The Cornerstone Report: Volume 2, Issue 3

ICE Dismantles International Money Laundering And Check Fraud Organization

ICE Special Agent in Charge, New York (ICE SAC/NY) recently finished an 18-month investigation, entitled “Operation Cheque Mate”, that identified and dismantled a network of individuals in London, England and the United States who were partly responsible for the production of more than $15,000,000 worth of counterfeit/forged and stolen bank checks seized by ICE SAC/NY, and the defrauding of securities firms of $250,000. Operation Cheque Mate was successfully conducted in partnership and cooperation with the financial trading community, United Kingdom and Spanish law enforcement, INTERPOL, U.S. regulatory agencies and other industry organizations—including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), Securities Industry Association (SIA), New York Stock Exchange (NYSE) and the National Futures Association (NFA).

Over 50 private sector companies assisted ICE SAC/NY during this investigation. This information exchange led to the indictment of the two foreign-based principals, 11 arrest warrants; the conviction of two individuals for bank fraud; and the seizure of banks checks, along with stolen identities from both U.S. and U.K. citizens.

The Scheme

The U.K.-based organization managed by the aforementioned two principals, profited hundreds of thousand of dollars by establishing online trading accounts with numerous brokerage firms with either stolen, fictitious or their own identities. After establishing the online relationship, they mailed bulk packages containing fraudulent or forged checks ranging from $61,000 to $600,000 along with applications in pre-addressed envelopes to a U.S.- based operative, who would then forwarded the envelope from a domestic address, to attract less scrutiny than foreign correspondence. Soon after, the subjects requested wire transfers of trading profits to a foreign bank account. As a result, the firms were exposed to millions in losses after the checks returned as counterfeit.

The Partnership

As part of the combined and coordinated effort, ICE worked with several organizations, associations, and brokerage firms to place alerts on their Web sites, warning potential investors and other firms about the fraudulent scheme. The alerts also included the name and contact number of the ICE case agent for the investigation. These postings resulted in numerous leads and significantly reduced the potential loss to the securities industry. Based on the alerts and industry cooperation, 14 financial Suspicious Activity Reports (SARs) were filed by affected brokerage firms that assisted in the investigation.

Fortunately, the losses sustained by the victim firms totaled just over $250,000. Without the early detection and combined and coordinated efforts of law enforcement and the private sector, losses could have exceeded $15 million.

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Cornerstone Calendar

Cornerstone is U.S. Immigration and Customs Enforcement's (ICE) comprehensive investigative initiative for fighting financial crime, trade fraud and intellectual property crime.

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