When people tell me they think they wired money to a con artist and want to know how they can get it back, I try to break the bad news to them gently. They'll likely never see that money again.
That's what they're afraid of when they call. I still encourage them to report the fraud to authorities and to the money transfer service on the off chance something can be done, but I warn them not to get their hopes up because a lot of this fraud is international and not easy to solve.
In this season of Thanksgiving, many victims, including some in the Lehigh Valley area, can be thankful because there is a chance they'll get their money back after all.
MoneyGram International has agreed to pay $100 million to reimburse scam victims as it attempts to avoid criminal prosecution in federal court in Harrisburg for aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program.
The deferred prosecution agreement is the result of an investigation by postal inspectors and the U.S. attorney's office for the Middle District of Pennsylvania, which includes Monroe, Carbon and Schuylkill counties.
Several scam victims in those counties are eligible for reimbursement, including people from Lehighton, Stroudsburg, Jim Thorpe, Mount Pocono, St. Clair and Shenandoah.
Federal authorities allege MoneyGram knew its money transfer system was being used by con artists who were stealing money through fake lotteries, sales of merchandise that doesn't exist and offers of loans that never were made. And by impostors posing as loved ones in trouble and in urgent need of dough.
Authorities say MoneyGram knew some of its agents were assisting scammers by concealing their identities so they could get away with their crimes. Yet senior company officers refused to fire agents who had racked up excessive fraud complaints.
Court records allege that instead of firing one agent in Toronto, it threw a party in his honor, gave him a bonus, increased his commissions and allowed him to open more locations.
"MoneyGram's broken corporate culture led the company to privilege profits over everything else," Lanny Breuer, a U.S. assistant attorney general, said in a statement. "MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims."
From 2004 to 2009, MoneyGram customers filed nearly 64,000 fraud reports totaling $128 million in the United States and Canada. When victims wired payment to the crooks through MoneyGram, the company profited by collecting fees on the transactions, authorities said.
MoneyGram officials are scheduled to make their first appearance Wednesday in federal court in Harrisburg. The company cooperated with investigators and did not dispute the allegations.
"We take compliance very seriously at MoneyGram, and nothing angers us more than when our services are used to perpetrate illegal activity," Chairman and CEO Pamela Patsley said in a statement. "Since 2009, we've created a new culture at the company and have taken numerous steps to enhance our global compliance and anti-fraud programs."
Court records say that in 2009, the company began addressing the problem by closing some MoneyGram outlets, replacing senior managers and creating an anti-fraud alert system that has stopped more than $100 million in fraudulent transactions.
This is the second time authorities have tried to hold MoneyGram accountable for processing fraudulent transactions. In 2009, the Federal Trade Commission raised similar allegations, resulting in MoneyGram paying $18 million to be reimbursed to victims.
Authorities say they've charged 28 former MoneyGram agents with fraud, money laundering and conspiracy. Court records in those cases explain how people, including a Stroudsburg area woman, were ripped off.
The woman, who is not identified, received a "certificate of award" in the mail from Universal Lottery Promotion, saying she'd won $65,000 in the British Lotto. With the award letter was a $3,600 check, supposedly an advance payment of the "international clearing fees."
She spoke with an agent in Winnipeg who told her to cash the check and wire $3,400 to an agent in Brooklyn to pay the international clearing fees. She sent payment by MoneyGram and never got her lotto award. A few days later, her bank told her the check she had deposited was counterfeit, and she'd have to cover the amount. Authorities said the money she wired via MoneyGram eventually ended up being collected by someone in Montreal.
"Thousands of citizens in Pennsylvania and other states suffered heartbreaking financial losses for years because of these international telemarketing schemes, which depended on MoneyGram's facilities to give them an electronic highway to move their illegal profits quickly out of the country," Peter Smith, U.S. attorney for the Middle District of Pennsylvania, said in a statement. "This case provides a way to get restitution for victims and ensure that MoneyGram does its part to deter similar scams in the future."
Never wire money to someone you don't know, no matter how trusting they sound. If you're sent a check from a stranger and asked to deposit it and then wire some of it back, don't do it. The check will bounce and you'll be responsible for repaying your bank.
The Watchdog is published Thursdays and Sundays. Contact me by email at email@example.com, by phone at 610-841-2364 (ADOG), by fax at 610-820-6693, or by mail at The Morning Call, 101 N. Sixth St., Allentown, PA, 18101. Follow me on Twitter at mcwatchdog and on Facebook at Morning Call Watchdog.
DID YOU GET SCAMMED?
If your loss occurred from 2004 to 2009, call the Justice Department at 877-282-2610 to see if you are eligible for reimbursement.