£1.74 million online loan-fraud scheme foiled by Feds
More than 2,000 victims lost money in the scheme since 2005
By Ellen Messmer | Network World US | Published: 11:32, 12 July 2012
A crime ring using fake websites and online ads to lure thousands of victims into their loan-fraud scheme that robbed them of millions of pounds has been disrupted by federal authorities.
A federal grand jury in Buffalo yesterday returned a 62-count indictment against 32 defendants residing in Michigan, New York and Canada accused of defrauding what could be more than 2,000 victims who lost £1.74 million ($2.7 million) in a loan-fraud scheme carried out since 2005. It was all based on fake Internet advertising that often mimicked the names of actual financial firms to make it seem legitimate.
Federal authorities yesterday said they've arrested 10 of the defendants, though others are at large, charging them with conspiracy to commit wire fraud and launder money.
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"As a result of this investigation by Homeland Security Investigations, a major international criminal network has been disrupted," said John Morton, director of US Immigration and Customs Enforcement, whose Homeland Security Investigations (HIS) division in Buffalo, NY went after the online crime ring with help from the US Attorney's Office in the Western District of New York.
The ring allegedly fooled loan applicants through numerous websites and search engines to get them to apply for loans, then told them they were approved, then directed them to make an initial security deposit payment through Western Union to money couriers so the crooks could get the victim's funds. But the victims never received loans or refunds of their money.
When victims realised they had been scammed, the crime ring operating the websites abandoned the old sites for new fictional companies, with online listings that included fake addresses.
The US government is seeking the arrest of other defendants in Canada under international treaties, and all the defendants could face 20 years in prison or more, a £161,311 ($250,000) fine and other penalties, if convicted in federal court. One defendant has already pleaded guilty to wire fraud and is scheduled to be sentenced in August.