Authorities Friday announced they had brought down a large-scale fraud operation that allegedly attempted to steal more than $1 million from five credit unions, including two of the nation’s largest CUs.
The five institutions are Nassau Educators Federal Credit Union, PenFed, Digital CU, Comtrust FCU and Navy Federal Credit Union.
Five individuals have been charged in what investigators called a “highly sophisticated” credit union loan fraud ring that involved hundreds of victims. The investigation is believed to be one of the largest identify theft cases that the Nassau County District Office has ever investigated.
“Over the course of a year these defendants allegedly operated a highly sophisticated and organized loan and identity theft ring,” Madeline Singas, district attorney for New York’s Nassau County, said in a statement. “The effects of this type of fraud are devastating for those who have to reclaim their identities and the banks that have to recoup financial losses.”
Singas believes these loan applications were filed between February 2018 and February 2019, with loan amounts ranging from $7,500 to $35,000. All applications were filed electronically under the guise of stolen identities. The ring utilized the social security numbers of the stolen identities to apply for the loans. Hundreds of files containing sensitive financial information including credit reports, fake identification cards, and cash wrappers were obtained.
Dascon Sears, 36, of Brooklyn, N.Y., is alleged to have led the effort. Sears is said to have applied for more than 100 different loans at the five CUs. He is also accused of opening up credit cards with the stolen identities. One of the defendants is a former banker with Capital One.
Some individuals within the ring were accused of stealing account information and selling it. Other defendants were also accused of withdrawing the loan proceeds from ATMs and then utilizing those funds for personal expenses such as rent, plane tickets and car loans.
The defendants targeted $1 million spread among the five credit unions, though they were only able to acquire $250,000. That figure is expected to climb, however, as investigators unearth more evidence around the operation once further evidence obtained from Sears’ home and storage locker are examined.
A press release from the D.A.’s office explained that credit unions caught on to the scheme after the loans became delinquent. CU employees then learned that the members they believed had received money were in fact unknowing victims in an identity-theft scheme.
NEFCU, one of the five institutions involved, reported financial losses to the United States Postal Inspection Service and the Nassau County District Attorney.
“Earlier today the Nassau County D.A. announced the arrests of several individuals who had perpetrated identity fraud opening fraudulent accounts at credit unions,” a NEFCU spokesperson said. “NEFCU identified this suspicious behavior and immediately notified authorities which sparked this successful investigation.”
NEFCU member data was neither compromised nor targeted, according to the spokesperson.
“This was a sophisticated ring that opened fake accounts to obtain loans,” they added.
NEFCU was the only one of the five CUs involved to respond to Credit Union Journal’s request for comment before deadline.
