In Search of a Fellow Fraudster

Silver and single, Karen*1 is in search of (ISO) a meaningful relationship. Unconventional herself, she opts to post her ISO on a popular dating website for a mature crowd. Soon, she receives a love connection and finds herself humbled that someone so picture-perfect sent her a message. Over the next year, Karen becomes convinced that this international man of mystery is her match made in digital heaven. The only hindrances to Karen finally seeing him were his unexpected financial troubles and the poor internet connection in his home country. What kind of life partner would Karen be if she did not help her beloved? After all, he stole her heart—and soon, he would steal her life savings.

After a bitter divorce, Randy* knew to be cautious as he entered the world of online dating. A website designed for those “over the hill but not six feet under” helped him once again feel that spark. His online ladylove also lamented about a failed relationship. Since distance barred the couple from finding comfort in each other’s arms, they found solace in each other’s words. Over the next year, caution was thrown to the wind. Randy had once again opened his heart—and soon, he would open his wallet.

The time had come for Missy* to meet her betrothed in person. Waiting at the airport for his arrival was nothing compared to the time it took to find love so late in life. There were obstacles in the online relationship, but all happy endings start out that way. Her emotional and financial contributions to him were finally going to be reciprocated in person. The passengers were deplaning and their new life together was about to begin. After realizing both passengers and crew alike had all disembarked from the aircraft, reality set in for Missy. Neither he nor her money were on board.

All three of these romance scams took patience and time. The investment resulted in dividends for the swindlers. While the love story and location differed for each aforementioned alias, at some point their stories all shared the same sad ending. In the name of love, all of those cheated wired funds to Vanessa*, who the “soulmate” presented as either their own trusted friend, coworker or relative. Fortunately for law enforcement (LE), Vanessa (despite her various titles and storylines) was as real as the love these victims felt for their significant others.

The Complicit Victim

In 2016, Vanessa, a retiree located in the mid-Atlantic U.S. region, was swindled out of her life savings in an online romance scam. The “International Investigation Bureau” emailed her soon thereafter to report that they identified her as a victim and wanted to discuss how to return the stolen funds. In late 2017, Vanessa finally reported the fraud and the “International Investigation Bureau” communication to her local LE. An LE officer gently tried to explain that the email communication was just another fraudster tactic and it should be ignored/deleted. The emails were as fictitious as the international agency sending the communication. Vanessa ignored the advice of LE and continued to engage in communication with the phony agency. A gullible Vanessa shared her personal information with the fraudsters. As a result of social engineering, the fraudsters were again able to target her in another online romance scam. Remarkably, a Brazil-based billionaire soon found her on a dating website and offered her his love and his money. Vanessa, desperate for love and to recoup her losses, ignored the fact that this was too good to be true. Her ensuing actions represent an emerging trend growing in the senior citizen social demographic—the “complicit victim.”

As directed by her billionaire boyfriend (and yet of her own volition), Vanessa opened up five different accounts in her own name at five different financial institutions (FIs). As the money flowed into and out of these accounts, she, as the sole signatory, was permitted to keep a small percentage of the funds. The compensation was miniscule compared to the total value of the scheme, yet it represented more than half of Vanessa’s monthly income. The outbound wires all funneled into one cryptocurrency exchange account that was also in Vanessa’s name. Both Vanessa and an Internet Protocol (IP) anonymizer accessed the account with two-factor authorization permitted by Vanessa. After the conversion to bitcoin, the funds were disbursed to more than 50 intermediary wallets. The controllers of these wallets then transferred the funds into the same final destination digital wallet, one that was safely out of reach of the American legal grasp. While the fraudster’s instructions may have been conducted in a surreptitious manner, the financial transactions resulting in a million-dollar loss were not.

When Should LE Come In?

While the fraudster’s instructions may have been conducted in a surreptitious manner, the financial transactions resulting in a million-dollar loss were not

Over the course of five months, the unusual money movement pattern unfolded right before the eyes of the FI branch personnel. This transactional activity was in gross contrast to the know your customer information and warranted conversation with Vanessa. Yet she responded with obvious deception. One such fabrication was that Vanessa was receiving loan repayments from family members, who had all remarkably paid her back at the same time and all requested her to convert the funds to cryptocurrency. Another false claim was that she received a loan repayment from a coworker. This particular explanation drew skepticism as the check was made payable to a third party, yet Vanessa endorsed and deposited it. Another tall tale she told alleged that the deposits were an investment for her boyfriend.

The untruths warranted filing a suspicious activity report (SAR) and even industry chatter in the form of 314(b) requests. However, the FI’s concerns never made it to the ears of LE until the time for intervention had long past. There was no protection or prevention afforded to the victims in this scenario. Why was LE not contacted when the staff observed the criminal scheme by Vanessa or the unwitting actions of the victims?

Much like the popular campaign “if you see something, say something,” the call for communal safety is more than just a precaution heard in airports or a warning seen inside a public bathroom stall. The vocalization of suspicious activity (and not just the documentation thereof), regardless of the venue, necessitates an immediate call to the public’s attention followed by an expeditious LE response. This proactive combination increases the likelihood of a successful intervention and helps achieve a safe environment for all. Mere documentation is oftentimes too little, too late, and results in a delayed, unproductive reaction. If public service announcements promote contacting LE when suspicious activity is observed in the community, why do FIs often fail to contact local LE when branch staff observe not only suspicious but illicit activity?

Unlike timely SAR filings, there is no decree for LE to review the tip in a concurrent time frame. This elongated process, coupled with the absence of actual outreach by phone or email to LE, can ultimately contribute to a lack of follow-up SAR investigations. The rationale? LE’s opportunity to intervene has passed. Prosecutions or seizures are no longer viable and criminals are long gone.

In the above scenario, five of the FIs noted Vanessa’s differing lies. All five concluded there was criminal activity afoot. There were even other FIs that detected their unsuspecting clients’ monetary transfers to Vanessa. Yet not one local FI branch contacted their local LE agency. This should not happen, especially when the Federal Right to Financial Privacy Act states, “Nothing in this chapter shall preclude any financial institution, or any officer, employee or agent of a financial institution, from notifying a Government authority that such institution, officer, employee or agent has information which may be relevant to a possible violation of any statute or regulation.”2

Even more disconcerting, the Code of Federal Regulations states, “In situations involving violations requiring immediate attention, such as when a reportable violation is ongoing, the financial institution shall immediately notify, by telephone, an appropriate LE authority and the OCC in addition to filing a timely SAR.”3 The ability to communicate with LE in the aforementioned scenario could have allowed for early intervention and/or the involvement of a social service agency. There could have been an opportunity to recover swindled funds. Had there been an option to follow this money, there may have been a chance to identify and apprehend the criminals who were in possession of the money.

The Consequences of No LE Communication

Yet in the aforementioned scenario, none of these results occurred. The victims never had funds returned and their bank accounts, much like their hearts, were pits of despair. Accounts were closed and Vanessa—who had recovered the value of her originally swindled funds—was no longer actively in communication with her overseas accomplices or engaging in criminal activity. Having no current criminal actions left Vanessa’s prosecution in a pending status; prosecutors will only seek to prosecute Vanessa in a court of law should she engage in future illicit activity. However, this is only the first impediment. Even if a jury found Vanessa guilty, would the imposed sentence echo evenhandedness? Would the sweet senior receive the same punishment as her younger demographic counterpart? Without a doubt, juror emotion can affect judgment.

Industry conversation has pointed out that much of the problem is exacerbated by a victim’s willingness to lie to defend their actions. In spite of the obstacles, certain FIs have designated a point of contact to reach out to an appropriate Adult Protective Services (APS) agency in an effort to disrupt the victimization of their senior customers. However, these efforts do not appear to be industry-wide. Despite legally permitted communication between the financial and LE sectors, hoaxers appear to have taken advantage of the absence of such contacts across FIs.

Conclusion

Desperate to salvage losses, elderly citizens are now willingly conspiring with the perpetrators of fraudulent schemes in order to defraud their peers. They are no longer the victim, but rather the willfully blind accomplice. This alarming new trend of age-related complicit victimology underscores one of the many facets associated with elder abuse—the absence of intervention. Where was the societal interference before the victim transformation to culprit? How do the legal and financial systems treat this Dr. Jekyll/Mr. Hyde paradox found with a complicit victim? Why did the FIs not intervene and report the crime to the police or their victim concerns to a local APS agency? Before the next senior becomes a swindler, these questions need to be answered and a collaborative action plan must be implemented by all. Only then can everyone have a happily ever after. 

Do you have a suggestion on how to improve proactive intervention measures by FIs?
If so, ACAMS Today wants to hear from you!

ACAMS Today law enforcement contributor, VA, USA, editor@acams.org

Disclaimer: The views expressed are solely those of the author and are not meant to represent the opinion of any employer.

  1. All names with an asterisk are fictitious.
  2. “12 U.S.C § 3403.-U.S. Code-Unannotated Title 12. Banks and Banking § 3403. Confidentiality of financial records,” Legal Information Institute, https://www.law.cornell.edu/uscode/text/12/3403
  3. “12 C.F.R. § 21.11- Suspicious Activity Report.” Legal Information Institute, https://www.law.cornell.edu/cfr/text/12/21.11

Leave a Reply