Contra Costa County Man Indicted In Alleged $2.7M Scam Against Bank

A Contra Costa County man has been indicted by a federal grand jury in connection with an alleged $2.7 million bank fraud scheme.

Orinda resident Alan Safahi, 58, entered into an agreement with a bank that would be the backer for prepaid charge cards, which Safahi’s company, Card Express, would issue and service, according to the U.S. Attorney’s Office and Internal Revenue Service investigators.

Safahi’s agreement with the bank required Card Express to fund 100 percent of the value of the cards and to turn over to the bank the total amount that the cards were supposed to be worth, prosecutors said.

Instead, Safahi allegedly directed Card Express employees to maintain two sets of books, the U.S. Attorney’s Office said.

One set was accessible to the cardholders and accurately reported the total amount for which the prepaid charge card was purchased, as well as the balance after any purchases, prosecutors said.

The second set of books, however, was provided to the bank and fraudulently stated that the amount the cardholder spent on the day the card was used was the total value of the prepaid card, according to prosecutors.

Authorities maintain Safahi misled the bank to believe the sponsored cards had much lower balances overall than they actually had.

The indictment announced Wednesday also alleges Safahi fraudulently diverted funds that should have been turned over to the bank, such as the difference between the value of the cards and the amount Card Express reported to the bank was prepaid for the cards. Safahi allegedly used some of the diverted funds to fund Card Express, authorities said.

Safahi allegedly used other diverted funds to maintain his personal lifestyle, including by purchasing his home, prosecutors said.

According to the indictment, on or about Sept. 24, 2014, Safahi no longer was able to maintain sufficient cash flow to conceal the fraud and reported the true overall balance of the prepaid charge cards to the bank.

After reporting the true balance of the cards, Safahi promptly shut down Card Express, causing the bank and its customers to lose money.

According to the indictment, the overall balance of the charge cards Safahi reported to the banks in September 2014 was about $2.7 million more than previously reported.

The indictment charges Safahi with bank fraud, four counts of wire fraud and one count of money laundering.

Safahi made his initial appearance on Wednesday and was released on a $250,000 bond. He was ordered to appear in court again on Sept. 13.

If convicted, Safahi faces a maximum 30 years in prison and a maximum $1 million fine on each count of bank and wire fraud. If convicted of money laundering, the defendant faces a maximum sentence of 10 years in prison and a maximum $250,000 fine.