Check fraud is a lot like ice cream -- it comes in many different varieties, with new flavors being created all the time, and old, traditional styles remaining highly popular. This report brings you information on the latest uses of perennial favorites (counterfeit and stolen items), as well as a few new twists creative thieves have added to try to avoid being detected and identified.
"Helping" the Homeless
One common form of check fraud involves counterfeiting corporate checks. Thieves typically make the checks payable to names in which they have established fake IDs. They then go to the financial institution where the corporation has its account and present the checks for payment over the counter. The institution checks the IDs on the noncustomer payees, but often does not detect the fact that the documents are false. Indeed, the actual IDs may be legitimate IDs (in the sense that they were issued by a government authority), but their issuance may be based upon fraudulent underlying documents.
As more scrutiny is being applied to the validity of identification documents in the wake of the USA PATRIOT Act, the proposed Customer Identification Program rules and increased fraud losses, some con artists are reluctant to take the risk that their fraudulent identity might be unmasked. That has lead them to employ a new strategy. They are now recruiting homeless people to be payees on the counterfeit checks. They carefully select homeless individuals who have valid IDs and recruit them to participate in the scheme for a share of the check proceeds. The individual may not have any idea fraud is involved. The crooks make the counterfeit checks payable to the homeless persons, drive them to the bank, and send them in to cash the checks. The homeless person presents their IDs, and even provides a thumbprint signature, if requested. When the check is later discovered to be counterfeit, the trail leads back to a no-asset individual who cannot connect the con artist to the crime.
BOL Tip: Tellers should be alert to circumstances where a noncustomer payee of a check from a corporate customer appears to be a homeless person. When in doubt about the authenticity of a transaction, the teller should contact the company to verify the validity of the check, including the amount and payee. Once you are aware of fraud of this type involving one of your business customers, the account should be closed and a new one opened. A list of outstanding checks on the old account # should be submitted to you by your customer and all checks presented for payment should be checked against that list.
Craft Class for Check Fraud Artists
Mailboxes yield all kinds of treasures for crooks, including boxes of freshly printed checks. Once the blank checks have been stolen, the thieves' goal is to find a way to use them that yields the greatest potential reward with the lowest possible risk. The method of choice for some of them involves scissors and paste. They take the blank checks, cut the account number out of the MICR line, and insert another MICR-encoded account number in its place.
Using fake IDs to make it appear they are the legitimate account holders, they purchase merchandise with the checks and turn around and return it for cash. By creating several variations of the account number, they manage to defeat store limits on the amount that can be purchased at the store in one day via check from a single checking account.
BOL Tip: It's touchy-feely time. The only sure way to catch this type of fraud is to run a finger over the MICR line and feel the cut and paste job. Educate your commercial customers to be on the lookout for this type of fraud.
A Lazy Counterfeiter
The thief who created counterfeit certified cashier's checks drawn on The Eastman National Bank, Newkirk, Oklahoma and Blackhawk State Bank, Beloit, Wisconsin is not overly ambitious. All of the items presented to date bear the same check number -- 42226, and the same routing number and account number. According to the FDIC, most, if not all, of these items were deposited by bank customers who accepted the checks as payment for motor vehicles. Here's what to watch out for:
Check #42226
Routing number of 103102410; account number 699252;
No MICR encoding
If you spot one of the fakes with The Eastman National Bank name, get in touch with:
Mr. Joe Anderson
Vice President and Cashier
The Eastman National Bank
P. O. Box 468
Newkirk, Oklahoma 74647
Telephone: (580) 362-2511
Fax: (580) 362-2115
If you discover one of the counterfeits that purports to be from Blackhawk State Bank, Beloit, Wisconsin, contact:
Ms. Susan Finkboner
Vice President and Compliance Officer
Blackhawk State Bank
400 Broad Street
Beloit, Wisconsin 53511
Telephone: (800) 209-2616 Ext. 4339
Fax: (815) 562-5273
Hijacked Money Orders
These money orders aren't fake -- they're stolen. 1200 money orders of Peoples State Bank, Many, Louisiana were stolen while in transit from the printer to the bank. The missing money orders are numbered as follows:
719579900 through 719579999
719580500 through 719580799
719580900 through 719581699
For more information, or for contact data, see FDIC FIL-90-2002.
More Counterfeits
Other counterfeits reported by the FDIC in the last week include:
Counterfeit official checks drawn on United California Bank, Los Angeles, California. The bank's legitimate official checks are marked "Issued by Integrated Payment Systems, Inc., Englewood, Colorado." The counterfeit items are marked "Issued by Integrated Payment Systems, Englewood, CT." Financial institutions can confirm the validity of money orders or checks marked "Issued by Integrated Payment Systems, Inc., Englewood, Colorado," by calling 1-800-223-7520. Contact information: FDIC FIL-91-2002.
Counterfeit bank money orders drawn on Warren Five Cents Savings Bank (Warren Bank), Peabody, Massachusetts. Contact information: FDIC FIL-91-2002.
Counterfeit cashier's checks drawn on First Federal Savings Bank of Florida, Live Oak, Florida. The routing number is 263184488. Contact information: FDIC FIL 89-2002. ; and
Counterfeit cashier's checks drawn on Baltimore Trust Company, Selbyville, Delaware. The routing number is 031100490. Contact information: FDIC FIL 89-2002.
Counterfeit cashier's checks drawn on Founders Bank, Chesterfield, Missouri, are in circulation. The items bear the routing number 081903456, assigned to the Bank of Ste. Genevieve, Ste. Genevieve, Missouri. Contact information: FIL-86-2002.
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