Two Arrests in Scam Using Phony Credit Union Names
Two brothers believed to have bilked hundreds of U.S. victims in the past year through newspaper ads for phony credit unions have been arrested and charged, Canadian law enforcement officials said.
The National Credit Union Administration was part of a cross-border task force that tracked the pair. David Eno, head of the agency’s fraud hot line, said Leslie Card, 35, and Kevin Card, 33, operated a sophisticated boiler room in a Toronto suburb. Americans and Canadians wired up-front fees to them for low-interest consolidation loans, mortgage originations, credit life insurance, and other services that were never delivered, according to Mr. Eno.
The Card brothers were arrested June 10, at home in Pickering, Ontario, and charged with 22 felony counts, including financial fraud, and weapons and drug charges. They are being held in local jail.
The suspects used stolen credit cards to pay for ads that often used the names of legitimate U.S. credit unions such as Heartland Credit Union, America’s Choice Credit Union, and Credit Union One, Mr. Eno said. They also used fictitious names including Zurich Credit Union, First Rate Credit Union, and Continental Credit Union. The suspects often created “shadow” Web sites that were nearly identical to the real credit unions’ sites, to fool their victims.
The scam was so lucrative that the Cards were each earning as much as $10,000 a day, Mr. Eno said.
Helen Czerniak, an investigator with the Ministry of Business and Consumer Services in Toronto, said that law enforcement officials believe the suspects, both Jamaican nationals, are tied to an organized-crime ring that is also responsible for drug and gun running. It is known to have used the names of large Canadian and U.S. banks and insurance companies, including Wells Fargo Bank and Citibank.
“After they finished with” the banks and insurers, the ring members “started in with credit unions,” Ms. Czerniak said. “This is a huge organized-crime group. We’ve been chasing this group for 10 years.”
Mr. Eno said the brothers advertised in newspapers in 23 states over the past year. During that time, the NCUA and law enforcement agencies on both sides of the border have been working with the American Newspaper Association.
The newspaper group sent 7,000 letters to publishers and advertising departments warning them of the scam, and the NCUA sent similar letters to all U.S. credit unions.
Among the victims was a school janitor in Virginia who sent about $15,500 for loan origination fees. An unemployed couple sent more than $4,000 they had borrowed from their parents to originate a mortgage on a first home.
“There’s dozens, if not hundreds, of cases,” Mr. Eno said.
Besides the NCUA, the joint U.S. and Canadian task force included representatives of the U.S. Postal Service, the Federal Trade Commission, the Toronto Police Service Fraud Squad, the Ministry of Consumer and Business Services, the York Regional Police Service, and the Royal Canadian Mounted Police.