Alan Safahi, Bank Fraud, California 2023

Orinda Man Sentenced To 40 Months For Bank Fraud, Wire Fraud, Money Laundering

San Francisco, CA - Alan Safahi was sentenced today to 40 months in federal prison following fraud and money laundering convictions arising from a fraudulent prepaid debit card scheme which created $2.7 million in unfunded liabilities, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Darren Lian.

Alan Safahi, 62, of Orinda, was convicted on June 30, 2022, following a four week bench trial before Senior United States District Judge Susan Illston. In a 39-page order, Senior U.S. District Judge Illston found Safahi guilty of one count of bank fraud, four counts of wire fraud, and one count of money laundering.

Safahi, the owner of CardEx, developed an elaborate fraud scheme in which he collected money from clients to buy prepaid debit cards and, while accurately reporting the cards’ balances to his clients, he in turn used a “funding on demand” scheme to defraud the bank that supported his cards.

The scheme unraveled on September 25, 2014, when Safahi reported the true total balance of all the cards to the bank. The difference between the reported balance and the actual balance was nearly $2.7 million in unfunded liability.

Evidence showed that Safahi had used the fraud scheme’s proceeds to purchase an Orinda home, among other things. He issued an $80,000 cashier’s check to himself from his company’s account just two days before reporting the true total balance of all the cards to the bank.

In addition to the 40 months imprisonment, Senior U.S. District Judge Illston imposed a $100,000 fine on Safahi and ordered three years of supervision of him following his release from prison. Safahi was ordered to surrender on May 4, 2023, to begin serving his prison sentence. A hearing to determine the amount of Safahi’s restitution obligation is set for March 31.

Source: https://www.justice.gov/usao-ndca/pr/orinda-man-sentenced-40-months-bank-fraud-wire-fraud-money-laundering