Old Scam, New Twist Stings Member; CEOs Targeted In Fraud

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Here's the 411 on the 419.

A member of Louisiana Federal Credit Union fell prey to a new twist on a decades old Nigerian-based scam (so- called 419 schemes, the Nigerian criminal code for fraud) over which credit unions and their members have been warned numerous times.

In this case, the credit union member accepted a overseas bid for a used truck he had advertised for sale on the Internet.

And, according the CUNA Mutual, Credit Union CEOs are the targets of a separate scam allegedly from Africa. The letter writer, via fax or e-mail, states that he would like to deposit a large sum of money from a deceased CU member into an account there.

LFCU President/CEO Rhonda Hotard said her CU received the e-mail a few weeks back, but barely gave it a thought.

"We just deleted it and laughed about it,'' she said.

Obviously, one member isn't laughing now.

Hotard said the 20-year old was taken for $7,800 after accepting the bid for his truck and receiving an "official check'' for $15,000, more than his asking price. The catch, he learned after reading the fine print upon receipt of the check, was that he had to send the excess amount back to the buyer via international wire remittance.

"And he did it,'' she said.

Hotard said employees at the Hammond branch "had a feeling something was not right'' when the member walked up to a teller window to deposit the check and request the wire transfer.

"He was adamant about it,'' Hotard said. "The credit union was busy so the branch manager asked him to sit down and think about this for a little bit.''

She later called the member to tell him, "You've been taken. The check was counterfeit.''

By then, his money was long gone.

Hotard said the member's loss was covered by the CU's insurance policy with CUNA Mutual.

And, she said, the incident stopped at least one other person from falling into the same trap.

"He (the victim) said his sister was about to do the same thing,'' she said.

The credit union later learned that a customer of a local bank and CU members in Delaware had also been duped by similar scams in recent months.

In this month's member newsletter, officials of the Delaware CU league reported that one credit union was hit twice by the Internet car scam, and three reported failed attempts by a man trying to pass fake checks. Another reported opening an account for the spouse of a member, but after attempting to verify the social security number, learned that it belonged to a deceased person

According to other sources, these victims are among a growing number of people - many of them credit union members - who have been bilked out of more than $5 billion after falling for variations of this scheme since the early 1980s.

After the arrests of three Nigerian immigrants in California in 2001, police found a list of targets that included 60 credit unions. They also learned that one of the men arrested was using account numbers and personal identification from 65 individuals to siphon as much as $10 million from CUs, banks and brokerages.

Hotard agreed with police that these types of scammers often target credit unions because they offer credit more easily than banks.

A statement issued earlier this month by Florida's Division of Consumer Commerce reported receiving numerous calls about a letter they received from Nigeria, asking them to help some businessmen shelter millions of dollars in oil profits. For their efforts in allowing this transaction, the recipient was promised a share of the money. But, to make this happen, he or she had to give the businessmen his or her account number and other vital information.

According to the FDCC, those who fall for it are later contacted with a request for money to help get the millions out of the Nigerian bank before it is raided.

Last year, Nigerian scams made Oregon Department of Justice's top 10 consumer complaints list. Officials reported seeing a "spike'' in scam activity in 2000 from more countries, surmising that new technology - fax machines and e- mail - have allowed these criminals to increase the number of targets faster and easier.

Similar complaints were reported in Pennsylvania and Canada.

The United States Secret Service, Department of the Treasury, said pitches involve everything from real estate ventures, crude oil, beneficiaries of wills, recipients of awards and paper currency conversion. For the millions these victims think they will receive, they oblige requests for advance fees to cover tax and attorney fees, vital personal and bank account information and blank company letterhead forms.

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