Payments Fraud Rides Money Mules Into 2019

Fraud Makes Headway Via ‘Payroll Diversion’

Mule scams spur warnings from the FBI and other agencies headed into 2019. In the meantime, individual payments fraud cases in the U.S. show some more traditional methods of ill-gotten gains, spanning kickbacks, falsified records and misuse of credit card data.

It’s no surprise that payments fraud is on the rise. Juniper Research, for example, has estimated that retailers will lose as much as $130 billion in card-not-present (CNP) fraud through 2023 — as tech gets more complex and transactions are done across borders.

It’s gotten bad enough that the Federal Bureau of Investigation (FBI), and other enforcement agencies globally, sent out warnings late last month about “money mules” — a new(ish) wrinkle in fraudulent activity, where individuals’ and companies’ bank accounts are used unwittingly to move money to bad actors’ accounts, most frequently in money laundering activities.

In December, as a matter of fact, Europol said it had identified more than 1,500 mules, with as many as 168 arrested by that time. As noted by UK Finance in September, nearly £100 million ($126.27 million USD) was lost in the first six months of 2018 alone, and the average losses stemmed across thousands of pounds for individuals and tens of thousands of pounds for businesses.

Through the “Don’t Be a Mule” campaign, the FBI has been warning that the fraudsters are targeting companies, schools and nonprofits across the United States.

Then again, the fraud may be a bit more low-tech and on-site. In a smattering of headlines, news came this past week from Georgia, where an account manager at a dental firm stands accused of stealing about $84,000 from customers. The accused, Essence Boatwright, allegedly bilked dozens of patients over five years by logging into Carestream Dental profiles via company computer access, and crediting refunds to her own checking account. According to reports, the scam was allegedly tied to Boatwright having to approve or deny credit applications. Thus, she had banking and credit card information.

Separately, as reported in North Carolina, Former Buncombe County Manager Mandy Stone admitted guilt to conspire in a kickback scheme, and faces up to five years in prison and a $250,000 fine. Stone is the third official to plead guilty in a case where she conspired with two other county staffers — Jon Creighton and Wanda Greene — to submit per diem expense reports to the county for meals, other expenses and gifts totaling more than $40,000, even though those expenses had been covered by a contractor’s business (the contractor has not been charged). The Asheville Citizen-Times reported that the scheme falls under the ruse of “kickbacks-for-contracts.”

In yet another case, Catholic Charities of St. Paul and Minneapolis has linked with authorities to investigate an alleged theft by three women, who took thousands of dollars meant to help the homeless. The accused pretended to be landlords renting to those victims. One accused fraudster, Sharré Ophelia Rush, gave an unnamed charity worker her Social Security number and helped fill out phony documentation. The charity’s accounts payable department cut housing rental assistance checks over the course of several years, beginning in 2012, for hundreds of thousands of dollars.