Amex wins suit against merchant account fraudsters

By Hally Z.

American Express recently won a judgment against a father-and-son team of Nashville restaurant owners for credit card fraud. Michael D. and Michael G. Tangredi were sued by American Express for allegedly using an employee's identity to open an unauthorized account. American Express also claimed that the Tangredis opened and maintained a merchant account for a fictitious nightclub. Using the nightclub's merchant account, the Tangredis charged purchases totaling $1.14 million.

American Express initially tried to reverse the charges placed on the Tangredi credit card accounts. When that approach failed, the company filed suit against the pair and their company, M. Tangredi Restaurants Inc.

American Express claimed that an employee, Laura Lightfoot, was fooled by the Tangredis into providing her name and credit information so that they could open a credit card account. Using her name, the Tangredis had supplemental credit cards issued for Michael D. Tangredi, his wife Maria, and their 18-year-old son, Michael.

The Tangredis then opened a merchant account for a nonexistent nightclub by the name of Minc Concepts. The business address provided on the credit card application was actually the son's home address. The application also supplied the name of "Michael Santaniello" for the authorized signer. American Express claimed that Michael Santaniello was a false name used to commit fraud. It also pointed out that Maria Tangredi's maiden name was Santaniello.

Using these unauthorized personal and merchant credit cards, the Tangredis then made numerous credit card transactions, American Express claimed. The U.S. District Court agreed and ruled in the company's favor. At one point, the court ruled that the Tangredis had even purchased a 2003 Maserati Coupe with money acquired through their American Express merchant account. The car has since been seized.

This is just one example of credit card processing fraud. According to CyberSource, a credit card payment gateway, North American merchants lost 1.4 percent, or $3.6 billion, of their sales in 2007 due to stolen or fraudulent credit cards. Worldwide, credit card fraud in 2007 totaled more than $5.5 billion.

Credit card fraud does not occur only through merchant accounts. BAI Global Inc., a research firm based in New York, surveyed 1,000 Americans and found that at least 10 percent have been victims of credit card fraud.

Article by Hally Z.

Published: May 5, 2010