In what may raise many questions about banks' ability to detect and deter fraudulent activities, a European fraud ring used a number of shell companies set up in the U.S. to defraud over 50 U.S. banks out of more than £10 million.
Last week, Europol said that an international law enforcement operation it coordinated last year broke the back of an organised crime group which used a number of shell companies to defraud U.S. banks out of millions in cash.
Members of the fraud ring, most of whom were Greek nationals, set up a number of shell companies in the United States and opened bank accounts in the name of these companies. The criminals then made a number of fund transfers to these accounts from different locations in the EU to gain the trust of over fifty U.S. banks which, based on these transfers, issued debit and credit cards for these accounts.
After the cards were issued, retailers based in Spain quickly financed the available credited amounts on the cards and laundered the stolen funds to a number of bank accounts in several EU countries. Once the fraud was discovered, it kicked off an international operation that involved the participation of law enforcement authorities in the United States, Austria, Denmark, and Greece.
On 6th October last year, Europol coordinated a pan-European operation which culminated in the arrest of 105 suspects and the seizure of £356,047 in cash and fourteen high-end vehicles, including 13 luxury cars. The operation involved 88 house searches, the freezing of 87 bank accounts with more than £1 million, and the execution of 19 European arrest warrants.
"Europol facilitated the information exchange, the operational coordination and provided analytical support for this eight months long investigation. During the operation, Europol set up a coordination centre at its headquarters with the use of a virtual command post to enable liaison officers from the involved countries, Europol experts and a representative from Eurojust to coordinate the operational activities. Europol also deployed an analyst to Greece to provide real-time analytical support to investigators on the ground," Europol said in a press release.
The dismantling of the financial fraud ring took place just days before Europol and authorities from the UK, Italy, and Hungary cracked down on the sale of stolen credit card data on dark web marketplaces and card shops, seizing 90,000 pieces of card data and preventing approximately €40 million in losses.
Last year, a British national was also sentenced to twenty months in prison in the U.S. for stealing as much as $22 million from 375,000 victims in the U.S. by depositing remotely-created checks (RCCs) on behalf of account holders in banks to pocket the money.
Gareth David Long formerly operated V Internet Corp, a payment processing company between 2008 and 2013. Long stopped acting as a third-party payment processor for other merchants in 2013, but continued to use RCCs to charge the bank accounts of consumers whose personal identifying information he had acquired since 2008.
Between January and July 2013, Long created and deposited more than 750,000 RCCs that were valued at over $22 million. While half of those RCCs were immediately reversed by victims' banks, he still managed to steal around $11 million by carrying out wire fraud in the six-month period.
Using the stolen money, Long made several high-value purchases such as a ranch and 23 acres of land in Texas, three airplanes, cars, a fire truck, and construction and farm equipment. As part of the court order, Long was forced to forfeit the purchased land and the Texas ranch and also had more than $2.9 million of the stolen case seized by the U.S. Postal Inspection Service.