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Financial Fraud Law

‘Money Mules’ Key To International Scheme Stealing From Credit And Debit Cards, FTC Alleges

 More than one million consumers have been hit with one time charges of $10 or less, and their payments were routed through dummy corporations in the United States to bank accounts in Eastern Europe and Central Asia, according a complaint filed in federal court today by the Federal Trade Commission. 

The defendants, using phony company names resembling real companies, and information taken from identity theft victims in the United States, opened more than 100 merchant accounts with companies that process charges to consumers’ credit and debit card accounts, according to the FTC complaint. The FTC believes the defendants may have run credit checks on the identity theft victims first, to be sure they were creditworthy. The defendants also cloaked each fake merchant with a virtual office address near a real merchant’s location, a phone number, a home phone number for the “owner,” a Web site pretending to sell products, a toll free number consumers could call, and a real company’s tax number found on the Internet, according to the FTC.
 
The FTC alleged that with spam e-mail, the defendants recruited at least 14 “money mules” – people in the United States they paid to form 16 dummy corporations, open associated bank accounts to receive the card payments, and transfer the money overseas. The defendants used debit cards linked to these bank accounts to set up telephone service, virtual addresses, and Web sites that helped deceive the card processors, according to the FTC’s complaint.
 
Moreover, the government alleges, the “money mules” responded to spam e-mail pretending to seek a U.S. finance manager for an international financial services company. The FTC has not determined how the defendants obtained the stolen identities or consumers’ credit and debit account numbers. Consumers’ payments were sent to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.
 
According to the FTC: None of the consumers affected by the scam had contact with any of the defendants. Most consumers either didn’t notice the charges on their bills or didn’t seek chargebacks because of the small amounts – charges ranged from 20 cents to $10. Consumers who called the toll free numbers that appeared on their bills either found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned. Total losses to consumers exceeded $10 million.
 
The defendants include API Trade LLC, ARA Auto Parts Trading LLC, Bend Transfer Services LLC, B-Texas European LLC, CBTC LLC, CMG Global LLC, Confident Incorporation, HDPL Trade LLC, Hometown Homebuyers LLC, IAS Group LLC, IHC Trade LLC, MZ Services LLC, New World Enterprizes LLC, Parts Imports LLC, SMI Imports LLC, SVT Services LLC. The FTC charged them with making unauthorized charges to consumers’ credit cards in violation of Section 5 of the FTC Act. A federal district court judge in the Northern District of Illinois froze the defendants’ assets and ordered them to stop operating, pending final resolution of the case.