LAS VEGAS (10/30/14)--As she walked through her branch in December 2012, Gail Cook, CEO of Widget FCU, overheard a branch manager comment about a strange new account, words that would spark an investigation that would span more than a year and involved tens of millions of dollars in fraud.
In this two-part series,
will cover the Widget FCU case, how Cook and her staff helped bring down a conspiracy and what credit unions can learn from it. Cook told her story to the nearly 300 credit union representatives that particpated in the Credit Union National Association-National Association of State Credit Union Supervisors Bank Secrecy Act Conference, which ended here Wednesday.
Cook and Widget FCU, Erie, Pa., with $264 million in assets, eventually found they helped shed light on a group of fraudsters
Gail Cook, CEO of Widget FCU, says she overheard a branch manager comment about a strange new account, words that would spark an investigation that would span more than a year and involved tens of millions of dollars in fraud. (CUNA Photo)
responsible for tens of millions of dollars worth of phony IRS refunds, opening a minimum of 3,000 fraudulent accounts and identity theft affecting as many as 20,000 consumers.
Back in December 2012, Cook heard a branch manager remark that another online account based in Providence, R.I., had just been opened. Widget opens 300 to 400 online accounts per month, so while nothing seemed suspicious on the surface, Cook told her manager to mention it to the compliance department.
A few days later, the vice president of branches said he got a call from a man who did not have an account, but had received account information and materials from Widget.
"At this time, I started feeling a little nervous. Most of our accounts are based in Erie and the surrounding areas," Cook said. "So I quietly went to our IT department and asked them to do a search of all accounts opened through online channels that didn't seem to have any connection to Pennsylvania. And they got back to me a few days later with eight accounts, and said, 'You're not going to like what we found.'"
The eight accounts had been opened over an eight-month period from November 2011 to September 2012. Four were based in Inwood, N.Y., three based in Providence, R.I., and one based in Brooklyn, N.Y. Cursory examination into those accounts revealed some odd similarities.
All the accounts listed the account holder's occupation as some kind of technician. All the accounts from each town had similar phone numbers and street addresses. All used Yahoo e-mail accounts. And all of the accounts said they met Widget's field of membership requirement through a brother who lived in the Erie area.
So Cook contacted a National Credit Union Administration examiner, who told her to contact the FBI.
"When I called the FBI, I wanted all the documentation I could get my hands on, anything we had on file from these accounts to give to the FBI," Cook said. "And that's when we started seeing the real red flags."
Those red flags included:
- All listed their monthly income in account documents as being between $40,000 and $80,000 per month;
- The driver's licenses of all the accounts from each state had the same height, weight and eye color listed, and the signatures were all the same. All the photos were slightly fuzzy, and the subjects were dressed similarly;
- All account holders had used utility bills to provide proof of address, and all bills were from the same amount and had the same handwriting. A call to the utility companies revealed no such accounts;
- All the accounts were accessed within minutes of each other from the same IP addresses; and
- All account activity involved ATM transactions in public places and the sending and receipt of postal money orders.
After giving the information to the FBI, Special Agent Michael Thoreson brought a few IRS special agents to speak to Cook, and then she didn't hear anything.
Until she got a call earlier this year.
"In April of this year, Agent Thoreson called me and went on and on and on thanking us for the work we had done. He said they had uncovered the largest fraud conspiracy of its kind to date," Cook said.
"It kind of blew us away when he called. We had called them and given them our information, and then we get this phone call. He just went on and on about how this information we gave him allowed them to crack the case."
for Part Two of the story, including how the case was cracked, and what credit unions can learn from Widget FCU.