The money was laundered through Smiles II strip club on Route 46 in Roxbury, authorities say.
A retired dentist from Livingston and his associates were indicted Thursday for funneling $ 12 million stolen from phony gift cards through a Roxbury strip club.
Kevin Lipka, 63, co-owned Smiles 2 gentlemen’s club on Route 46 with his wife, Shelly Lipka, 62.
They were both indicted on charges of racketeering, conspiracy and money laundering in the elaborate scheme, which led to the arrests of nine people.
The state Attorney General’s Office alleges Kevin Lipka’s associates would use fake credit cards with stolen information to buy pre-paid gift cards from Master Card, Visa, American Express and retailers like Target and Home Depot.
The gift cards were then converted to cash through phony transactions at Smiles II, authorities say. The proceeds were then allegedly divided among the associates who supplied the cards.
Authorities claim Lipka and Smiles 2 management received 20 percent of the cut.
Lipka, authorities say, also obtained nearly $ 400,000 from returning high-priced stolen items, mainly power drills, to Home Depot.
The Roxbury Police Department initiated the investigation, which became known as “Operation Smiles,” in 2015 and then enlisted the help of the state Attorney General’s Office. The Livingston Police Department also assisted with arrests and searches.
Most of the defendants were arrested in July 2016.
Along with the Lipkas, the remaining defendants are: Kevin Bae, 30, of Edgewater; Eric Olsen, 49, of Roxbury; Peter Vasilipous, 73, of Elizabeth; Kevin Rodriguez, 25, of Whitehall, Pennsylvania; Jordan Turner, 25, of Jamaica, New York; Chintan Patel, 34, of Edison; Adam Ferguson, 26, of Bronx, New York.
Each defendant was charged with racketeering, conspiracy and money laundering. Racketeering carries a prison sentence of 10 to 20 years in state prison.
Attorneys for most of the defendants were not immediately available to comment.
An attorney representing Olsen, Marcy McMann, said her client has “maintained his innocence” through the legal process, but that she had not reviewed the indictment yet.
“We intend to litigate the matter,” she said.
Alex Napoliello may be reached at anapoliello@njadvancemedia.com. Follow him on Twitter @alexnapoNJ. Find NJ.com on Facebook.
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