Fraud Leader Sentenced to 11 Years in Prison

The leader of a fraud conspiracy that led to nearly $500,000 in losses for sailors and members of the $159 billion Navy Federal Credit Union was sentenced to 11 years in federal prison.

U.S. District Judge Raymond A. Jackson in Newport News, Va., also ordered Tequan Smith on Wednesday to pay $480,358 in restitution to 43 petty officers, seamen and airmen. Prosecutors said there were likely many more sailors who were victimized by the fraud scheme.

“Unlike many fraud cases, the bulk of the losses here were not borne by financial institutions or a corporation. In most cases, the defendant and his coconspirators obtained by fraud the savings of young sailors in the Navy and left them mired in debt,” prosecutors wrote in their sentencing memo to Judge Jackson. “The defendant caused this harm to pay for his high-stakes gambling, luxury vehicles and other totally unnecessary expenses.”

What’s more, after Smith learned of the federal government’s investigation, he destroyed relevant evidence by throwing a dozen telephones used to commit fraud in the James River. He also attacked one of his coconspirators on the same day he learned of her cooperation against him, and he posed as a law enforcement officer to compromise sensitive information about the government’s investigation, prosecutors said.

But Smith’s defense attorney, who requested a nine-year prison sentence, wrote in a sentencing memo that Smith has consistently accepted responsibility for his actions and never attempted to shift the blame.

“His response was to come clean, admit his guilt and do everything that he could to make things right or in some way reverse the harmful effects of his wrongdoing,” Smith’s defense attorney wrote. “He deeply regrets his involvement in this offense and those who have been harmed by his actions.”

In March, Smith pleaded guilty to one felony count of conspiracy to commit bank fraud and one felony count of aggravated identity theft.

He recruited and managed at least four other co-conspirators and also identified the defrauded sailors.

Smith and the coconspirators phished access to Navy Federal accounts and posed as credit union employees alerting members to a phony fraudulent purchase in order to get their information to their accounts without their consent.

Prosecutors said the criminal ring then targeted sailors on dating apps like Tinder by posing as females interested in a romantic relationship.

The fraudsters used the member accounts they previously accessed via phishing to transfer those funds to the targeted sailors’ Navy Federal accounts. The sailors did not know the transfers were illegitimate.

Smith and the coconspirators asked the sailors to withdraw the transferred funds often under the guise of helping a relative in the Navy who was trying to send them money. To obtain the funds, the criminals met the sailors via the internet and in person at various locations throughout eastern Virginia, prosecutors said.

Other members of the fraud ring included Trequan Smith’s brother, Samari Smith, who pleaded guilty to one felony count of conspiracy to commit bank fraud and is scheduled to be sentenced in January.

Emani Burton pleaded guilty to conspiracy to commit bank fraud who was sentenced to a term of one day of incarceration and three years of supervised release and also was ordered to pay restitution of $38,875. Mark Aspili and Shawn Stacey, have each pleaded not guilty to one felony count of bank fraud and one felony county conspiracy to commit bank fraud. Their cases remain pending.