Plea Agreement Hearing Set for Suspect in $2M Navy Federal Mobile Phone Fraud

He is the first member of the fraud ring to agree to a plea deal, which must be approved by a federal judge. Two pending felony counts against Smith are conspiracy to commit wire fraud and wire fraud, according to an information document.

Nine of the 10 co-conspirators, who were indicted in August, have pleaded not guilty to multiple felony counts, including bank fraud, wire fraud, conspiracy to commit bank and wire fraud, and conspiracy to commit money laundering. One suspect remains at large.

Because federal prosecutors believe the parking lot scam potentially victimized hundreds more beyond eastern Virginia, U.S. District Court Judge Elizabeth W. Hanes for the Eastern District in Norfolk is allowing federal prosecutors to use alternative procedures, including the DOJ website and press releases, to reach other victims. Some individuals have already been contacted through the DOJ’s victim notification system.

The parking lot scam emerged in January 2023 and continued through May 2025 in Portsmouth, Chesapeake and Suffolk.

Prosecutors alleged Smith and 10 co-conspirators, sometimes accompanied by minors, targeted victims described as “marks”: Navy Federal members with identifying characteristics of military-age men who appeared to be non-confrontational.

The fraud involved deception and intimidation to gain access to members’ phones and accounts through Navy Federal’s mobile app. The suspects allegedly operated out of rental cars and approached victims under false pretenses, claiming they needed help accessing their own credit union accounts. In exchange for compensation via peer-to-peer apps, victims were persuaded to hand over their unlocked phones.

Once the mobile phone was unlocked, conspirators allegedly made unauthorized transfers to accounts controlled by the fraud ring. They also extracted members’ personal and financial data. If the initial ruse failed, the suspects escalated their tactics. In some instances, they forcibly took devices and used facial recognition to unlock them. In one case, a suspect brandished a firearm to intimidate a victim, prosecutors said.

The fraudsters allegedly used Navy Federal’s app to submit fraudulent personal expense consumer (PEC) loan applications. Once the loan funds were deposited into the victim’s savings account, the funds were transferred to accounts controlled by the ring to conceal the source of the money. Navy Federal offers members PEC loans with nearly instant disbursement upon application.

What’s more, the suspects allegedly disputed large debits in the victims' banking accounts, prompting the credit union to temporarily credit the accounts, which increased the funds available for the fraudsters to steal. They also accessed Cash App accounts and shared login credentials with other conspirators.

After funds were stolen, suspects sometimes claimed they had overpaid victims and used Cash App, Zelle or Navy Federal’s member-to-member transfer service to recover the alleged over-payments. When digital transfer limits were reached, suspects coerced victims into withdrawing cash or purchasing money orders, even escorting them to stores or ATMs.

To cover their tracks, the co-conspirators allegedly deleted email and app notifications, uninstalled banking applications and returned phones in airplane mode, according to prosecutors.

Stolen funds were allegedly laundered through accounts belonging to conspirators via Navy Federal, Venmo and Cash App. In many instances, the victims’ own accounts were used to reroute the money, adding another layer of concealment.

When Navy Federal members realized they were victims, some of them reported being contacted by the suspects, who threatened them and claimed the stolen money belonged to the fraud ring.

READ MORE: Corey Smith’s Criminal Information Document.

Contact Peter Strozniak as peter.strozniak@arc-network.com.