New Fraud Scheme Targets Navy Federal Members With Cellphones in Parking Lots

“These cases illustrate how important it is to treat an authenticated banking app with the same level of caution as a wallet. If approached by someone asking to borrow your phone — especially in a public setting like a parking lot — we recommend declining and offering to make the call or transfer on their behalf if necessary,” a Navy Federal spokesperson said Tuesday. “Navy Federal Credit Union is deeply concerned about these schemes and is actively cooperating with law enforcement in investigations.”

Navy Federal said it has taken several steps to protect members from this type of fraud, including member education campaigns focused on mobile device safety and scam awareness.

Federal prosecutors said conspirators who act as the talkers would initiate the fraud scheme. They allegedly approached the marks (members) in parking lots near an Navy Federal branch, asking whether they have an account with the credit union. If the marks said yes, the talkers claimed they could not access their own Navy Federal account at an ATM or were otherwise in need of financial assistance.

Victims who agreed to help were allegedly offered reimbursement via Zelle or Cash App. Once victims handed over their phones, the talkers faked accessed to financial apps under the pretense of sending payments to the victims. In cases where victims resisted, perpetrators forcibly used facial recognition to unlock the phones and, in some instances, displayed firearms to intimidate them, according to the indictment.

Other alleged conspirators, who were waiting in nearby rental cars, acted as “phone controllers” and used the victims’ Navy Federal app to submit fraudulent personal expense consumer (PEC) loan applications. Funds were deposited into the victim’s savings account and transferred to checking accounts to obscure the loan’s origin. The credit union offers members PEC loans with nearly instant disbursement upon application.

What’s more, the suspects allegedly disputed large debits in the victims' banking accounts, prompting Navy Federal to temporarily credit the victim's account, which increased the funds available in the victim’s account for the fraudsters to steal. The perpetrators, who allegedly obtained the victims’ personally identifiable information and login credentials, also gained access to the victims’ Cash App accounts and made them accessible to other members of the fraud ring.

After allegedly stealing the funds, the suspects again misled the victims by stating that too much money had been transferred to the member’s account. The conspirators obtained the alleged "excess” funds from victims’ accounts via Cash App, Zelle or Navy Federal’s member-to-member transfer. In situations where the victims’ account had a limit on the amount of funds that could be transferred in a single day, the suspects coerced members to obtain a money order from a store or cash from an ATM by following them to the store or cash machine, according to the indictment.

To cover their tracks, the conspirators allegedly deleted email and app notifications, uninstalled banking applications and returned phones in airplane mode, according to prosecutors.

Stolen funds were allegedly laundered through accounts belonging to conspirators via Navy Federal, Venmo and CashApp. In many instances, the victims’ own accounts were used to reroute the money, adding another layer of concealment.

After Navy Federal members realized they were victims, some of them reported being contacted by the suspects, who threatened them and claimed the stolen funds belonged to the fraud ring.

The indictment’s named conspirators were Rodney Thornton, Steven Jones III, Jamaica Sumner, Troy Davis III, Laterrance Parker Jr., Jordan Pugh, Lois Staton, Joy Davis, Persia Brown and Andrea Holley. All face multiple felony counts, including bank fraud, wire fraud, conspiracy to commit bank and wire fraud, and conspiracy to commit money laundering.

Thornton, Jones, Sumner, Davis, Staton, Davis, Brown and Holley have pleaded not guilty to all charges. Court hearings are pending for Parker and Pugh.

“These types of scams can happen anywhere, not just in Virginia. We encourage all members — regardless of location — to remain vigilant and cautious about letting others use their phones, especially in unfamiliar or high-traffic public areas,” the Navy Federal spokesperson said. “If you believe you’ve been targeted or affected by this type of scam, please contact your local police department immediately. Navy Federal is committed to supporting our members and encourages anyone impacted to also reach out to us directly.”

Read More: Indictment USA v. Thornton et al.

Peter Strozniak can be reached at pstrozniak@cutimes.com.