Blog Post

Background:

The scams are often initiated through either dating sites/apps or spam emails/phone calls. They currently appear to be originating more often through the dating/social sites/apps. The fraudster builds a rapport and often the façade of a romantic relationship (online and long distance) with you. They are looking to cultivate an ongoing (weeks to months) digital/virtual relationship with you to make them trust and develop feelings for them, even promising the possibility of a future in-person meet up. At some point they bring up a way for both of you to make some extra money. If you are receptive, they begin to lay out how it works. At any point you resist or say you are not interested, the online relationship quickly fizzles out. The fraudster is on to a new mark. The fraudster may even imply that participating will help them have the money to meet in person sooner to entice you to participate.

The scam:

You are sent a check for a large amount of money, typically over $30,000. Then you are instructed to go to a bank or credit union and open an account using cash or other funds you already have, asking questions about other available banking services to appear to be a legitimate new accountholder. You are to indicate through conversation that you are expecting a large check from a previous employer that will be a 401(k) rollover and you will be depositing this into an IRA. After a couple of weeks, you are told to bring in this check and make the deposit into the IRA, often with the same employee who opened it, building familiarity and knowing they are aware of this soon to be received check. Then you simply deposit the funds into an IRA, hoping the personal familiarity and the type of account will keep the bank employee from putting a hold on the check. Within 2 days, you’re back looking to withdraw the money from the IRA, in cash. You have been told to go to a different individual who may not realize these funds are from a check only deposited 1-2 days prior. Then you are to send part of the cash through various means to people involved in the scam via mail and keep a designated amount for yourself. You may be told to send the cash directly, use gift cards, cash app, or other means, but because these tools are purchased with the ill-gotten cash, they become harder to trace or locate.

Afterwards:

When the bank or credit union receives notice from the depository bank or credit union that the check is fraudulent and the funds are being returned, the bank or credit union is left holding the bag. However, because the mark (or mule), in this case you, uses your true personal information to open the account, you are the ones legally liable for repaying the money. You can be held liable by the bank or credit union with a civil claim, and you could also be prosecuted for perpetrating the fraud. Knowing it is not a legitimate retirement account, making false statements about where the money is coming from to the bank or credit union, and then sending money or monetary instruments to the other scammers could open you up to prosecution for various felonies including fraud for profit, check fraud, money laundering, dishonest misappropriation of property, and mail fraud.

The original perpetrator of this fraud goes to great lengths to coach you, the mark/mule, to make sure you know what to say to the bank or credit union, as well as the police and prosecutors’ offices after the fact, because they will be coming to see you to investigate. Continuing with the process at this point would make you a willing participant in fraud and subject to prosecution on your own or as part of the fraud ring. Although it is possible they will opt to consider you a victim as well, they very well could choose to prosecute, as you knowingly went along with the scam and were the catalyst for perpetrating the fraud. Any money you send to the fraud ring is gone. The fraud ring is well organized and uses layers of other mules or fictitious names, including on the dating site/app, leaving the trail to go cold, and you left holding the bag.

Please be aware of the old adage with check fraud…whether it is an IRA, secret shopper, lottery, inheritance, or other type of scam, if you are asked to send money to someone else to obtain money or as part of the completion of a task that does not line up with the pay, it is always a SCAM.

For more information about scams, how we protect you, how to protect yourself, and how to recognize and report fraud, visit our website: https://www.membersalliance.org/education/security-privacy