Fraud in the News

Fraudulent forex fixing

On March 19, federal and state authorities announced that the Bank of New York Mellon (BNY) will pay $714 million to settle accusations that it cheated government pension funds and other investors for more than a decade. According to The New York Times article, Bank of New York Mellon Will Settle Currency Trade Case for $714 Million, by Ben Protess on March 19, the settlement resolves lawsuits filed in 2011 by Preet Bharara, the U.S. attorney in Manhattan, and Eric T. Schneiderman, the New York attorney general.

According to the article, the authorities accused BNY of assuring clients that they would receive the best possible rate when executing a foreign exchange market currency (forex) trade. However, the BNY did the opposite — it provided clients "prices that were at or near the worst interbank rates," which enabled the bank to make extra cash during the 2008 financial crisis.

In a statement by Bharara included in the Times article, he said that clients "trusted the bank to be honest about the financial services it was providing and to deal with them fairly." But instead, he said, the bank "and its executives, motivated by outsized profits and bonuses, breached this trust."

According to the article, victims included New York City pension funds and prominent investors. City investors included teachers and police officers, and the private investment funds belonged to entities like Duke University and the Walt Disney Company.

The Times article said the New York case originated from a whistleblower complaint filed with the New York attorney general's office in 2009. The whistleblowers included Harry Markopolos, CFE, CFA, the recipient of the 2009 ACFE's Certified Fraud Examiner of the Year award. Markopolos was the first to raise concerns about Bernard L. Madoff's Ponzi scheme.

Inmate mobile phone extortion

More than 90 percent of American adults have cellphones, and according to a March 24 article, Cell Extortion: Inmate Phones Leading to Violence, Fraud, by Lisa Riordan Seville and Hannah Rappleye of NBC News, the majority of prisoners might also have them. Georgia, the nation's fourth-largest prison system, confiscated more than 13,500 phones in 2014 — about one for every five prisoners.

So when Addis Thompson, 78, received a phone call purportedly from his local sheriff's office in Macon, Georgia, he didn't realize an inmate was scamming him. According to the article, the caller told him that Thompson had missed jury duty and a warrant was out for his arrest. The man, who identified himself as an officer, told Thompson he could pay a fine or go to jail.

The caller wasn't a sheriff's deputy — he was, allegedly, a convicted coke dealer serving 30 years at Georgia's Autry State Prison. Thompson, who forked over $734 for his "fine," is one of many victims across the country whom cellphone scammers inside Autry have targeted. According to the article, law enforcement officials in California, New Jersey and Georgia told NBC News they've traced "jury duty" calls to prison.

Georgia prisoners also have used mobile phones to text pictures of bloodied inmates to their outside relatives and threaten further harm unless the families send cash.

Dad to the rescue

According to the March 24 Iowa City Press-Citizen article, Bank teller thwarts fraud of his own daughter, by Zach Berg, police say an Iowa City bank teller thwarted an attempt by a Coralville, Iowa, man to cash a fraudulent check — a check the teller's daughter had written to pay her rent.

An Iowa City police complaint states that Brian Jeffrey Albaugh, 29, found a check for $700 on which the "Pay to the order of" line was left blank. The complaint stated the bank teller's daughter had an agreement with her landlord to keep it blank.

According to the article, the complaint states that Albaugh "put his name or had someone else put his name" on the check. The bank teller — the father of the would-be victim — contacted his daughter and the landlord to confirm they didn't authorize the check. The bank didn't give Albaugh the money.

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