Six credit unions, a corporate credit union and 20 banks throughout the nation were victimized by a fraud ring that operated out of a Massachusetts apartment.
Charles Washington of Dorchester, and an unknown number of co-conspirators obtained account numbers and personally identifiable information for high-balance bank accounts, which included the names, address, dates of birth, Social Security numbers and sample signatures that the victim financial institutions used to identify and authenticate account holders, according to court documents filed in U.S. District Court in Boston in August.
From August 2013 to April 2016, the fraud ring gained access to nearly $4 million held in accounts and withdrew $2 million.
Federal prosecutors alleged that Washington and his co-conspirators recruited runners of the same gender and approximate age of these account holders to impersonate them when they went to branches to withdraw funds.
They withdrew as much money as possible but would take out smaller amounts at several different branches of the financial institution in an effort to avoid detection of the scheme.
The victimized credit unions were $1.4 billion Achieva Credit Union in Dunedin, Fla., the $89 million Foothills Credit union in Lakewood, Colo., the $545 million Harvard University Employees Credit Union in Cambridge, Mass., the $103 million Northern Skies Federal Credit Union in Anchorage, Alaska, the $411 million Reliant Community Credit Union in Sodus, N.Y. and the $949 million TruWest Credit Union in Tempe, Ariz. The $3.5 billion Alloya Corporate Federal Credit Union in Naperville, Ill., also was victimized according to court documents.
“Unfortunately, all financial institutions battle fraud every day. We do things on a daily basis to react quickly and remain vigilant about protecting consumers and their information,” Pamela Heald, president/CEO of Reliant CU, said in a prepared statement. “Our members can be reassured that account security has always been, and remains our highest priority. Reliant continues to utilize state-of-the-art technology, increased risk management resources, and highly trained staff to ensure that member accounts are protected as fraud continues to rise.”
The other five credit unions and Alloya Corporate FCU did not provide comments regarding this fraud case when contacted by CU Times last week.
The fraudsters also hit some big banks like Bank of America, Citizens Bank, JP Morgan Chase, Northern Trust, TD Bank, a slew of small and midsize banks throughout the country and the Commercial Bank of Kuwait. Court documents, however, do not specify how the Kuwaiti financial institution was affected by the fraud.
Washington and coconspirators also set up “drop accounts” to receive large-dollar wire transfers and check deposits fraudulently withdraw from a credit union or bank and home equity line of credit accounts.
The fraud ring recruited runners to open accounts in the runner’s own name or in the names of fake businesses. The shell businesses were land title businesses, property management firms and contracting businesses for which large-dollar wire transfers and other big deposits would not be unusual. The fraudsters also obtained business licenses to make it appear the shell companies were legitimate.
In court documents, federal prosecutors revealed four specific examples on the amount of money stolen from members’ accounts at credit unions.
For example, on March 11, the fraudsters wired $70,000 from an account at Harvard University Employees CU to a drop account at Citizens Bank in Massachusetts. Three days later, the coconspirators wired $131,000 from a member’s account at TruWest CU to a drop account at Citizens Bank branches in Randolph and Malden, Mass. On March 29, the fraud ring wired $78,539 from the Foothills CU to another Citizens Bank branch in Massachusetts, and on March 31, the fraudsters wired $68,430 from member’s account at Northern Skies FCU to TD Bank accounts in Boston and West Roxbury.
Soon after the co-conspirators verified the wired money was deposited in their fake accounts, they withdrew the funds. Washington and the runners frequently used text messages to communicate with each other to carry out their scam.
On Aug. 11, Washington pleaded not guilty to one felony count of bank fraud conspiracy and four felony counts of bank fraud. The number of the co-conspirators and their identities were not revealed in court documents.
