Criminal Justice News

Monday, August 27, 2012

Marlborough Man Sentenced to 51 Months in Prison for Role in Multi-Million-Dollar Bank Fraud Conspiracy

The United States Attorney for the District of Connecticut announced that Mirza H. Baig, 49, of Marlborough, was sentenced on Friday, August 24, by United States District Judge Janet Bond Arterton in New Haven to 51 months of imprisonment, followed by five years of supervised release, for his role in a multi-million-dollar bank fraud scheme.

According to court documents and statements made in court, Baig worked for Branford-based New England Cash Dispensing Systems Inc. (“NECDS”), which was in the business of operating a network of automated teller machines (ATMs). Beginning in approximately March 2000, NECDS entered into an agreement with Domestic Bank of Cranston, Rhode Island, whereby NECDS would supply ATM services in conjunction with Domestic Bank, the victim in this case. The ATMs in the network were stand-alone machines located in various commercial establishments, such as convenience stores and gas stations, and other locations throughout several northeastern states, including Connecticut. While all of the ATMs in the NECDS network bore the logo of Domestic Bank, NECDS was responsible for contracting with merchants and placing the ATMs in their establishments and would perform maintenance on the ATMs. Ultimately, there were three funding sources for ATMs within the NECDS network: Domestic Bank provided the cash for specified ATMs in the network, NECDS supplied cash for other ATMs in the network, and certain merchants supplied cash for other ATMs. Over the course of time, the number of ATMs in the network that were funded by Domestic Bank increased, while the number of ATMs funded by NECDS decreased.

As part of a scheme to defraud Domestic Bank of cash the bank supplied for use in the ATM network, Baig and other NECDS personnel ordered excess cash from Domestic Bank and used it to refill ATMs that would otherwise have been refilled with NECDS’s funds. BAIG and his co-conspirators also engaged in a cover-up to prevent the bank from recognizing that money was missing by “floating” Domestic Bank’s money. Specifically, the co-conspirators would order extra money for an ATM that was funded by Domestic Bank, knowing that the extra cash would be used to fill another ATM that previously had been shorted cash. This was done regularly over several years and resulted in Domestic Bank receiving false information through the periodic replenishment process indicating that its cash was appropriately accounted for.

Domestic Bank ultimately lost approximately $4.8 million in funds that it had supplied to NECDS.

On September 8, 2011, BAIG pleaded guilty to one count of conspiracy to commit bank fraud and admitted that he personally stole approximately $2 million in cash, which he used for his own personal enrichment.

Judge Arterton ordered BAIG to pay restitution in the amount of approximately $4.8 million and to forfeit an interest in his house of up to $1.2 million, as well as two vehicles.

Joseph Sarlo, the former chief executive officer of NECDS; John DeMilo, the former general manager of NECDS; and Gary Vestuti, an NECDS employee, each previously pleaded guilty to one count of conspiracy to commit bank fraud stemming from this scheme. On September 13, 2011, Vestuti was sentenced to 27 months of imprisonment. DeMilo and Sarlo await sentencing.

This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Paul Murphy.

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