Credit Union Uncovers Massive Nationwide Fraud Ring
Federal prosecutors on Wednesday credited an employee of the $252 million Widget Financial Federal Credit Union in Erie, Pa., for uncovering a massive fraud scheme.
The accused five-person ring allegedly stole personal information of thousands of people, opened bogus accounts at several credit unions and banks across the country and filed fake federal income tax returns that bilked the U.S. Treasury out of more than $10 million over nine years, federal prosecutors said.
“This investigation began in December 2012 when an alert Erie credit union employee contacted the FBI to report suspected fraud related to several bank account applications submitted via the Internet that listed the same personal information (under) different names,” David J. Hickton, U.S. attorney for Pennsylvania’s Western District, said during a press conference in Pittsburgh. “From the initial information, the FBI and IRS in Erie, Pa., working with the FBI and IRS in New York, Providence R.I. and Memphis discovered thousands of fraudulent bank accounts tied to this scheme that had been opened in hundreds of financial institutions throughout the country.”
That employee who contacted the FBI was Widget Financial President/CEO Gail J. Cook (pictured above), who with two other employees, connected the dots that enabled federal investigators to uncover a massive fraud case that is “on a scale that is unprecedented,” Hickton said.
In an exclusive interview with CU Times, Cook said a branch manager initially raised concerns about “another account being opened from the New York City area,” because the vast majority of online accounts opened come from people who live in the Erie area.
“She (branch manager) brought the matter to our compliance/member service departments in that she thought it was strange she was getting another application from the New York City area,” said Cook. “At the same time, my vice president of branches got a phone call from someone in New York City who had received mail from us, but he told us he did not open an account with us. I took it from there realizing there was something peculiar here.”
Cook asked her IT department to run a report on all accounts that were opened over the last two years from New York, Rhode Island and Connecticut. Widget Financial began offering online account openings in 2012.
“At that point, we unveiled 10 accounts that were similar, so we started looking at the applications,” she said. “The utility bills were the same and looked like a cut and paste type of thing, some of the IDs and some of the phone numbers were the same as well.”
Then Cook looked at the IP addresses to see where and when the accounts were being accessed from.
“We could see that from the same IP address, they would log on to one account and then two minutes later would log on to another account and then (minutes later) they would log on to other accounts checking balances,” she said. “At that point I knew we didn’t have legitimate accounts opened here.”
Cook called the FBI and submitted the information her team collected to federal investigators.
Cook also said member accounts were never compromised.
Charged with conspiracy to commit wire fraud were Doherty Kushimo of Providence, RI; Saburi Adeyemi of Memphis, Abiodun Bakre of Queens, N.Y., Adetunji Gradegeshi of Queens, N.Y. and Adebola Mejule of Hempstead, N.Y. Kushimo and Bakre also have been charged with aggravated identity theft, court documents show.
Kushimo pleaded not guilty to the charges in U.S. District Court in Erie, Pa., on Monday.
Federal prosecutors alleged these individuals targeted and stole the personals identities, including names, Social Security numbers, birth dates, from thousands of individuals. They also stole false identification documents such as driver’s licenses, Social Security cards, and used this information to open accounts at eight credit unions in five different states and PNC Bank in Pittsburgh.
The conspirators used these bank accounts to deposit tax refunds they received after filing phony federal income tax returns. Some of the stolen funds made their way to Nigeria, according to court documents.
The conspirators filed about 2,400 bogus federal income tax returns from 2005 to this year that sought more than $21 million in tax refunds. The actual losses to the U.S. Treasury were more than $10 million, court records show.
Federal prosecutors also said the conspirators opened credit cards using fake IDs and used them to support their fraudulent operations by purchasing software that allowed them to remain anonymous on the Internet.
Hickton also said the FBI and IRS are continuing their criminal investigation into this case, indicating that the losses are expected to reach tens of millions of dollars. Federal authorities said the indictments represent just the “the tip of the iceberg,” according to local media reports.
“We could be working this case for the rest of our careers,” Patrick Fallon, assistant special agent in charge of the FBI’s Pittsburgh field office, told the Pittsburgh Business Times.