efforts to collect money wired from two Bank of America accounts in California to the Harrah's and Rio hotel-casinos. As in other identity theft cases, the bank account owners were unsuspecting victims who had no idea how their accounts were accessed.

Gant was accused of retrieving $17,500 of a $100,000 wire transfer at the Rio. Smith was accused of attempting to collect $80,000 that was wired to Harrah's from a second account. Unauthorized wire transfers of an additional $193,000 combined from both accounts were also executed, according to the federal complaint.

Harrah's cooperated with Metro by detaining Smith and by e-mailing other casinos about possible unauthorized wire transfers. The Rio, likewise, detained Gant and turned him over to Metro. Hepp also searched Gant's hotel room at the Rio and reportedly found about $16,000 in cash and casino chips that Gant said were proceeds of the wired funds.

According to the complaint, Gant admitted that he was to keep 30 percent of the proceeds for his participation but said he did not know the people who set up the wire transfers and never met with them.

Ted Wehking, executive director of the Nevada Bankers Association in Reno, said many banks notify customers of potential bank account fraud through brochures. He agreed with police that the use of wire transfers to bilk funds from an account is rare.

"I would think it would be extremely difficult without someone on the inside helping," Wehking said. "The security policies in place at banks are generally adequate to protect the public."

Law enforcement authorities and consumer advocates say a more common way of committing bank fraud involves the opening of new accounts using phony identification and then making deposits using stolen or counterfeit checks. Another way is by stealing mail and copying signed checks, creating bad checks that could be used to bilk the owner of that checking account.

Many identity fraud cases involve the use of phony drivers' licenses that can be produced through the use of computers and lamination machines. The Nevada Department of Motor Vehicles and Public Safety hopes to reduce the possibility of fraudulent Nevada licenses by next year when it introduces a new non-laminated license that will contain a digital photo of the driver.

DMV spokesman Kevin Malone said the new licenses should be far more difficult to counterfeit because they will contain computerized bar codes and other security markings. DMV will also have copies of the digital photos on file.

"What is much more common than a fake driver's license are illegal immigrants or people on the run from the law who show up with other phony documents in an attempt to get a driver's license," Malone said.