A New Business Internet Scam Puts Companies in Legal Hot Water

By Erick Sherman

Criminals are trying to turn companies into money mules, according to the FBI.

Under the scam, criminals with illegally gained money—often through other Internet frauds—get a company to receive cash and then forward it to an account in another country. The intent is to get around official scrutiny of financial transactions.

Money mule schemes themselves aren’t new. In the past they targeted consumers, some of whom were aware of the schemes and others taken in by a con artist. The criminals often disguised themselves as work-from-home opportunities, according to the U.S. Computer Emergency Response Team (CERT), although another popular approach was romantic interaction that starts on a dating site.

Now companies are targets, according to the Associated Press. One executive in Connecticut received an email from someone who seemed to be the small business’s owner requesting a money transfer. It was really a money mule plot targeting companies, schools, and non-profits.

“They trial and error this stuff and they see what works and they see what doesn’t,” FBI supervisory special agent James Abbott told AP.

Not only will money mule scammers try what seem to be legitimate requests, but also might try attacking computer systems for covert access to bank details.

The Department of Justice began to more heavily target money mule scams starting October 1, the agency said in a press release. It has worked to stop 400 money mules in 65 federal districts.

Potential consequences for being a money mule include frozen bank accounts, prosecution, and liability for others’ losses. The consequences can be serious, so companies should be on guard. CERT suggests companies use anti-virus and anti-spyware, limit access to sensitive data, regularly check employee lists and financial transactions, and consider isolating computers that perform banking functions from other systems.

FBI warns of money laundering scams using ‘money mules’

By Eric Tucker & Michael Balsamo

WASHINGTON — The email caught the executive at a small Connecticut company by surprise one morning in 2016. The company’s owner, or so he thought, was requesting a money transfer to pay for supplies from a new vendor.

It wasn’t until that night when the executive, hours after the money had been wired and still puzzled by the out-of-the-blue demand, texted the owner to make sure he’d heard the request correctly.

The befuddled reply was disheartening: “I just saw your message about a wire transfer today. What is this about?”

It was a fraud scam that targeted companies in Connecticut and elsewhere in the United States and that resulted this month in a 45-month prison sentence for one of the culprits. The case is part of a seemingly endless cycle of money laundering schemes that law enforcement officials say they’re scrambling to slow through a combination of prosecution and public awareness. Beyond the run-of-the-mill plots, officials say, is a particularly concerning trend involving “money mules” — people who, unwittingly or not, use their own bank accounts to move money for criminals for purposes they think are legitimate or even noble.

The “mule” concept has attracted renewed attention with this month’s release of Clint Eastwood’s “The Mule,” a real-life tale of an elderly horticulturist who smuggled cocaine for a Mexican cartel. But the modern-day mules of most concern to the FBI are people who get themselves entangled in complicated, international money laundering schemes that cause millions of dollars in losses and show no signs of stopping.

“They trial and error this stuff and they see what works and they see what doesn’t,” FBI supervisory special agent James Abbott said in an interview. “It’s a much higher success rate when you have a lot of money using somebody else’s account going through there instead of trying to cross the border with a physical transportation of cash.”

The FBI and international law enforcement agencies have stepped up efforts against the fraud and say they’re building bigger cases than before. Europol said this month it had identified 1,504 money mules, arresting 168, in a continent-wide bust. The FBI in June announced the arrests of 74 people, including 29 in Nigeria, for schemes targeting businesses and the elderly, and this month launched a publicity campaign called “Don’t Be a Mule.”

The money mule cases are an offshoot of more generic frauds encountered by the FBI, including schemes that dupe people into thinking they’ve won the lottery and can claim their prizes by wiring an advance payment, or that trick the unsuspecting into believing a relative has been arrested and needs urgent bail money or that a supposed paramour they’ve met online requires cash. In cases like the Connecticut one, fraudsters assume identities of executives and scam employees into wiring cash.

That’s what happened in 2016 at Beacon Systems, a Texas company where a new employee received an email from someone she thought was the chief executive officer instructing her to transfer nearly $100,000 for a vendor-related payment. Several weeks later, Kerry Williams, the CEO whose identity was impersonated, was on her way to the airport when an FBI official contacted her and explained how the company had been victimized as part of a much broader swindle. A dual Nigerian-U.S. citizen was ultimately sentenced to four years in prison in connection with the scheme.

“It makes you kind of paranoid,” Williams said, describing how the experience made the SAP consulting firm more vigilant. “Even to this day, we’re overly cautious about everything. I think you kind of go to that extreme.”

As for money mules, they’re persuaded, sometimes with the incentive of keeping a cut of the funds, into allowing money transfers to their own bank accounts at the direction of a fraudster they may mistake for an online friend or romantic partner, a military officer overseas or an employer. They’re then instructed to transfer those funds elsewhere, into accounts controlled by criminals.

In one case, the FBI says, a fraudster posing as an Army captain stationed overseas recruited a man he met online to be a money mule, saying he was making arrangements to travel home and needed the man’s help receiving and sending some funds. The FBI says $10,000 was wired into the man’s account. He was instructed to withdraw it in small increments and send it to someone else in Texas.

The mules are sometimes witting conspirators. Other times, they’re often elderly, lonely or confused. In those cases, they’re questioned by the FBI and given warnings but generally avoid prosecution. The FBI says it’s interviewed more than 300 people suspected of acting as money mules.

“When we approach them and talk to them and explain to them what they’ve been doing, a lot of times, the horror is there, said Steven D’Antuono, an FBI section chief specializing in financial crimes. “It’s all walks of life, all educational levels. Anyone can fall victim to this.”

In the Connecticut case, the executive explained those horrors in a letter to the judge before the sentencing this month of the defendant, Adeyemi Odufuye.

The executive, whose name and company are redacted in the letter, described feeling initially apprehensive about the money transfer instructions and advising the company owner that it was a “lot of money for supplies.”

That night, he described the interactions to his wife, who asked if he was really certain the emails were legitimate. He suddenly wasn’t so sure, realizing for the first time he may have been duped.

“Because of crimes like these,” he wrote, “our society is losing much of the trust and openness that we once experienced.”

Money laundering scandal involving people on both sides of jail

By Sarah Horne

Money laundering can land you in jail, but nine individuals used the jail itself as the setting for a fraudulent money scheme, officials said.

The scam allegedly involved nine men who are now all facing money laundering and telecommunications fraud charges. They are Parisian Fitzhugh, Georvaughn Campbell, Charles Harrell, Demontez Harrison, Dyerico Johnson, Dominic Lindsey, Jerome McCoy, Cortez Reed and Eric Sanks.

According to prosecutors, the scheme would start with a person using a bad credit card to transfer funds into an inmate’s account.

Then the inmate would ask someone at the justice center to send the money in his account to a friend or family member, officials said.

Finally, investigators said an employee at the jail would write a check to someone on the outside.

The banks connected to the credit cards lost about $4,000 were lost throughout this process, officials said.

Hamilton County Sheriff’s Office spokesman Lt. David Daugherty said this case is the first of its kind for the county.

The case has been under investigation for about two years, he said, and it has resulted in changes to how money is processed from inside to outside the jail.

Before inmates could transfer up to $500 out of the jail at once, Daugherty said. Now, the amount is up to $250.

He said now there is more internal and external vetting and credit cards are checked for clearance before transactions are made. Inmates are also restricted to one transaction per month, Daugherty said.

One of the nine defendants is already being held at the Hamilton County Justice Center. Trials in the case have not yet been scheduled.

Tampa woman faces 20 years in prison for money laundering scheme

By Crystal Owens

A Tampa woman is facing 20 years in federal prison after she pleaded guilty Monday to conspiracy to commit money laundering.

As part of a plea agreement with federal prosecutors, Brenda Dozier, 54, agreed to pay approximately $225,000 in restitution to the victims of the money laundering conspiracy and to a forfeiture money judgment in the same amount.

A sentencing date has not been set.

Dozier laundered money from July 2015 through at least November 2015 that had been extorted from residents by conspirators residing in the states and overseas, according to U.S. Attorney Maria Chapa Lopez.

Her India-based conspirators extorted money by impersonating IRS officers and misleading victims to believe that they owed money and would be arrested and fined if they didn’t immediately pay their alleged back taxes. As part of the conspiracy, Dozier opened bank accounts, which she used to receive the fraud proceeds, typically via interstate wire transfers, according to U.S. Middle District of Florida court records. Once Dozier had retrieved the funds, she provided the money to her co-conspirators. Dozier was paid for opening the accounts and conducting the transactions.

Three of her co-conspirators, Nishitkumar PatelHemalkumar Shah and Sharvil Patel, were charged on Oct. 11 in a related case with conspiracy to commit wire fraud and extortion, and with individual counts alleging wire fraud, extortion, money laundering and aggravated identity theft for their roles in the scheme.

Their trials are scheduled to begin in April 2019 in U.S. Middle District Court in Tampa.

The case was investigated by the Treasury Inspector General for Tax Administration, the IRS–Criminal Investigation, the Florida Department of Law Enforcement and the Tampa Police Department. It is being prosecuted by Assistant U.S. Attorney Rachel K. Jones.

Texas Trio accused of Money Laundering, ID Theft

By Nicholas Davis

WICHITA FALLS, TX (RNN Texoma) – Wichita County Sheriff Deputies say they have arrested three men after a traffic stop unveiled more than $75,000 in cash and “hundreds of names, credit card numbers, pin numbers and zip codes.”

According to a press release, a Highway Interdiction Deputy made a traffic stop on U.S. 287 near Electra at around 1:45 Monday afternoon.

The occupants consented to a search of the car.

During the search, the deputy discovered $75,215 cash, gift cards not under the names of the driver or passengers, and two flash drives containing names, credit card numbers and more.

The driver, 34 year old Osniel Ramirez along with two passengers have been arrested.

The Passengers have been identified as 25 year old Disney Avila and 27 year old Miguel Aguiler.

All three man face charges of Fraudulent Use/Possession of Identifying Information and Money Laundering.

All three men were under investigation by the Amarillo Police Department regarding a large number of identity theft cases that occurred in that city.

Mayfair Fine Art administrators struggle to trace paintings linked to money-laundering scandal

By Kabir Jhala

Administrators cannot locate two paintings supposedly belonging to Mayfair Fine Art Limited, whose former director Matthew Green is being charged with attempted money laundering following the scandal involving the city stockbroker Beaufort Securities earlier this year.

In a progress report, Kingston Smith & Partners, the corporate recovery and insolvency firm who have been administering Mayfair Fine Art following its bankruptcy in March, claim that the two paintings allegedly purchased from a third party cannot be found.

The contact information provided by Mayfair Fine Art, which states that the works were purchased by an “associated company” and were “apparently held in Dubai”, was found to be insufficient in ascertaining the ownership, location or existence of the artworks. A source at Kingston Smith has declined to share further details of the works in question.

The report also reveals that MBU Capital Limited, the secured creditor who called time on an overdue loan and initiated the administration of Mayfair Fine Art, is still owed an estimated £520,000 to be paid from the company’s assets. Kingston Smith & Partners are continuing to enquire into the full extent of the company’s assets and transactions, including examining the company’s historic bank transactions in order to reach a fair settlement.

In March, Green was charged with conspiring with Panayiotis “Peter” Kyriacou, an investment manager at Beaufort’s London office, and his uncle Aristos Aristodemou to “clean up” £6.7m through the attempted sale of a Picasso painting to an undercover FBI agent.

The ensuing multi-court indictment by US federal court has seen six individuals and four companies charged with an array of crimes relating to money laundering and conspiracy.

Of the six individuals charged, two defendants have since pleaded guilty. Arvinsingh Canaye, who ran the Mauritius branch of Beaufort Management, pled guilty to charges of conspiracy to launder money in August and Adrian Baron, the chief business officer of Loyal Bank pled guilty to conspiracy to defraud the US in September.

Green, 51, who left his directorial roles at his family’s company Richard Green & Sons Limited in 2012, is among the four remaining defendants who have yet to plead.

https://www.theartnewspaper.com/news/administrators-struggle-to-trace-paintings-linked-to-money-laundering-scandal

Bitcoin [BTC] worth $5.84 million stolen from MapleChange; Binance CEO gives his insight

MapleChange, a Canada-based cryptocurrency exchange, recently announced that their platform was hacked. The exchange platform took to their Twitter handle to provide clarity on the situation, stating that they could not refund the stolen cryptocurrencies.

According to their official post, a bug on the platform enabled a group of hackers to withdraw funds remotely. The platform reported that 913 Bitcoins [BTC] were stolen and that they cannot refund any of the funds until a “thorough investigation” was conducted.

Another controversial aspect was that the “thorough investigation” resulted in the exchange platform realizing that they did not have funds for repaying its users. Furthermore, they stated that the platform would not function anymore and that they would soon deactivate their social media channels. Their official post stated:

“We have sustained a hack, and we are investigating the issue.”

On their official Twitter handle, the exchange stated that they had not “disappeared”, but had temporarily turned off their accounts to think of a solution.

In addition, they could not refund “everyone with all their funds”, but would soon open wallets in order to allow its users to “hopefully” withdraw whatever funds were left on the exchange. They added:

“We CANNOT refund any BTC or LTC funds unfortunately. We will try our best to refund everything else.”

Changpeng Zhao, the CEO of Binance, the world’s largest cryptocurrency exchange in terms of trading volume, was surprised by the hack and stated that a procedure was required to rank exchanges based on their wallet storage. He added that users had to avoid using exchange platforms which did not have anything in their cold wallets.

Maplechange’ed, a platform dedicated to find, take down and expose maplechange.com, with the help of members from the Lumeneo [LMO] telegram channel, allegedly found that Glad Poenaru, a service technician at American Piledriving Equipment, could have been responsible for the hack.

Joseph Young, a cryptocurrency investor and analyst, stated:

“A small crypto exchange pulled off an exit scam, taking all customer funds. There is no incentive for using small exchanges. Use established exchanges that are regulated, & transparent. Small exchanges also focus on maximizing profitability, not security or investor protection.”

MapleChange further added:

“We are sending all of the coin developers the wallets containing the coins we have left. So far, LMO and CCX have been handed over the funds.”

https://ambcrypto.com/bitcoin-btc-worth-5-84-million-stolen-from-maplechange-binance-ceo-gives-his-insight/

How The Unexplained Wealth Order Combats Money Laundering

The UK is a haven for dirty money; more than £90 billion is estimated to be laundered through the country per year. The size of the UK’s financial and professional services sector, its open economy and the attractiveness of the London property market to overseas investors all make it unusually exposed to international money laundering risks. As part of new measures to tackle asset recovery and money laundering, the UK government introduced Unexplained Wealth Orders (UWOs) in January, which are being hailed as the cure to Britain’s dirty money problem.

What is an Unexplained Wealth Order?

UWOs require the owner of an asset worth more than £50,000 to explain how they were able to afford that asset. Introduced primarily to target Russian and Azerbaijan laundromats, UWOs have wide-ranging applications to all situations where the National Crime Agency (NCA) believes wealth was acquired illicitly, including tax evasion.

The game-changing nature of UWOs lies in the power they give UK law enforcement to prosecute. Formerly, little could be done to act on highly suspicious wealth unless there was a legal conviction in the country of origin. In cases where the origin country is in crisis or the individual holds power within a corrupt government, this is unlikely to be achieved. Where previously law enforcement agencies needed to prove in court that an asset was purchased with laundered funds, UWOs shift the burden of proof away from prosecutors and on to the asset’s owner.

Preventing Financial Crime with Unexplained Wealth Orders

The first successful use of a UWO since its implementation is the recent case of Zamira Hajiyeva, who owns millions of dollars in properties in London through offshore companies. Her husband, Jahangir Hajiyev, was convicted and sentenced to 15 years in prison for fraud and misappropriation of public funds, and authorities were able to identify a clear disparity between his income and the couple’s apparent wealth.

With corruption watchdog Transparency International estimating that £4 billion of UK property has been purchased with the proceeds of crime, it is hoped that this successful implementation of a UWO will herald a clampdown on overseas criminals laundering via the property market.

The success of this UWO has been fundamental in beginning to reduce the appeal of the UK as a destination for illicit income. In June, mortgage brokers were already reporting that Russian purchases of prime real estate in London had slowed as a result of both government pressure and a tightening of anti-money laundering rules.

There are, however, reasons to be wary of perceiving the introduction of UWOs as a cure-all for the UK’s money laundering problems. These court orders are ineffective as soon as a defendant can provide an explanation for the source of their wealth. In the absence of evidence to the contrary, they then win the argument. Legal difficulties and costs are other factors that can lead to delays in the UK’s fight against money laundering, while information obtained via a UWO cannot be used in criminal proceedings against the respondent. For UWOs to have credibility, authorities will need to ensure the first uses of them continue to be successful in order to serve as a useful deterrent going forward.

Further, money laundering covers a wide range of criminal activity and consequently can’t be solved by a single approach. Fragmented supervision and anonymous ownership of property in British Overseas Territories and Crown Dependencies are just two areas where Transparency International is still advocating for change to improve the UK’s asset recovery and anti-money laundering regime.

How Can We Continue to Fight Money Laundering?

It is clear that UWOs have the potential to act as powerful tools for law enforcement but are not yet being used frequently enough— more action is required if real change is to come. We need further action from the government to restrict property ownership and levy realistic local taxes.

With UWOs beginning to lead to the identification of criminals, questions will be asked of the financial institutions who facilitated the individual’s money management. To better equip themselves for the fight against money laundering, banks need to overhaul outdated AML systems to suit the complexity of the schemes perpetrated by criminals. They need to combat problems by employing entity resolution and network analysis techniques to understand vast data networks and identify hidden money.

https://www.forbes.com/sites/vishalmarria/2018/10/25/how-the-unexplained-wealth-order-combats-money-laundering/#26a904a54703

Bitcoin Hedge Fund and CEO Slapped With $2.5 Million Penalty for Ponzi Scheme

A New York federal court has ordered cryptocurrency hedge fund Gelfman Blueprint, Inc. (GBI) and its CEO Nicholas Gelfman to pay over $2.5 million for operating a fraudulent Ponzi scheme, according to an official announcement published Oct. 18.

GBI is a New York-based corporation and denominated Bitcoin (BTC) hedge fund incorporated in 2014. As stated on the company’s website, by 2015 it had 85 customers and 2,367 BTC under management.

The order is the continuation of the initial anti-fraud enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) against GBI in September 2017. The CFTC charged GBI for allegedly running a Ponzi scheme from 2014 to 2016, telling investors that it had developed a computer algorithm called “Jigsaw” which allowed for substantial returns through a commodity fund. In reality, the entire scheme was a fraud.

Per the announcement, GBI and Gelfman fraudulently solicited over $600,000 from at least 80 customers. Moreover, Gelfman set up a fake computer “hack” to conceal the scheme’s trading losses. It eventually resulted in the loss of almost all customer funds.

The current order charges GBI and Gelfman to pay over $2.5 million in civil monetary penalties and restitution. GBI and Gelfman are ordered to pay $554,734.48 and $492,064.53 in restitution to customers and $1,854,000 and $177,501 in civil monetary penalties, respectively.

James McDonald, the CFTC’s Director of Enforcement, said that “this case marks yet another victory for the Commission in the virtual currency enforcement arena. As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable.”

Last month, the CFTC filed a suit with the U.S. District Court for the Northern District of Texas against two defendants for the allegedly fraudulent solicitation of BTC. Per the suit, defendants Morgan Hunt and Kim Hecroft were running two fraudulent businesses and misleading the public to invest in leveraged or margined foreign currency contracts, such as forex, binary options, and diamonds.

https://cointelegraph.com/news/bitcoin-hedge-fund-and-ceo-slapped-with-25-million-penalty-for-ponzi-scheme

Stolen UI Employee Data Used To Commit Money Laundering

By: Hillary Ojeda

A woman pleaded guilty to money laundering charges involving more than $200,000 after she submitted false tax returns using University of Iowa employees’ data, on Oct. 11 in Davenport.

Nadine Nzuega Robinson entered into a plea agreement at the United States District Court for the Southern District of Iowa.

She waived her right to a jury trial and the district court will decide the verdict on or at the date of sentencing, scheduled for Feb. 22, 2019, according to court documents.

Starting in 2013, or earlier, Robinson and her partner Patrick Koloko opened a check cashing business in a suburb of Atlanta, Georgia. Located in Doralville, the name of the business was Azalea USA, LLC and Robinson was identified as the CEO and 85 percent owner, according to court documents.

Robinson agreed with Koloko and others to carry out illegal financial transactions to make a profit and hide unlawful wire and mail fraud.

Then, in early 2015, Robinson created checking accounts at Bank of America in Georgia under the name of Azalea.

Court documents say in late February and early March of 2015, false tax returns for tax year 2014 were being submitted electronically to the Internal Revenue Service using the names, addresses, occupations and social security numbers of University of Iowa employees.

The court documents did not detail how that data was acquired by Robinson or others.

Following an investigation, it was found that the suspects committed wire fraud and mail fraud, according to court documents. The stolen identities were used to apply for state and federal income tax returns. The fraudsters also provided debit card account numbers for the IRS to authorize payment of the returns to be distributed onto the debit cards.

The IRS processed the fraudulent returns leading  to U.S. government money being transferred electronically onto those debit cards.

The debit cards were then used to buy hundreds of money orders that were converted to cash in the Atlanta, Georgia area. False payee names were used and the cash was distributed to Robinson and other criminal companions.

Court documents say hundreds of money orders obtained through similar means continued to be deposited by Robinson into the Azalea accounts.

Robinson deposited money orders totaling $215,464 from fraudulent tax returns using University of Iowa employees data, according to Azalea-Bank of America accounts records from March and April of 2015.

If convicted, Robinson faces a maximum sentence of 20 years in prison and a maximum fine of $500,000.

Court documents show Robinson was originally arrested on Oct. 12 last year in Atlanta, Georgia, before a court order moved her case to the United States District Court Southern District of Iowa in Davenport.

https://www.press-citizen.com/story/news/2018/10/17/stolen-ui-employee-data-used-commit-money-laundering/1663905002/

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