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Beware of bad check scams

Recent arrest in Schenectady points to need for caution

Sunday, January 13, 2013
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— From the outside, the package appeared to be important.

It was addressed from the official-sounding “Independent National Electoral Commission” in the west African country of Nigeria.

It was addressed to an ambassador — an ambassador taking his mail in the diplomatic hub of Schenectady.

Types of fake check scams

• Foreign business offers: Scammers pretend to be businessmen or government officials, promising millions. Real companies or officials, though, would never contact strangers in other countries for business propositions.

• Love losses: Individuals promise to come to the U.S. to be with their supposed love interest. The catch is that they need the love interest to cash a check or money order to cover travel expenses.

• Overpayments: Scammers send more money for items than the sale price, sometimes saying it’s a mistake. The seller is asked to cash the check (a fake cashier’s check) and send the excess money back.

• Rental schemes: Supposed renters claim to be moving in from outside of the area or country, then send a check to cover shipping costs, with instructions to send the excess to a third party or to return the overage to cover unexpected expenses.

• Sudden riches: Claims of lottery winnings or cash grants, none of which are real. The “winnings” come with instructions to send money to get the money.

• Work-at-home: The offers come with requests to process payments, essentially cashing checks and sending the money on to another person. None of the checks are real, and real companies wouldn’t do business like that.

Source: FakeChecks.org

The package, though, contained no official diplomatic correspondence. Also, it now appears, there is no ambassador living on Moyston Street in Schenectady’s Vale neighborhood.

What the package did contain, discovered upon inspection by U.S. Customs and Border Patrol agents when the package arrived in the United States, was the potential for a $1.7 million fraud to be perpetrated on U.S. banks — and on trusting, unsuspecting U.S. citizens.

Inside the package were 358 separate cashier’s checks, each with an apparent face value of $4,950. Each one was a fake. The package was searched and seized at the shipping company’s Kentucky facility.

An investigation by the U.S. Department of Homeland Security used a controlled delivery of the package, with an agent posing as the delivery man, to the Moyston Street address to help trace who they believe was the actual intended recipient: a man named Larry Crews from the Bronx. Crews has since been arrested, according to papers filed in U.S. District Court in Albany.

What the fake cashier’s checks were intended for is unclear. Documents, though, suggest that Crews previously possessed fake checks, re-mailing them to other individuals.

The case carries many of the hallmarks of ongoing Internet scams, many based in Nigeria.

One such scam targets sellers on the sales site Craigslist, the scammers offering to buy big-ticket items with even bigger cashier’s checks. The seller is asked to cash the check and send the excess back or to a third party, and the scammer hopes it all happens before the bank realizes the check is worthless.

Banks are constantly on the lookout for such scams, educating tellers on the latest tactics and tricks in the hopes of stopping them.

But the efforts aren’t foolproof, as evidenced by the fact that the scams continue. By one industry estimate, those efforts are able to stop $10 of fraud for every $1 that gets through.

“These types of scams have been around for quite a few years; they’re not new,” said Doug Johnson, vice president of risk management policy at the American Bankers Association. “However, we do find that customers from time to time are susceptible to them. That encourages individuals to continue to try to perpetrate this fraud.”

The banking industry, Johnson said, has worked to counteract that fraud by working with other groups, including the U.S. Postal Service, to head off the scams.

The Federal Deposit Insurance Corporation regularly issues alerts for bank tellers about counterfeit checks seen in circulation. The industry also tries to work with customers to build awareness of the problem so that people won’t get sucked in.

The risks for customers are great: A customer who successfully cashes a fake check, even if they don’t know it’s fake, is on the hook for the money.

Sometimes when the fakes are spotted before the check is cashed, there’s the problem of convincing the customer of what is actually happening, Johnson said.

“In a lot of instances it becomes, frankly, almost difficult and sometimes impossible to convince a customer that it is not a correct check, that this is, in fact, a fake check,” Johnson said.

Johnson pointed to a website called FakeChecks.org, a project of the National Consumer’s League.

The fake check scams work, according to the site, because a bank is required to give access to deposited funds within a few days. It may take longer, though, for the banks to determine that the checks are fakes.

The site includes descriptions of the scams, including video interviews with victims.

In one interview, a woman tells of being scammed out of $3,500 over a $100 table she was selling online.

Describing herself as a trusting person, the woman overlooked red flags and cashed a $3,500 certified check from the foreign buyer, kept the $100 for the table and wired back the rest. By the time the check was deemed a fraud, it was too late. For ignoring the red flags, she ended up still in possession of the table and $3,500 poorer.

The site lists six separate types of schemes: the foreign business offer, the scheming suitor, overpayment offer, the rental scheme, the sweepstakes scheme and the work-at-home scheme.

The site also includes hidden-camera videos aimed at highlighting the absurdity of the scams, showing that they could never work face-to-face.

Jenny Shearer, a spokeswoman for the FBI, said that is often a problem in online scams: Red flags that would be obvious in individuals’ day-to-day interactions with people just aren’t there when they deal online.

“If folks apply that same kind of screening process to their email, I think that would be helpful,” Shearer said.

Exactly how many people fall for the scams is a hard number to figure, experts say. Embarrassment and other factors can stall or prevent reporting.

Shearer pointed to another site that serves as a complaint center, where individuals can alert authorities of a scam and what happened.

The site, IC3.gov, the Internet Crime Complaint Center, is a partnership between the FBI and the National White Collar Crime Center.

In 2011, the site recorded more than 314,000 complaints of Internet fraud, with 115,000 of those reporting some kind of monetary loss.

The average monetary loss of those who reported a scam was more than $4,000. Overpayment fraud, involving fake monetary instruments, was the fifth most reported fraud to the site.

“I don’t see Internet fraud becoming less of a problem anytime soon,” Shearer said.

Check scams have also been around locally for years.

In 2007, a local woman reported getting caught up in a work-from-home scam. She was sent three Wal-Mart cashier’s checks to cash to get the “work” started. The woman promptly went to the store in Glenville and asked if they were real. They weren’t.

She had received the checks from a Wisconsin address with instructions to cash them, keep 10 percent and send the rest of the cash to Africa. Police were notified and a general warning to the public was issued.

In 2010, a man was stopped on the Thruway in Montgomery County and found to possess 500 counterfeit MoneyGram money orders. In that case, the driver, Anthony Raines, formerly of West Virginia, pleaded guilty to a misdemeanor and was sentenced to nine months in jail.

Raines had first come to the attention of law enforcement, according to a federal filing in his case, when agents in Tennessee intercepted a FedEx package addressed to a West Virginia address and sent from Nigeria. In that shipment, investigators discovered more than $383,000 in counterfeit money orders and cashier’s checks.

In the recent Schenectady case, Crews was eventually charged, accused in federal court with possessing fake cashier’s checks. He was ordered held on $10,000 bail.

He came to investigators’ attention when they spotted the Nigerian shipment, sent through DHL, at the company’s Kentucky processing facility. He had earlier been stopped in New York City with $21,000 in fake cashier’s checks, according to the federal filing. As to why the recent shipment was sent to Schenectady, court paperwork indicates that he knew people who lived there and gave them instructions to accept the package.

Though slightly different, another local scam this past year resulted in more than 50 arrests of individuals accused of cashing fake payroll checks at local Price Choppers. The fake checks were connected to jobs at which the individuals never worked and organizations for which they never worked.

Those cashing the checks kept a portion, but they were easily found out by investigators and were arrested and charged. Each faces charges of felony forged instrument possession. The fake payroll check scam, which apparently had no broader or foreign connection, eventually cost Price Chopper more than $100,000. Two other people were charged federally in the case: one has been sentenced, while the other, accused of directing the scheme, is awaiting sentencing.

Colonie Police Lt. Robert Winn said he can’t imagine that any police department in the nation isn’t seeing some form of these financial scams.

He had simple advice to avoid becoming a victim.

“You really have to do your due diligence,” Winn said. “If it’s too good to be true, it probably is. If anything seems hinky in the whole deal, call it off.”

 
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