Canadian law enforcement said they have arrested and charged two suspects they believe are responsible for a multi-state scheme that bilked hundreds of victims through phony credit unions advertised in U.S. newspapers over the past year.
The two suspects, brothers Leslie Card, 35, and Kevin Card, 33, operated a sophisticated boiler room in suburban Toronto that convinced individuals in both the U.S. and Canada to wire them funds over the Internet to pay for low-interest consolidation loans, mortgage originations, credit life insurance, and other services that were never delivered, according to David Eno, head of NCUA's Fraud Hotline, who participated in a cross-border task force that tracked the suspects.
The Card brothers were arrested June 10 at their Pickering, Ontario home and charged with 22 felony counts, including financial fraud, weapons and drug charges, and were being held in local jail.
The suspects paid for ads often using names of legitimate U.S. credit unions, like Heartland CU, America's Choice CU, Credit Union One and Century CU, using stolen credit card accounts, according to Eno. Other names used in the scheme were Zurich CU, First Rate CU and Continental CU. Often the suspects incorporated "shadow" websites, nearly identical to the real CUs' sites, to fool unsuspecting victims.
Victims sent money to prepaid toll-free 866 phone numbers, acquired at Radio Shack stores. "That way, it's virtually untraceable," said Eno.
Helen Czerniak, an investigator with the Ministry of Business and Consumer Services in Toronto, the Ontario Provincial trade commission, said they believe the suspects, both Jamaican nationals, are tied to organized crime that is responsible for drug and gun running, as well as financial fraud. The group is also know to have used the identities of large Canadian and U.S. banks and insurance companies, including Wells Fargo, Citibank. "After they finished with them, they started in with credit unions," said Czerniak. "This is a huge organized crime group. We've been chasing this group for 10 years," she said.
The group has moved from state to state, taking out ads in newspapers in 23 different states, over the past year, according to Eno. During that time, NCUA and law enforcement agencies on both sides of the border have been working with the American Newspaper Association, which sent out 7,000 letters to publishers and advertising departments warning them of the scam. NCUA also issued letters to all U.S. CUs warning them of the scheme.
Among the victims were a school janitor in Virginia who sent group $15,500 for a series of loan origination fee. A newly unemployed husband and wife who sent more than $4,000 they borrowed from their parents to originate a mortgage on a first home. "There's dozens, if not hundreds, of cases," said Eno.
"It was really an economic attack on 23 states; just like a war," said Eno.
The investigation was carried out by a joint U.S.-Canadian task force that included representatives of NCUA, the U.S. Postal Service, the Federal Trade Commission, the Toronto Police Service Fraud Squad, Ministry of Consumer and Business Services, York Regional Police Service, and the Royal Canadian Mounted Police.
