Tag: fraud

FBI Warns of Potential Charity Fraud Associated with the COVID-19 Pandemic


Many Americans want to help during the COVID-19 pandemic by contributing to charities, but the FBI is warning that scammers also want to help—they want to help themselves to your money.

Nationwide, the FBI and other law enforcement agencies have received reports of scammers fraudulently soliciting donations for individuals, groups, and areas affected by COVID-19.

They are leveraging the COVID-19 pandemic to steal your money, your personal information, or both.

Don’t let them.

Charity scams often occur when a scammer poses as a real charity or uses the name of a real charity to get money from you.

Be careful about giving money to any charity calling you for donations and be wary if you get a call about a donation pledge that you don’t remember making.

Remember, you can’t always believe your caller ID. Scammers often spoof organizations’ phone numbers. It’s always best to research the organization telephone number yourself and call direct to verify.

Do not be pressured or rushed to donate. That is a strong indicator of a scam.

Similarly, if you receive an email purporting to be from a charitable organization, do not click on links. These could be attempts to download viruses onto your computer or cell phone. Watch out for charity names which sound very similar to well-known charities, as well as email addresses that are not consistent with the charity soliciting donations. Instead, search for the charity using an internet search engine to ensure you’re connected to the actual charitable organization.

The best way to protect yourself is by doing your research.

Here are some tips on how to avoid becoming a victim of a charity fraud:

  • Do your homework when it comes to donations, whether you’re donating through charities, social media, or crowdfunding websites.
  • Look for online reviews of charity organizations or use information from your state’s regulator of charities or from websites like the Better Business Bureau, give.org, charitynavigator.org, or charitywatch.org to check on the legitimacy of charitable organizations.
  • Before donating, ask how much of the donation will go toward the program or cause you want to support. Every organization has administrative costs, and it’s important to understand those structures.
  • Never pay by gift card or wire transfer. Credit cards are safer.
  • After making a donation, be sure to review your financial accounts to ensure additional funds are not deducted or charged.
  • Always do your research before clicking on links purporting to provide information on the virus, purchasing COVID-related products online, or providing your personal information in order to receive money or other benefits.

The FBI has more tips at fbi.gov/charityfraud.

If you think you are a victim of a scam or attempted fraud involving COVID-19, report it to the FBI online at tips.fbi.gov and to FTC  at ftc.gov/complaint.

Blogs to Follow:

FBI.gov (October 2020)  FBI Warns of Potential Charity Fraud Associated with the COVID-19 Pandemic

Twelve charged in multi-year mortgage fraud scheme


Twelve defendants in Georgia have been charged in a mortgage fraud scheme allegedly spanning more than four years and resulting in the approval of more than 100 mortgages based on fabricated documents and false information. 

Many of the loans are insured by the Federal Housing Administration (FHA) resulting in claims being paid for mortgages that have gone through loan modification.

“These defendants allegedly used their knowledge of the real estate lending process to manipulate the system for their own benefit,” said U.S. Attorney Byung J. “BJay” Pak.  “Mortgage fraudsters threaten the soundness of the real estate market in our community.  We will investigate and charge anyone who takes advantage of our mortgage lending system for their own personal gain.”

“These charges represent the government’s commitment toward combating such alleged criminal activity,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “We will steadfastly protect American citizens and the real estate market from predators who drag down our economy by deceit to line their own pockets.”

“What we have here is a group of mortgage industry professionals that have allegedly perpetrated a sophisticated mortgage fraud for profit scheme that was designed to enrich themselves at the expense of a federal housing program,” said Wyatt Achord, Special Agent in Charge, Office of the Inspector General, U.S. Department of Housing and Urban Development. “The efforts that brought forward these charges demonstrate that when law enforcement is made aware of such schemes, we will commit the necessary resources to make sure that fraudsters are brought to justice.”  

“As charged, the defendants engaged in a multiyear scheme to defraud Fannie Mae and Freddie Mac.  The Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) will investigate and hold accountable those who seek to victimize these Government Sponsored Entities supervised and regulated by FHFA”, said FHFA-OIG Special Agent in-Charge Edwin Bonano.

According to U.S. Attorney Pak, the indictment, and other information presented in court: The defendants participated in a scheme in which homebuyers and real estate agents submitted fraudulent loan applications to induce mortgage lenders to fund mortgages. 

Listing agents Eric Hill and Robert Kelske represented a major nationwide homebuilder, and helped more than 100 homebuyers who were looking to buy a home, but who were unqualified to obtain a mortgage, commit fraud.  The agents instructed the homebuyers as to what type of assets they needed to claim to have in the bank, and what type of employment and income they needed to submit in their mortgage applications.

Hill and Kelske then coordinated with multiple document fabricators, including defendants Fawziyyah Connor and Stephanie Hogan, who altered the homebuyers’ bank statements to inflate the their assets and to create bank entries reflecting false direct deposits from an employer selected by the real estate agent.  The document fabricators also generated fake earnings statements that matched the direct deposit entries to make it appear that the homebuyer was employed, and earning income, from a fake employer.  Other participants in the scheme then acted as employment verifiers and responded to phone calls or emails from lenders to falsely verify the homebuyers’ employment.  Defendants Jerod Little, Renee Little, Maurice Lawson, Todd Taylor, Paige McDaniel and Donald Fontenot acted as employment verifiers.  Hill and Kelske coordinated the creation and submission of the false information so that the lies to the lenders were consistent. 

In another aspect of the scheme, real estate agents Anthony Richard and Cephus Chapman falsely claimed to represent homebuyers as their selling agents in order to receive commissions from the home sales. 

In reality, these real estate agents had never even met the homebuyers they claimed to represent. 

To avoid detection, the agents often notified closing attorneys that they would not be available for the home closing, and sent wire instructions for the receipt of their commissions.  When these purported selling agents received their unearned commissions, they kicked back the majority of the commissions to Hill or Kelske for enabling them to be added to the deal, keeping a small share for their role in the scheme.

The following defendants have been charged as part of these conspiracies:

•         Eric Hill, 50, of Tyrone, Georgia (charged by Information)

•         Robert Kelske, 52, of Smyrna, Georgia

•         Fawziyyah Connor, 41, of Tyrone, Georgia

•         Stephanie Hogan, 57, of Norcross, Georgia

•         Jerod Little, 42, of McDonough, Georgia

•         Renee Little, 33, of McDonough, Georgia

•         Maurice Lawson, 36, of Powder Springs, Georgia

•         Todd Taylor, 54, of Fairburn, Georgia

•         Paige McDaniel, 49, of Stockbridge, Georgia

•         Donald Fontenot, 52, of Locust Grove, Georgia (charged by Information)

•         Anthony Richard, 44, of Locust Grove, Georgia

•         Cephus Chapman, 49, of Warner Robins, Georgia

Members of the public are reminded that the indictment and informations only contain charges.  The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.

This case is being investigated by the Federal Bureau of Investigation, Department of Housing and Urban Development Office of Inspector General, and Federal Housing Finance Agency Office of Inspector General.

Assistant U.S. Attorney Alison Prout is prosecuting the case.

Blogs to Follow:

Justice.gov (September 2020)  Twelve charged in multi-year mortgage fraud scheme

Fifteen Defendants Plead Guilty to Racketeering Conspiracy in International Cyber Fraud Scheme


Fifteen defendants have pleaded guilty to-date for their roles in a transnational and multi-million dollar scheme to defraud American victims through online auction fraud.

Four of the guilty pleas took place in the past 24 days before U.S. Magistrate Judge Matthew A. Stinnett of the U.S. District Court for the Eastern District of Kentucky.

Bogdan-Stefan Popescu, 30, of Romania, pleaded guilty on June 11, 2020, to one count of RICO conspiracy.  According to plea documents, Popescu operated a car wash in Bucharest, Romania, where he managed co-conspirators in the RICO enterprise.  From at least December of 2013, Popescu oversaw an operation whereby he knowingly negotiated fraudulently obtained Bitcoin. 

He did so in many ways. 

For example, he would sometimes receive cryptocurrency from co-conspirators who obtained the funds through online fraud scams, transfer the cryptocurrency to other conspirators such as co-defendant Vlad-Călin Nistor. 

He would then direct that Nistor exchange the cryptocurrency for fiat currency, and deposit the fiat currency into bank accounts held in the names of various employees and family members.  According to court documents, in addition to providing money laundering services, Popescu also coordinated the dissemination of tools used to defraud American-based victims, such as the language and photographs for fake advertisements as well as usernames and passwords for IP address anonymizing services.  Popescu also assisted members of the RICO conspiracy by connecting them with other members who could provide call center services—that is, who would impersonate eBay customer service representatives over the phone.

Liviu-Sorin Nedelcu, 34, of Romania, pleaded guilty on June 11, 2020, to one count of RICO conspiracy.  According to court documents, Nedelcu worked in conjunction with others to post advertisements for goods online.  To maintain the appearance of legitimacy, Nedelcu created fictitious entities through which he purported to sell vehicles.  Once Nedelcu and his co-conspirators convinced victims to purchase falsely advertised goods, they sent the victims invoices for payment that appeared to be from legitimate sellers, such as eBay Motors.  Upon receiving payment, Nedelcu and his co-conspirators engaged in a sophisticated money laundering scheme to convert the victim payment into Bitcoin.

Vlad-Călin Nistor, 33, of Romania, pleaded guilty on May 19, 2020, to one count of RICO conspiracy.  According to plea documents, Nistor was the founder and owner of the Romania-based Bitcoin exchange Coinflux Services SRL.  He exchanged cryptocurrency into local fiat currency on behalf of the Romania-based members of the conspiracy, knowing that the Bitcoin represented the proceeds of illegal activity.  According to plea documents for example, Nistor exchanged over $1.8 million worth of Bitcoin for co-defendant Bogdan Popescu.

Beniamin-Filip Ologeanu, 30, of Romania, pleaded guilty on May 19, 2020, to one count of RICO conspiracy.  According to court documents, Ologeanu worked in conjunction with others in the conspiracy to post advertisements for goods to auction websites, including eBay, and sales websites, including Craigslist.  Once Ologeanu or his co-conspirators convinced victims to purchase and provide payment for falsely advertised items, Ologeanu reached out to U.S.-based conspirators to convert the victim payment into other forms of payment and transfer part of it to Ologeanu in Bitcoin.  Ologeanu also purchased fraud proceeds from other co-conspirators, typically in the form of prepaid debit cards, to be laundered by U.S.-based co-conspirators.

“Today’s modern cybercriminals rely on increasingly sophisticated techniques to defraud victims, often masquerading as legitimate businesses,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “These guilty pleas demonstrate that the United States will hold accountable foreign and domestic criminal enterprises and their enablers, including crooked bitcoin exchanges that swindle the American public.”

“The guilty pleas announced today are a direct result of the extraordinary cooperation and partnership among law enforcement agencies at the local, state, federal, and international levels,” said U.S. Attorney Robert M. Duncan Jr. for the Eastern District of Kentucky.  “These partnerships helped dismantle a sophisticated organized crime group who preyed upon victims across the United States.  I commend the exceptional work conducted by our law enforcement partners and trial team members who worked diligently to hold these defendants accountable.”                                         

“Through the use of digital currencies and trans-border organizational strategies, this criminal syndicate believed they were beyond the reach of law enforcement,” said Assistant Director Michael D’Ambrosio, U.S. Secret Service, Office of Investigations. “However, as this successful investigation clearly illustrates, with sustained, international cooperation, we can effectively hold cyber criminals accountable for their actions, no matter where they reside. I commend the hard work and perseverance of all those who joined together in this investigation and prosecution. This includes our partners in Europe, as well as those closer to home.”

“Today’s guilty pleas serve as a reminder that IRS-CI special agents will uncover illegal activity here and abroad, pierce the perceived veil of anonymity provided by cryptocurrencies, and bring those responsible for unlawful acts to justice,” said Special Agent in Charge Jonathan Larsen of the IRS-Criminal Investigation (IRS-CI) New York Field Office.  “We will continue to push the agency to the forefront of complex cyber investigations and work collaboratively with our law enforcement partners to ensure the United States financial system is protected.”

“These are scam artists who hide behind a wall of technology which allows them to prey upon innocent victims throughout the United States,” said Kentucky State Police Commissioner Rodney Brewer.  “The dismantling of this criminal enterprise was made possible because of the incredible level of cooperation between the law enforcement community here in Kentucky.”

According to court documents, the defendants participated in a criminal conspiracy that engaged in a large-scale scheme of online auction fraud.  Specifically, Romania-based members of the conspiracy posted false advertisements to popular online auction and sales websites—such as Craigslist and eBay—for high-cost goods (typically vehicles) that did not actually exist.  Members of the conspiracy would convince American victims to send money for the advertised goods by crafting persuasive narratives, for example, by impersonating a military member who needed to sell the advertised item before deployment.

According to court documents, members of the conspiracy created fictitious online accounts to post these advertisements and communicate with victims, often using the stolen identities of Americans to do so.  They also delivered invoices to the victims bearing trademarks of reputable companies in order to make the transaction appear legitimate.  Members of the conspiracy also set up call centers, impersonating customer support, to address questions and alleviate concerns over the advertisements.

Once victims were convinced to send payment, the conspiracy participants engaged in a complicated money laundering scheme wherein domestic associates would accept victim funds, convert these funds to cryptocurrency, and transfer proceeds in the form of cryptocurrency to foreign-based money launderers.

The 15 defendants who have pleaded guilty in this case have yet to be sentenced.  Two other defendants in the case are scheduled for trial starting on Sept. 14, 2020, before the Honorable Robert E. Wier of the U.S. District Court for the Eastern District of Kentucky.  Three others are fugitives.

In addition to pleading guilty in this case, on Jan. 13, 2020, Adrian Mitan pleaded guilty in a related money laundering conspiracy, arising from online schemes, including a credit card phishing and brute-force attack scheme, designed to steal money from Americans.  According to court documents, Mitan phished for payment card information of U.S. customers, hacked into the electronic systems of American businesses, and then conducted a brute-force attack on their point-of-sale systems for the purpose of stealing the remaining payment card information.  Mitan then directed American money launderers to create clone payment cards with the stolen information, which were used to extract money from the customers’ accounts.  These fraudulent proceeds were then returned to Mitan in the form of Bitcoin.

The investigation was conducted by the U.S. Secret Service, Kentucky State Police, Lexington Police Department, IRS Criminal Investigation, and U.S. Postal Inspection Service, and supported by the Justice Department’s Organized Crime Drug Enforcement Task Forces (OCDETF) and the International Organized Crime Intelligence and Operations Center (IOC-2).  Assistance was provided by the Romanian National Police (Service for Combating Cybercrime) and the Romanian Directorate for Investigating Organized Crime and Terrorism (Agency for Prosecuting Organized Crime).  The Criminal Division’s Money Laundering and Asset Recovery Section provided significant support and the Criminal Division’s Office of International Affairs provided significant support in securing and coordinating the arrests and extraditions from Romania of more than a dozen defendants. 

This case is being prosecuted by Senior Trial Attorney Timothy C. Flowers and Senior Counsel Frank H. Lin of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Kathryn M. Anderson and Kenneth R. Taylor of the U.S. Attorney’s Office for the Eastern District of Kentucky.

Individuals believing they may be victims of the advanced fee and online auction fraud or brute-force attack schemes described herein are encouraged to visit the following website to obtain more information: https://justice.gov/usao-edky/information-victims-large-cases.  

Tips to avoid becoming a victim of online auction fraud can be found here on the U.S. Secret Service’s website.

Justice.gov (June 2020) Fifteen Defendants Plead Guilty to Racketeering Conspiracy in International Cyber Fraud Scheme

COVID-19 fraud domain seized from seller who attempted to sell it using bitcoin


U.S. Immigration Customs and Enforcement’s (ICE) Homeland Security Investigations (HSI) and United States Attorney’s Office for the District of Columbia obtained a warrant Friday authorizing seizure of coronaprevention.org following an HSI Philadelphia investigation in support of Operation Stolen Promise.

HSI recently launched Operation Stolen Promise to protect the homeland and global supply-chain from the increasing and evolving threat posed by COVID-19-related fraud and criminal activity by combining HSI’s expertise in global trade investigations, financial fraud, and cyber investigations with robust private and public partnerships.

“Sadly, criminals are using the current pandemic as an opportunity to generate proceeds while so many Americans are suffering,” said William S. Walker, acting HSI Philadelphia special agent in charge. “Homeland Security Investigations and our partners will continue to aggressively pursue those who attempt to illegally capitalize on this crisis through illicit money-making schemes.”

The seizure warrant alleges that the owner of the domain name, coronaprevention.org, posted it for sale on a hackers forum.

The post appeared the day after the president declared a national emergency due to the COVID-19 pandemic. The seller stated on the forum that this domain would be an effective way to sell “high markup in demand products.”

The seller exponentially marked up the price of the domain. The seller asked for the payment to be made via bitcoin.

The warrant further alleges that the seller engaged in conversations with an undercover agent from HSI about the sale of the domain. The seller stated that it was “genius” to sell “fake testing kits” using this domain.

The seller further stated that the seller “wanted to do that but I couldn’t get enough cash to bulk buy them from Alibaba [a Chinese e-commerce site].” The seller recommended directed the undercover agent on how to set up a new website on the domain using a foreign-based service, so as to prevent U.S. authorities from being able to shut it down in the future.

“We will not tolerate exploitation of this national emergency for personal gain,” said U.S. Attorney Tim Shea. “This office will not allow fraudsters to use anonymous online spaces and cryptocurrency to hide their harmful activities and prey on victims.”

The charges in the warrant are merely allegations, and civil forfeiture proceedings will commence in which any interested party may make a claim to ownership of the seized property.

The enforcement action against the owner of a fraudulent website follows Attorney General William Barr’s recent direction for the department to prioritize the detection, investigation, and prosecution of illegal conduct related to the pandemic.

The case is being handled by Assistant U.S. Attorney Zia M. Faruqui, Paralegal Specialist Brian Rickers, and Legal Assistant Jessica McCormick of the U.S. Attorney’s Office for the District of Columbia.

As part of Operation Stolen Promise, HSI is partnering with U.S. Customs and Border Protection (CBP), the Food and Drug Administration, the U.S. Postal Inspection Service, the U.S. Secret Service, the Internal Revenue Service, the Federal Bureau of Investigation, and the Five Eyes Law Enforcement Working Group. Additionally, efforts span multiple HSI components including the National Intellectual Property Rights Coordination Center, HSI International Operations, the Illicit Finance and Proceeds of Crime Unit, and the Cyber Crimes Center.

As of April 23, 2020, HSI special agents have opened over 232 cases initiated, 376 total seizures, 329 leads sent, 70 disruptions, seized over three million dollars in illicit proceeds; made six arrests; executed 12 search warrants; sinkholed over 11,000 COVID-19 domain names and worked alongside CBP to seize over 225 shipments of mislabeled, fraudulent, unauthorized or prohibited COVID-19 test kits, treatment kits, homeopathic remedies, purported anti-viral products and personal protective equipment.

The launch of the operation is in direct response to a significant increase in criminal activity.

To report suspected illicit criminal activity or fraudulent schemes related to the COVID-19 pandemic, email Covid19Fraud@dhs.gov.

ICE.gov (April 2020)COVID-19 fraud domain seized from seller who attempted to sell it using bitcoin

Operator of durable medical equipment company charged in multi-million-dollar telemedicine kickback scheme


Defendant is the 22nd charged in largest fraud scheme ever prosecuted by Southern District of Georgia

A California man who operated a durable medical equipment (DME) company has been charged for his alleged participation in a massive healthcare fraud scheme.

The defendant is the 22nd charged in the Southern District of Georgia as part of an investigation that uncovered more than $410 million in fraudulent claims to Medicare, the largest fraud case in the history of the Southern District of Georgia.

Scott M. Hirsch, the operator of JI Medical, Inc., a California company, is accused of conspiring to pay kickbacks in exchange for obtaining orders for DME that JI Medical, Inc. would then bill to Medicare. Those Medicare beneficiaries were located in the Southern District of Georgia and elsewhere. As part of this scheme, the physicians receiving the kickbacks from JI Medical, Inc. knowingly signed false medical records describing “consultations” of Medicare patients. The operator of JI Medical, Inc. was charged by way of an Information, filed in the U.S. District Court for the Southern District of Georgia.

“Telemedicine is an important tool for legitimate providers – but paying kickbacks is not part of telemedicine and will not be tolerated under any circumstances,” said U.S. Attorney Bobby L. Christine. “While many of our prosecutors and law enforcement partners may be working remotely during the COVID-19 pandemic, this office continues to work day and night to bring bad actors to justice.” 

The healthcare fraud scheme charged is the largest in the history of the Southern District of Georgia. Previous charges in this string of cases include eight physicians, two nurse practitioners, two operators of telemedicine companies, and two brokers of patient data. The Medicare and Medicaid beneficiaries whose identities were used as part of the scheme are located throughout the Southern District of Georgia, including the Augusta, Brunswick, Dublin, Savannah, Statesboro, and Waycross Divisions, as well as elsewhere in the United States.

The $410 million fraud scheme charged in the Southern District of Georgia is part of nationwide operations by the Department of Justice that thus far has halted a multi-billion dollar fraud network involving fraudulent claims for genetic testing, orthotic braces, pain creams, and other items.

“The growing number of medical providers and equipment providers alleged to have been involved in this ongoing scheme is disheartening,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “The FBI and our federal partners will continue to root out such deceitful practices and protect taxpayers and the citizens who deserve the benefits from programs like Medicare, even as telemedicine becomes more common.” 

 “This investigation is a stellar example of inter-agency cooperation and working together to bring those who defraud the health care system to justice,” said FBI Birmingham Special Agent in Charge Johnnie Sharp Jr. “The public can be assured that the FBI and our partners will continue to seek to identify and pursue investigations against such egregious offenders.”

“In these trying times, it’s more important than ever that we safeguard the Medicare trust fund,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “HHS/OIG, along with our partners, will vigorously pursue any provider who puts their own financial gain above that of their patients.”

“Cases of this magnitude can only be tackled using a strategy that recognizes that the most effective way to fight these large criminal networks is by combining the strengths, resources, and expertise of our federal agencies,” said Resident Agent in Charge Glen M. Kessler of the U.S. Secret Service. “Our nation’s healthcare system cannot tolerate kickbacks to physicians and pharmacies while criminals line their pockets with taxpayer funded healthcare dollars.”

“The U.S. Postal Inspection Service aggressively conducts investigations of those who fraudulently use the U.S. Mail to facilitate complex fraud schemes,” said Inspector in Charge Joseph W. Cronin of the U.S. Postal Inspection Service’s Boston Division.  “We will continue to support and work with our federal law enforcement partners to stop those who are engaged in these types of fraudulent activities and defend the U.S. Mail from criminal misuse.”

“The defendant in this case used the U.S. Mail to facilitate his elaborate criminal scheme. Postal Inspectors partnered with other agencies to quickly identify the scheme and worked aggressively with the U.S. Attorney’s Office to dismantle this criminal enterprise. Through cases like these, the Postal Inspection Service upholds its longstanding mission of protecting the public and preventing criminal misuse of the U.S. Mail,” said Antonio J. Gomez, Inspector in Charge of the U.S. Postal Inspection Service – Miami Division.

Indictments or criminal information contain only charges; defendants are presumed innocent unless and until proven guilty.

This investigation is ongoing. As telemedicine becomes an increasing part of our healthcare system, vigilance in ensuring that fraud and kickbacks do not usurp the legitimate practice of medicine by electronic means is more important than ever. If you are aware of any fraud or kickbacks relating to telemedicine, including COVID-19 fraud, please call the FBI hotline at 1-800-CALL-FBI.

This particular prosecution resulted from a joint investigation of multiple agencies and offices.  U.S. Attorney Christine acclaimed the hard work of the investigatory team, led by FBI – Savannah, FBI – Birmingham, the Department of Health and Human Services Office of Inspector General, the United States Secret Service, and the United States Postal Inspection Service.

Assistant U.S. Attorneys J. Thomas Clarkson and Jonathan A. Porter are prosecuting these cases on behalf of the United States.

Justice.gov (April 2020) Operator of durable medical equipment company charged in multi-million-dollar telemedicine kickback scheme