New court documents revealed that a $600,000 credit card scheme victimized many more credit unions than banks across 19 states, which was not previously reported publicly by federal authorities.
Michael Lee Thomas of Oakland, Calif., and Barbara John Lopp of Stockton, Calif., were sentenced to federal prison for conspiracy to commit bank fraud in U.S. District Court in Oakland last week.
New court documents, however, show that 33 credit unions in 13 states and only three banks in six states were victimized by the scheme that prosecutors called “complex and brazen.” But federal prosecutors did not explain why the California duo targeted many more credit unions than banks. Federal prosecutors did not return CU Times’ email and phone requests for comment.
Thomas (pictured at left) received a 38-month prison sentence and Lopp was sentenced to 27 months. Thomas was also ordered to pay $433,472 in restitution. Loop was ordered to pay $198,988 in restitution.
Although the FBI began investigating the fraud in June 2013, it wasn’t until Feb. 12, 2015, when the California couple was arrested at a branch of the $16.3 million Municipal Credit Union in Sioux City, Iowa, where their cash advance scheme drew suspicion from employees who contacted police.
Thomas and Lopp were arrested by local authorities and charged, but their case was transferred to California. At the time of their arrest, publicly available court documents did not specify how many financial institutions were victimized, but five credit unions and a bank were mentioned as specific examples that showed how the California couple carried out their credit card fraud.
The banks were JP Morgan Chase branches in Michigan, New York, New Jersey, Illinois and Iowa; TruWest Bank and Bank of America in Texas.
The new court documents also revealed that in September 2013, Lopp was arrested and convicted of felony theft but was sentenced to only three years of probation and no prison time. According to court documents, Lopp swindled the Navigant Credit Union Lincoln, R.I., branch out of $9,300 on Sept. 17, 2013.
Apparently, Lopp didn’t commit additional credit card fraud until September 2014 when prosecutors said in court documents that she participated in the scheme with “renewed vigor.” During that month, Lopp and Thomas traveled to Kansas, Missouri, Oklahoma and Alabama and siphoned more than $50,000 from two credit unions and one bank.
In every month after that, the California couple preyed mostly on credit unions in Illinois, Indiana, Tennessee, Oklahoma, Virginia and Iowa, until they were finally arrested in February 2015. Thomas and Lopp targeted 17 credit unions in Iowa alone in January and February.
By the end of January and early February, however, word about the California couple’s scheme had spread within the credit union community. Court records show from Jan. 29 to Feb. 10, Thomas and Lopp attempted to pull off their fraud at 10 credit unions but failed.
After flying to a new state, Thomas and Lopp rented a car and drove to several financial institutions over the course of a few days. On some of these trips, the California couple would score more than $60,000.
Thomas and Lopp (pictured at left) took turns walking into branches and sometimes told tellers the cash advance was needed to pay for a relative’s funeral expenses. In addition to the fake credit cards, they also used bogus IDs.
When tellers processed the cash advance request, it was declined. However, Thomas or Lopp then told tellers there might be a block on the card because they were traveling outside of their normal geographic area. They then asked the teller to call the credit card company.
What tellers didn’t know was that the toll-free number on the fake credit card also was fake, and the person who answered that number was working with Thomas and Lopp, according to court documents.
The individual pretending to be a customer service representative authorized the cash advance and gave the teller a series of instructions, leading the credit union or bank to manually post the transaction to the fraudulent credit card, which is sometimes called a forced post transaction.
This fraudulent transaction was often not discovered, however, until a chargeback notice was later received by the financial institution, according to federal investigators.
The credit unions named in court documents were: In Indiana: Primetrust CU, Ball State CU, Financial CU, Forum CU, 3Rivers CU and Midwest CU; in Kansas and Missouri, Great Plains CU; in Alabama and Florida, Guardian CU in Alabama; in Illinois, Credit Union 1; in Tennessee, Tennessee Valley CU; in Oklahoma, Tinker FCU, Green Country CU, Focus FCU; in Virginia, Beacon CU; in Iowa, eco CU, Veridian CU; Community Choice CU; First Class CU; United Service CU; Greater Iowa CU; Collins CU; Community 1st CU; Dupaco Community CU; Metco CU, TelcoTriad CU, Sioux Valley CU, Municipal CU, Siouxland FCU, Midwest, and Linn Area CU; in Minnesota, Star Choice CU; in Rhode Island, Navigant CU; in New Hampshire and Massachusetts, Digital FCU.
