Can this really happen? The answer is yes and here’s how it works. Financial institutions and investigators are seeing more situations where victims of fraud schemes are recruited to deposit checks from other fraud victims and then forward money to the criminal actors. In a sense, the first victim is becoming an unwitting money launderer. This is particularly true in cases where Senior Citizens are victimized.
One of the most distressing crime trends in current times is the increasing losses due to financial abuse of Senior Citizens and other vulnerable victims. Current population demographics indicate that the general population in the United States is getting older. Many Seniors possess significant assets, others struggle with poverty, and many are somewhere in the middle. The Baby Boom generation is now entering retirement years after building nest eggs of savings and retirement accounts.
To be sure, criminal actors are targeting the wealth created by the aging population. The estimated value of savings and retirement accounts in the United States approaches $27 Trillion. These vast sums have attracted highly sophisticated organized criminal groups from inside the United States and foreign countries. These organized crime groups are responsible for well-known identity theft, lottery, romance, work at home, grandparent, tax payment, fraudulent IRS returns, business email compromise (BEC) scams. Ponzi schemes and other fraudulent investment schemes also cause large losses to thousands of victims.
Successful criminal groups need to move and hide enormous sums of stolen money. To answer the challenge, complex money laundering networks are formed for the placement of money into the banking system, the layering of the proceeds through multiple accounts, and reintegrating money back into the financial system. They can then use the “clean” money to purchase assets, pay co-conspirators, or finance other fraud schemes.
Many victims are directed to send money to overseas locations. However, since many victims are reluctant to send money overseas, criminal organizations have formed networks of money laundering “mules” to receive the initial fraud dollars, deposit the dollars in U.S. based banks, transfer the money into other accounts, and then forward the money to the criminals. Many of the money laundering mules are willing participants in the schemes and are compensated from the fraud dollars. It is also now known that criminals are adept at convincing victims to become unwitting money laundering mules and instruct the victims to use their own bank accounts to deposit and transfer stolen proceeds, or to deposit fraudulent checks and forward the proceeds. These unwitting money laundering mules are found in romance scams, work at home scams, and other internet based scams.
Of course, most fraud victims do not set out to become money laundering mules. However, many feel trapped by the circumstances and will follow corrupt instructions to open new bank accounts, deposit checks from other persons, and forward money to others using money orders, cashiers checks, or wires. Many victims are encouraged to use variations of their actual names like nick names, middle names, or maiden names to purchase money orders or send wires. The fraudsters know that many of the victims are reluctant to lie about their personal names but may be convinced that using a variation of their actual name is not really lying. The criminals know that varying names on transactions make the tracing process more difficult for investigating officials. Other victims may be convinced to use criminal proceeds to purchase gift cards and other stored-value cards and forward the serial numbers to the perpetrators. The victims are often instructed to keep quiet about sending the money because other people may want to interfere or restrict their freedom.
Protecting Vulnerable Victims
No one organization or government can prevent swindlers from attacking victims. Recognizing the early warning signs of fraud schemes is a key factor in protecting people from determined criminals. Currently, a wide variety of government and private organizations offer resources to describe current fraud schemes and recommended protective measures. Reading about the schemes is not enough. Some of our loved ones will appreciate efforts to protect them and some will resist interference. These crimes are seriously underreported because many victims feel ashamed about being defrauded. They often want to keep it quiet fearing that their families will want to take over their lives and finances. If the perpetrator(s) are other family members, the discord within the family can be very contentious. Regardless of the individual circumstances of each case, documenting the victim’s loss of money and other wealth is necessary to tell the story.
I will be preparing additional blogs and podcasts to continue the discussions about protecting vulnerable victims from determined fraudsters.