Federal authorities indicted 94 people yesterday (Dec. 7) for their part in a check-fraud ring that netted the suspected crooks more than $450,000 from TD Bank.
Members of the suspected New York City crime gang are accused of exploiting a loophole that allowed them to open more than 90 bank accounts, deposit fraudulent checks and then transfer the money to their new checking accounts and withdraw large sums before the (phony) checks had cleared.
Leading the fraud ring were nine "recruiters," who allegedly enlisted 85 others to open the checking accounts and deposit the bad checks, which were drawn from closed bank accounts with insufficient funds or from banks other than TD Bank. Once an account was opened, the recruiters would transfer the funds via telephone, which made the money immediately available for withdrawal. (Traditionally, money from a deposited check cannot be withdrawn until that check has cleared.)
TD Bank public relations manager Rebecca Acevedo told SecurityNewsDaily that the bank "conducted an internal investigation into this matter and we continue to work closely with authorities on their criminal investigation. TD Bank maintains and upgrades our security systems regularly, but for security reasons we do not disclose what these are. What I want consumers to know is that no customer data was ever compromised."
The lower-level members then took out money, in some cases $5,000 at a time, from Western Union branches in Manhattan, casinos in Atlantic City or at Foxwoods Casino in Connecticut, all of which offered high- or no-limit withdrawals.
"This case charges the entire criminal conspiracy from top to bottom — from the masterminds who organized and operated the scam, to the individuals who participated to make a quick buck," Manhattan District Attorney Cyrus Vance said in an official press release.
For their participation in the fraud ring, the indictment said the 85 recruited members of the gang were "generally paid a few hundred dollars," while the recruiters took most of the money.