The owner of a now-shuttered go-go bar in Roxbury, his wife, and seven associates have been indicted on charges that they conspired in an elaborate scheme.

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TRENTON -- The owner of a now-shuttered go-go bar in Roxbury, his wife, and seven associates have been indicted on charges that they conspired in an elaborate scheme in which they used stolen credit card information -- and illegally acquired gift cards -- to steal more than $12 million.

Attorney General Gurbir S. Grewal announced the indictment on Friday and said the defendants were charged in an investigation called "Operation Smiles" led by the Division of Criminal Justice and the Roxbury Police Department. The alleged criminal activity involved Smiles II, a go-go bar owned by retired dentist Kevin Lipka, 63, of Livingston, and his wife, Shelly Lipka, 62. The two owned a company known as She-Kev, Inc., which did business as Smiles II, Grewal said.

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Kevin Lipka is alleged to have led the criminal enterprise.

The Division of Criminal Justice Gangs & Organized Crime Bureau obtained a 19-count state grand jury indictment on Thursday charging nine defendants with first-degree charges of racketeering, conspiracy, and three counts of money laundering.

Two of the defendants, Chintan Patel, 34, of Edison and Adam Ferguson, 26, of Bronx, N.Y., were arrested Friday. The other defendants were arrested previously.

The Roxbury Police initiated the investigation in 2015 and enlisted the Attorney General's Office. Most of the defendants were arrested in July 2016, when search warrants were executed for Smiles II, Kevin Lipka's home, his vehicle, and other locations. Thousands of gift cards were seized as well as documents related to the alleged schemes. The Livingston Police assisted in the arrests and searches.

According to Grewal, the investigation revealed that from April 2014 to July 2016, the defendants allegedly conspired to steal more than $12 million by defrauding retailers, banks, credit card processing companies and credit card holders. The scheme involved using stolen credit card information and fraudulently obtained gift cards. Stolen credit card information was cloned onto blank plastic cards with magnetic strips using a machine that produces usable cards. The cloned cards were printed to look like legitimate cards. They were used to buy pre-paid gift cards issued by credit companies such as Master Card, Visa and American Express at retail stores, including Target and Home Depot. The defendants allegedly obtained gift cards from crews of "runners" who used the cloned credit cards to buy gift cards at stores across the regions where they operated, including Southeast Pennsylvania and Brooklyn, N.Y.

Grewal said the gift cards allegedly were used for phony transactions at Smiles II.

Peter Aseltin, spokesman for the Attorney General's office, said the value of the gift card was banked, but no purchases actually took place. The defendants allegedly swiped the cards through card processing devices to generate proceeds that went into the business accounts of She-Kev Inc. In some instances, defendants allegedly purchased liquor for Smiles II using stolen credit cards or illegally acquired gift cards, Grewal said.

The proceeds were divided between the individuals who supplied the cards – including Kevin Rodriguez, 25, of Whitehall, Pa., Jordan Turner, 25, of Jamaica, N.Y., Patel, Ferguson, and the other runners – and Kevin Lipka, Kevin Bae, 30, of Edgewater, and the other partners at Smiles II. It is alleged that Kevin Lipka and his partners at Smiles II typically took 20 percent of the proceeds, with 80 percent going to the individuals who supplied the gift cards.

Grewal said the investigation further revealed that the defendants allegedly acquired gift cards through various other criminal schemes. In one scheme, vehicles were fraudulently offered for sale through eBay and Craigslist. Unsuspecting purchasers would be directed to pay for the vehicle with pre-paid gift cards from credit companies, and those gift cards also were allegedly processed through Smiles II. The vehicles were never shipped to the victims.

In other instances, the defendants allegedly obtained gift cards through variations on the common "grandparent" scam, in which an elderly victim is contacted by someone posing as the grandchild or nephew of the victim and claiming to need bail money to be released from jail. The victim would be told to pay the bail by purchasing gift cards and providing the gift card information by phone to a "police officer' involved in the arrest.

It is further alleged that Kevin Lipka and certain associates, including Bae and Rodriguez, would fraudulently return expensive merchandise, particularly high-end power drills, to The Home Depot that had been stolen from the retail chain. The returns were made without a receipt for store credit. The defendants then allegedly would sell the store credit on a website that engages in gift card buybacks, or Kevin Lipka would use the credit for items related to the construction of a luxury home he was building in Livingston. It is alleged that Kevin Lipka was involved in approximately $368,000 in illegal returns to The Home Depot, Grewal said.

The investigation began when an out-of-state law enforcement agency contacted the Roxbury Police Department with information that they had tracked gift cards purchased with stolen credit card information to Smiles II, where they had been processed and "cashed out." The Roxbury Police began investigating the bar and brought in the Division of Criminal Justice Gangs & Organized Crime Bureau, he said.

"Because they are anonymous and hard to trace, gift cards are a favorite currency of alleged con artists like Kevin Lipka and his associates, who are charged with using them to generate millions of dollars in illicit proceeds from stolen credit card information," said Director Veronica Allende of the Division of Criminal Justice, in a prepared statement. "We shut down this alleged fraudulent plastic mill, and through the diligent work of our team of attorneys and detectives in the Division of Criminal Justice and Roxbury Police Department, we built a strong racketeering and money laundering case against the defendants."

In addition to the racketeering, money laundering and conspiracy charges,Kevin Lipka faces an additional count of first-degree money laundering, and he and Shelly Lipka are charged with misconduct by a corporate official (second degree), two counts of filing a fraudulent tax return (third degree), and two counts of failure to file a tax return (third degree).

Bae also is charged with failure to file a tax return (third degree).

In connection with the racketeering case, the Division of Criminal Justice has placed liens on the bar in Roxbury, two homes owned by the Lipkas in Livingston worth a total of about $4 million, two homes owned by Kevin Lipka in Essex Fells and Belvedere, a vehicle, and multiple bank accounts.

Turner faces additional counts of receiving stolen property (third degree) and credit card theft (fourth degree).

Eric Olsen, 49, of Roxbury, was daytime manager of Smiles II and handled finances for the business. He allegedly participated in the criminal enterprise, spending hours at a time processing transactions with stolen gift cards and credit cards at the bar. He faces a charge of hindering prosecution (third degree).

Bae shared a bank account with Kevin Lipka, into which millions of dollars were transferred.

Peter Vasilipous, 73, of Elizabeth, was nighttime manager of Smiles II. It is alleged that he also spent hours at a time processing transactions with stolen gift and credit cards at the bar.

Rodriguez, Turner, Patel and Ferguson allegedly brought stolen credit cards and illegally acquired gift cards to Lipka and his associates and shared in the profits.

"These ring members allegedly were prolific in purchasing stolen credit card information on the dark web, turning it into plastic, and ultimately converting the plastic into millions of dollars in cash. I commend the members of my office and the Roxbury Police Department who skillfully investigated this high-tech scheme," Grewal said .

The first-degree charges carry a sentence of 10 to 20 years in prison and a fine of up to $200,000. The racketeering charge includes a mandatory period of parole ineligibility equal to 85 percent of the sentence imposed. The money laundering charges include parole ineligibility equal to one-third to one-half of the sentence imposed. They carry a fine of up to $500,000 and an added money laundering penalty of up to $500,000. Second-degree charges carry a sentence of five to 10 years in prison and a fine of up to $150,000, while third-degree charges carry a sentence of three to five years in prison and a $15,000 fine, according to Grewal.

The indictment was handed up to Superior Court Judge Mary C. Jacobson in Mercer County, who assigned the case to Morris County, where the defendants will be ordered to appear in court at a later date for arraignment.

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