SAN DIEGO — In what is believed to be the first connection of violent street gangs to a sophisticated bank scam here, 60 suspects were arrested last week in a predawn raid here and charged with scamming Navy FCU out of more than $500,000.
The suspects, including more than a dozen members of San Diego's Lincoln Park gang, were charged with conspiracy, money laundering, forgery and burglary.
Joan Stein, deputy district attorney for San Diego County, told Credit Union Journal Navy Federal was targeted in part because CUs are seen as easy marks compared to their bank counterparts. "I know from other financial crimes I've worked on that credit unions are easier targets than some other financial institutions," Stein explained. "Credit unions are friendly and don't want the transaction to be a hassle. Banks say, 'Too bad, the check will clear in seven to 10 days,' but credit unions want to be service oriented."
"This is not the only credit union in San Diego that has experienced this type of crime," Stein added.
"Street thugs, operating like white collar criminals, devised an ingenious scam to bilk Navy Federal Credit Union out of $500,000," said California Attorney general Edmund Brown Jr. "They recruited and paid off willing credit union members and manipulated rules to feed their criminal enterprise."
"Navy Federal's investigators noticed suspicious activity in 2005 and at that point we reported it to the Secret Service," Navy FCU said. "We have been cooperating with t he investigation ever since."
The arrests of 60 defendants in "Operation Bank Gig" were announced by the County of San Diego District Attorney's office, which is jointly prosecuting the case with the California Attorney General. Numerous government agencies and other entities participated in a 10-month investigation, including the U.S. Secret Service, the San Diego Regional Fraud Task Force, San Diego Police Department Gang Detectives, San Diego District Attorney Investigators, the U.S. Postal Inspection Service, Naval Criminal Investigative Service and Navy Fed.
Some of the defendants are active duty military, the San Diego D.A. said. The office released a statement saying Navy Fed members were recruited by San Diego's Lincoln Park gang to participate in the crime for a share of the proceeds.
Once gang members had the Navy Fed members' ATM cards and PINs, authorities said counterfeit checks were deposited into accounts, then cash withdrawals were made prior to certification of the checks. The members were instructed to tell investigators from the CU their cards were stolen.
According to Stein, the scam targeting Navy Federal, the country's largest credit union, dates to 2005 because it takes a while to see a pattern and because the amounts taken typically were small. "This type of stealing is not unique, but what was unique was the conspiracy between gang members and their associates who thought Navy Federal was an easy target."
Stein said she was unfamiliar with credit unions prior to working on the current case, and praised the dedication of the representatives from Navy FCU she met, adding she is hopeful credit unions can learn from the experience.
"This might be a good case study to look at. Credit unions should ask what policies and procedures they have in place that might cause them to be victimized. It was Navy Federal's chief investigator who presented what he believed to be a crime to law enforcement. After an investigation it was determined it was a scheme, not just a bunch of individuals."
The majority of the transactions took place at Barona Casino, an Indian casino east of the city. Stein said point-of-sale ATMs at the casino were used by the gang because they allow for larger withdrawal amounts. The Barona Tribal Government fully cooperated with the investigation and provided surveillance evidence prosecutors said helped identify suspects.
The case is believed to be the largest of its kind in state history, with the 60 defendants being charged with 347 felony counts, including conspiracy, grand theft, money laundering, forgery and burglary.
