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Daniel Blitzer was arrested during a raid of his Contant Avenue home by Homeland Security and IRS agents on Monday and brought before a federal judge in Manhattan.
Blitzer, like the others, was charged with international money laundering, wire fraud and conspiracy.
The crew scammed the Mexican government out of value-added tax (VAT) that's imposed on goods one Mexican company sells to another -- but is returned to exporters on certain items, said Preet Bharara, the U.S. Attorney for the Southern District of New York.
The conspirators created and controlled front companies at either end, creating a circle of exchange from June 2011 through May 2016, Bhahara and other federal authorities said:
Their firms in Mexico bought obsolete cell phones from companies selling outdated inventory, then exported them to those in the United States.
The conspirators ginned up invoices that falsely inflated the value of the merchandise, then cashed in on the VAT refunds.
But they weren't finished: The phones that made it to the U.S. were then split among other front companies and shipped back to Mexico to repeat the process all over again.
Defendant Carlos Djemal, who was arrested in Chicago, bought Mexican-based InvestaBank SA -- which was established from acquisition of Royal Bank of Scotland's operations in Mexico -- in 2014, authorities said.
He and Isidoro Haiat are accused of handling the administrative details of the conspiracy.
They also owned a currency exchange, Casa de Cambio Tiber, that authorities said paired with InvestaBank to move funds to the front companies.
Five of the front companies got about $21 million of an estimated $100 million in bogus VAT refunds, Bharara said.
Along with Djemal and Blitzer, agents arrested a man identified as Max Fraenkel in Austin, Texas, and another named Robert Moreno in Dallas.
They were still looking for Haiat and Braulio Lopez, Bharara said.
The crew: used the U.S. banking system to commit an international fraud scheme that deprived the Mexican government of substantial tax revenue and involved the laundering of over $100 million," the U.S. attorney for New York said.
“This investigation took law enforcement above and beyond its traditional role in financial crimes," added IRS-CI Special Agent-in-Charge William J. Cotter said. "In effect, it put us squarely in the middle of the high-tech world of banking and the sophisticated electronic movement of money.”
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