Man extradited in $29M fraud case probed by FDIC monitor

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A Nicaraguan citizen was brought to Miami from Spain this week on federal charges tied to the man's alleged wire fraud and money-laundering operation. 

As part of the joint investigation by the Federal Deposit Insurance Corp.'s Office of Inspector General and the U.S. Secret Service, prosecutors allege the man drained more than $29 million from U.S. bank accounts.

Ernesto Ortega Padgett is facing a 27-count indictment for allegedly leading a network that posed as bank officials to trick victims into handing over sensitive information, then moved stolen funds through shell accounts and cash withdrawals, often converting them into cryptocurrency, according to a release from the OIG.

"Ortega and his co-conspirators posed as bank representatives and used a combination of technology and social engineering to deceive victims into providing sensitive account information … then used that information to access victims' bank accounts and initiate unauthorized wire transfers," the OIG release stated. "Ortega relied on an international network of money launderers to receive the stolen funds, withdraw them in cash, and forward the proceeds to accounts directly under Ortega's control, often in the form of cryptocurrency."

The indictment details that — as part of the scheme that ran from 2020 onward — Ortega and his co-conspirators used extortion and threatened force to compel some money launderers to take part in the scheme.

Ortega was wanted in the U.S., Spain and Panama and was captured in Paris late last year. He now faces felony counts tied to wire fraud, extortion and handling criminal proceeds.

The federal government under the Trump administration has taken a number of steps to reduce fraud. The FDIC sought input Tuesday on how to curb payments fraud, which the agency says harms consumers, businesses and banks. 

A new request for information will take information for 90 days related to cross-government collaboration on fraud prevention, educational programming and information sharing. The Federal Reserve, FDIC and Office of the Comptroller of the Currency also issued a joint RFI on check fraud prevention on Monday.

The Treasury in May sought public feedback on its planned elimination of most paper checks as part of a government-wide shift to electronic payments. That move comes as part of a March executive order that mandates a government-wide shift from paper checks to electronic payments by Sept. 30. 

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President Donald Trump's executive order bars the federal government from issuing paper checks as payment, saying they "impose unnecessary costs, delays, and risks of fraud, lost payments, theft and inefficiencies." Banking groups welcomed the move as a viable means of reducing instances of check fraud, which have been growing in recent years. 

Banks plan to ramp up tech spending in 2025, according to American Banker research. Meanwhile, fraud rings are exploiting economic uncertainty and low entry costs, especially around checks. From mail theft to digital manipulation, fraud has become a multistep operation with entire networks handling stolen checks, fake endorsements and money mules.

While technology has broadened the kinds of scams launched against U.S. consumers, the research indicates even classic scams — like fake sweepstakes checks asking victims to wire money back — are on the rise, often leaving the customer legally responsible.