A dapper young man known for bragging about Rolex watches and Lamborghini sports cars strolled into an Oakland coffee shop the day after Christmas in 2013 and ordered a hot matcha latte.
Three months after federal prosecutors accused him of embezzling more than $2 million from Bank of New York Mellon Corp., Joseph Graziano Jr. waited inside Peet's Coffee at the corner of Forbes Avenue and Atwood Street for the frothy beverage made from crushed green tea leaves.
When the clerk asked for $3.85, authorities say Graziano paid with a counterfeit $100 bill he pulled from a pocket stuffed with about 20 crisp, fake notes. He tucked the $96.15 in change into a different pocket and continued on what prosecutors contend was a post-holiday, money-laundering spree.
Attorney Martin Dietz, who represents Graziano, declined to comment.
That coffeehouse transaction is the genesis of a federal investigation that started in Pittsburgh, tunneled into the anonymous corners of the Internet and reached into the heart of Africa, where Ugandan officials last week arrested Ryan Andrew Gustafson — an American citizen accused of heading the international counterfeiting ring that supplied bogus money to Graziano and others.
On Thursday, U.S. Attorney David Hickton in Pittsburgh announced charges against Gustafson, 27, who went by aliases Jack Farrel and Willy Clock. Authorities said Gustafson manufactured more than $2 million in U.S. currency, most of it passed in Uganda, but about $270,000 of which was shipped to Pittsburgh and other American locations, including Washington, Minnesota, Texas and Florida.
Agents recovered about $30,000 in Pittsburgh, Hickton said.
“I've often said cyber crime is a 21st-century problem that requires 21st-century solutions,” said Hickton. “These charges demonstrate we will hold cyber criminals responsible and bring them to justice no matter where they reside.”
It is unclear when Gustafson, who lived in Texas and Colorado, will be prosecuted in Western Pennsylvania. Ugandan authorities charged him with similar crimes, and authorities in Kenya want Gustafson on weapon charges.
Hickton did not mention Graziano, referring to him only as a “mule.” Graziano's initials are in the criminal complaint against Gustafson.
“We've identified several people by their initials because the investigation continues,” Hickton said.
Graziano is being held in a federal facility in Ohio. Prosecutors asked that he be detained after learning he is suspected in the counterfeiting scheme.
In September 2013, the U.S. Attorney's Office charged Graziano with 14 counts of bank fraud, bank embezzlement and mail fraud. Federal prosecutors said he embezzled nearly $2.5 million from BNY Mellon while working as a corporate trust administrator; took out bank loans and offered expensive cars he no longer owned as collateral; and ripped off eBay customers by accepting money for electronics and sending empty boxes to buyers.
A judge had allowed Graziano to remain free on bond when he pleaded not guilty. Graziano grew up in northeastern Pennsylvania near Scranton, graduated from the University of Pittsburgh in 2008 with a degree in economics and worked for BNY Mellon.
He ran a website, BlackCardStatus.com, where he bragged about his exploits as an entrepreneur and big-ticket possessions, including a Lamborghini Gallardo Superleggera emblazoned with a personalized license plate reading BNKRUPT. He upgraded to a Lamborghini Murcielago, valued at $495,000, before getting a Bentley.
Authorities said Graziano secured fraudulent loans from several banks, including money from Dollar Bank to buy a Downtown condominium on Fort Pitt Boulevard where he had lived since 2009.
“I've experienced more at my age than most people will in their entire lifetime,” Graziano blogged on his site, over which statement American Express has sued him for trademark infringement.
A bank employee flagged the counterfeit $100 bill in a Peet's Coffee deposit, authorities said. The Secret Service investigates cases involving counterfeit currency.
Fake currency from Uganda had been known about since 2007, though it mostly circulated in Europe, said Eric Zahren, special agent-in-charge of the Secret Service Office in Pittsburgh. He said the bills were high-quality notes made on an off-set press.
“The first time this note reached our shores, it showed up here in Pittsburgh,” Zahren said. “That certainly stood out.”
After his visit to Peet's Coffee, Graziano went to a Rite-Aid drugstore on Forbes Avenue, court documents state. He bought two money orders, first using a fake $100 bill to buy a $20 Western Union money order and then 16 counterfeit bills to pay for a $1,500 money order and related expenses. He kept the fake money and real money in separate pockets, agents said.
On Jan. 25, Graziano repeated similar transactions at a CVS drugstore in Carnegie, where he used counterfeit money to buy a $50 prepaid debit card, court documents state. Four days later, he bought a PayPal card at a Walgreens in Penn Hills using 25 fake $20 bills.
Investigators said they identified Graziano from video surveillance footage at the businesses.
Secret Service agents recovered the money from banks and matched the bills through identifying features to counterfeit notes from Uganda.
In February, Customs and Border Protection agents told investigators in Pittsburgh that Graziano possibly was involved in an international counterfeit money scheme.
Agents listed two Pittsburgh addresses that received DHL shipments from Uganda. One was Graziano's Downtown condo, the other a UPS Store in the South Side that investigators linked to Graziano's first case.
On Feb. 21, agents seized three DHL packages intended for Graziano sent from “Beyond Computers” in Kampala, Uganda. They found $7,000 in denominations of $100, $50 and $20. Investigators said they found a fingerprint from Gustafson.
When questioned, Graziano told agents he met a person called “Willy Clock” in Tor Carding Forum, an online criminal marketplace, court documents say. Graziano reportedly said he agreed to buy $4,000 in fake U.S. currency, and on Dec. 18, 2013, wired $1,500 to Uganda through Western Union. He received two shipments, each containing $2,000 worth of fake $100 bills.
Graziano reportedly told investigators he bought more fake money and communicated with “Clock” through his own online forum, Community-X.
From March through November, federal agents focused on Gustafson through his online forum by purchasing counterfeit money and tracing accounts and aliases. Agents used facial recognition software to connect a photograph of “Jack Farrel” to a Texas driver's license issued to Gustafson, court documents state.
On Nov. 17, “Clock” posted on the forum that $250,000 in fake U.S. currency “just arrived in the United States.”
Jason Cato is a Trib Total Media staff writer. Reach him at 412-320-7936 or jcato@tribweb.com.
