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Thread: Cross Border Cheque Scams
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Cross Border Cheque Scams
REPRINTED FROM THE FEBRUARY RCMP GAZETTE
Anybody out there on any of these divisions??
Gazette magazine, Vol. 70, No. 1
Fighting cross-border cheque scams
National plan starts with individual readiness
By Caroline Ross
Courtesy of Greg Campbell, USPIS
American and Nigerian law enforcement officers discovered several counterfeit cheques concealed in this shoe, a flip-flop-style sandal, which Nigerian fraudsters were attempting to mail to criminal associates overseas.
You receive an e-mail: a businessman in the United Kingdom (U.K.) is relocating and wants to rent the apartment you advertised online. He mails you a company cheque for 12 months rent. After you deposit the cheque, he e-mails again: his job transfer has fallen through — could you wire him back his deposit, minus a fee for your trouble?
You do it, never suspecting that the “U.K. businessman” is a Nigerian youth in an Internet café; that the “company cheque” is a counterfeit mailed from Canada; that the wired funds were collected by criminal associates in Singapore.
What you do know — when your bank calls a month later to advise you of the counterfeit cheque — is that you must repay the losses. You’re just another victim of cross-border mass-marketing fraud involving counterfeit cheques.
Rental schemes, lottery schemes, overpayment schemes, inheritance schemes — the list of scams is endless. And it’s lucrative business. Between January and October 2007, law enforcement agencies in the United States (U.S.), Canada, the U.K., Nigeria and the Netherlands collectively seized over $2.1 billion, face value, in counterfeit financial instruments.
“It’s a global problem,” says Insp Mario Beaulne, officer in charge of major fraud with the RCMP. “A gentleman in Finland gets a letter from Singapore and needs to send money to Canada. Where are the bad guys? They’re all over the place.”
The bad guys are using international borders and the Internet to evade detection, but international law enforcement is starting to blow that cover, tracing the cross-border network of e-mails, letter mail and money transfers, connecting the dots and apprehending the perpetrators.
Tracing Internet communications
“Most victims, regardless of what country they’re in, are identified through the Internet,” says Greg Campbell, inspector in charge of global security and investigations with the U.S. Postal Inspection Service (USPIS), the agency responsible for protecting the U.S. mail system from criminal misuse.
The Project COLT joint task force in Montreal intercepted 14,648 lottery scam letters — and an accompanying $46 million worth of counterfeit cheques — destined for Canadian and American victims in November and December 2007.
Most victims are also U.S. citizens, thanks in part to American banking laws that require banks to make deposited funds available within five days — even though it may take weeks or months for a cheque to clear.
To address the problem, USPIS investigators interviewed fraud victims and identified e-mail addresses implicated in the crimes. Working closely with Internet companies in the private sector, investigators were able to trace the line of communication back to the original Internet Protocol (IP) addresses.
Most IP addresses were from Nigeria, says Campbell, so the USPIS joined forces with Nigeria’s Economic and Financial Crimes Commission, combining the IP address information with local intelligence in Nigeria. The partnership was so effective that the agencies were able to target specific Internet cafés and arrest several perpetrators on the spot.
“We used the tools of the suspects in order to identify where they were and to arrest them,” says Campbell. “It was a private sector and international law enforcement effort. It had never been done before in the United States from a fraud standpoint.”
Monitoring the mail
Mass-marketing fraudsters also rely on the mail system to cover their tracks. Counterfeit cheques are often produced in one country, mailed in bulk to associates in other countries, then re-mailed individually to foreign victims.
Montreal has become one of many re-mailing hubs, particularly for lottery scams targeting U.S. citizens, says RCMP Sgt Yves Leblanc.
Leblanc works in Montreal and runs Project COLT, one of six Canada–U.S. joint task forces investigating Canadian-based mass-marketing fraud. COLT partners — the RCMP, the Sûreté du Québec (Quebec provincial police), Montreal city police, the FBI, Canada Post Security and Investigation Services, the USPIS, Canada Border Services Agency, U.S. Immigration and Customs Enforcement, the U.S. Federal Trade Commission and the Competition Bureau of Canada — operate a mail interception program designed to identify and interdict counterfeit financial instruments as they enter or leave Canada via postal or courier mail.
Partners know what to look for, says Leblanc. Nigerian addresses, negotiable instruments over $10,000 and bundles of letters dropped in street letter boxes and affixed with specific postage are just some of the signs that could prompt further investigation in an attempt to nab the criminals behind mail fraud.
“When you investigate the people who are doing this,” says Leblanc, “it’s just small cells everywhere — two or three people working together, often with links to Nigeria.”
While many of the counterfeits COLT has intercepted originate in Nigeria, others are produced in Canada by criminal offshoots. The patterns have only become evident over the last few years of mail interdictions, says Leblanc.
“It’s difficult investigation, but we have a lot of success. In a lot of cases, we charge the people in Canada, and in a lot of others, we extradite people to the States.”
Following the money
A third piece of the puzzle fell into place in March 2007, when the Canadian Anti-Fraud Call Centre’s Criminal Intelligence Analytical Unit (CIAU) began a one-month pilot project to “follow the money” implicated in cross-border counterfeit cheque fraud.
Taking victims out of the loop
Identifying and prosecuting fraudsters is one aspect of the fight against global counterfeit cheque fraud. Teaching the public how to recognize, report and avoid scams is another.
“Education is the key — in all of the countries,” says Greg Campbell of the United States Postal Inspection Service (USPIS). “If we educate the public not to become victims, then we take away the crime.”
In October 2007, the USPIS and the Alliance for Consumer Fraud Awareness (U.S.) launched www.fakechecks.org, a public education web site specifically focused on counterfeit cheque fraud perpetrated via the Internet. The site includes videos, FAQs and victim interviews that help people recognize popular scams and overcome the stigma associated with reporting victimization.
The Canadian Anti-Fraud Call Centre is a repository for mass-marketing fraud complaints in Canada. The CIAU analyzes the complaints to identify trends and develop intelligence packages.
“We looked at our database for a period of one month, and we discovered that the vast majority of requests by the criminals were to send money to foreign financial institutions,” says Cpl Louis Robertson, RCMP officer in charge of the CIAU.
The pattern was so clear that the CIAU extended the pilot indefinitely. But, says Robertson, Canadian investigators weren’t able to link the money trail to other global fraud activity until six months later, when they met with their American, British, Nigerian and Dutch counterparts on a broader project to jointly assess the global threat presented by mass-marketing fraud.
At that meeting, the full picture of the cross-border counterfeit cheque fraud became clear.
“Each country may have a part of the information,” says the RCMP’s Beaulne. “A scam may be initiated in Nigeria, but then have criminal cells or links in other countries like the U.S. and Canada or elsewhere. In Canada, we might see where some of the envelopes are addressed and where some of the victims are asked to send the money, but we didn’t necessarily understand where or who was behind the sending of the letters. At the same time, over in Nigeria and the U.S., (where investigators were pinpointing perpetrators), they may not have known exactly where the money was going.
“The break-through, really, was that we were able to have all the key partners in the various countries able to share information and then close the loop on the whole process.”
It’s only one loop in a massive fraud network that involves many other countries and many other components — and the crimes will continue as the perpetrators relocate or employ new tactics to delay detection.
“We can’t stop them all,” says Campbell of the USPIS. “When we take off one suspect, there are plenty standing in line to fill that void. But we’re not stopping. We will continue to investigate these crimes.”
As the investigations and intelligence sharing continue, global law enforcement shines more light on the criminal trail, leaving future suspects with fewer shadows to hide behind.
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