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How to Protect Yourself and Your Family from the Financial Ruins of Nigerian 19 Counterfeit Check Fraud By Peter Hampton Director@Web-Police.org The
Nigerian Counterfeit Check Fraud:
Bankrupting
thousands through online and offline Classifieds
Between
February and June of 2003, more than $25 Million Dollars disappeared
into Here's
how it starts
You
want to sell your old car, or Aunt Tillie's bureau, or those terrific
dogs you breed? Just run an ad in any one of the online classifieds and
you can reach an audience of thousands. One
of those thousands is a swindler who has been patiently watching his
screen all morning, just waiting for you - and several hundred other
people - to post an ad. He
or she will contact you by email or phone and offer to buy what you're
selling, usually no questions asked, sight unseen. What a deal! Your
item will be picked up on behalf of the so-called buyer by someone
local. As for the payment, you'll be sent a check that's way over the
amount you're asking. Please just go ahead and deposit the check and
send the buyer the difference. Where
do these checks come from? In
the beginning, most of the checks arrived by mail with a return address
of " These
days the checks arrive from all over - Toronto, New York, Amsterdam,
London, California (any one of the United States, actually), Malaysia,
pick a country, any country. Pick a city, any city. The
check forging rings are so widespread that members can be found just
about anywhere. They stay in place on long enough to ensure the forged
checks arrive at their destination. Most communication from the phony
buyer is received via email, cell phone, and satellite phone. Who
says you can't cheat an honest man?
Most
Nigerian scams rely on a certain amount of greed on the part of the
target and a willingness to overlook the legal aspects of the proposal,
such as ferreting illegally acquired funds out of The
Counterfeit Check scam, on the other hand, is based on the total honesty
of the swindler's target which is you, the seller. Following
the buyer's request, you deposit the check into your account. If you
have received a Cashier's Check or have an excellent credit record with
your bank, the check will be credited to your account without delay. If
the funds were wired directly to your account from another bank, then
there is no question that the money is readily available. You
then immediately arrange for the excess funds to be wired to the bank
account number the buyer has supplied to you for that purpose, or to
forward the funds through Shortly
thereafter you receive a call from the bank and the roof falls in on
you. Fact
is, NO legitimate business transaction asks you to wire excess funds
anywhere. It's simply not done for the basic reason that no legitimate
business person is about to trust an absolute stranger with their money. Who
ends up paying the price?
In
most instances, you are going to have to pay for the loss. That means
you will have to make up for the amount that you wired - plus any of the
money you spent. In rare instances, the bank will absorb the loss, but
don't count on it. The
reason for this is that when you endorse a check, you are vouching for
the validity of that check. But
what about Cashier's Checks? Or funds wired directly into your account?
In those instances the liability is determined on a case by case basis.
Some banks are on the alert for the scam, others are not. Nonetheless,
the final responsibility lies with the depositor. You
see, the only responsibility a financial institution has toward its
customers is to keep each person's funds accounted for and safe from
harm. Those are the basics. Beyond that, there are Federal regulations,
state regulations, and internal regulations. Laws are different for
Credit Unions, Commercial Banks, and brokerage houses. Each is
accountable to a different oversight organization. How
to REALLY verify that check Traditionally,
we have been taught that the best way to verify the validity of any
check is to call the account holder's bank. That is no longer a reliable
source of information. Those days are gone forever. The
fact is that the only response the account holder's bank can give you is
based on an electronic verification. This only confirms that the account
exists and that there are sufficient funds in that account at the moment
of your call. In
this day and age, one must contact the account holder himself. Only the
account holder can provide definitive information as whether or not a
check has been issued in your name for the requested product. Verifying
a Money Order It
sometimes happens that these swindlers use Money Orders. I haven't heard
of too many cases, but it does occur. If you receive a Money Order,
contact the Money Order company and make sure that you explain that you
want to verify that the amount and Payee match their records. Verifying
a Cashier's Check But
what about a Cashier's Check? Well here's what you do. Ordinarily
one calls the issuing bank. If this bank is huge, like Bank of America
or Wells Fargo, one is put through a series of options on a voice menu.
Again, if you go through the merchant verification routine, only the
electronic validity of the check is confirmed. Skip
that. Go directly to an assistant or whatever the real live person is
called on the voice menu. Ask for the telephone number of the branch on
which the Cashier's Check is drawn. If you are asked why you need to
speak to the branch, tell them that you need to get a physical
verification of the Cashier's Check you are holding. Call
the branch. Now you will be able to receive a physical verification of
the check you have in hand because a physical record is kept right there
at the branch. That branch can immediately tell you whether that
specific check was written for the amount indicated, and whether or not
it was made out to you. Accepting
Wired Funds Just
say NO. Sometimes the swindlers will wire funds directly to your
account. Under no circumstances whatsoever should you accept funds wired
to you by a stranger. Why? Because you have no way of verifying the
source of those funds. If you accept those funds, you may find out after
it's too late that the source is a forged Cashier's Check. What
smart people are doing ... It
is important to keep in mind that if you do not know the person with
whom you are doing business, then be wary until you have a proven track
record of dependability. Every
day merchants are taken to the cleaners by bad checks and stolen credit
cards. It's no different if you are an individual selling your car in
the classifieds. The
smart thing to do is have the check verified before even depositing it
into your account. Contact the owner of the check, or give the check to
your bank telling them you want it physically verified for authenticity. ...
and smarter still Do
you know what an escrow account is? If you don't, here is an explanation
of escrow services: An escrow service offers you the protection you need
from being taken to the cleaners by swindlers, disagreements on receipt
of product, misunderstandings, and all sorts of flies that can turn up
in the ointment. Essentially,
you are hiring a licensed and bonded 3rd party to hold the funds until
all parties are satisfied with the transaction, at which point the buyer
can order the release of his money to the seller. On the other hand, if
the item is to be returned to the seller, the buyer can't access his
funds until the seller agrees that he has received the item back in the
same condition as it was upon shipment. Escrow
services can be used for large ticket items, or small ones. It's better
to pay for this service (you can include the fees in your product cost)
than to find out that you are in a world of hurt because you didn't
protect yourself when dealing with a stranger. Know
Your Customer (KYC)
This
has become a byword for banks all over the world. It helps keep banks
from unknowingly being used for money laundering and other criminal
activities. Knowing
your customer means that you are not merely taking the word of someone
about whom you know nothing. Regardless of the financial transaction,
you should never accept as gospel what you are being told. You MUST
protect yourself and your family. The
Bank's Role In
order to understand the bank's role in all of this, you must first
understand what a bank really is. In
it's very simplest form, a bank is an accountant with a calculator, a
ledger, a safe, and a license to take money in for safekeeping.
Everybody's money is kept in the safe, and separated by owner in the
ledger, not the safe. A simple system of debits and credits. That's it
folks. Everything beyond that consists of add-on services to garner more
deposits from customers so that the accountant can pay for the overhead. The
way in which the accountant pays for the overhead is by charging a small
fee for maintaining each account (i.e. accounting for the funds in his
care), and by judiciously lending out a portion of the gross deposits.
By charging interest on the loans, some of which is shared with the
depositors, he can now pay for his office and his salary. A
bank is a building that houses the accounts of its depositors None
of the money in that building belongs to the bank itself, other than
what it earns in fees for service and its portion of interest on loans
and investments. The
processes of modern banking are complex, particularly since the advent
of electronic banking, the current tremendous growth of international
trade and trade banking, and the seemingly endless rules and
regulations, but the basics remain the same. So
along comes Joe with a forged check from a Nigerian con artist. Granted,
Joe doesn't know the check is forged, but that's not the real problem.
The problem is where the money comes from that will go into Joe's
account for him to spend. You see, in the case of a forged check, it
comes from Joe's neighbors. It comes out of that "safe" we
talked about in the first paragraph. JoesBank And
this is how it works. We'll call the place where Joe keeps his checking
account "JoesBank." JoesBank
electronically verifies the check that Joe brought in. In other words, a
teller or bank officer looks up the check owner's account on a computer.
Sure enough, there's money in the account on which the check is drawn.
Joe's account is credited with the amount of the check. There
are two processing possibilities for crediting Joe's account: 1.
If the check is a Cashier's Check or if Joe is a customer in good
standing, Joe's account may be immediately credited with funds.
"Immediately" means that a portion of the money in the
JoesBank "safe" is credited to Joe's account pending receipt
of the funds from the bank that issued the Cashier's Check. Normally,
the Cashier's Check bank debits funds from its "safe" and
sends them to JoesBank. JoesBank puts the funds from the Cashier's Check
bank back in its "safe." I'm simplifying here, but only by
very little. No point in getting into each detail of how money moves
through the Federal Reserve, going back and forth between banks. In any
event, in this case the Cashier's Check is denied, so there is no money
to put back in the JoesBank "safe" to replace the money
credited to Joe's account. 2.
If the check is a regular corporate check, it's sent through the system.
This means that a Hold is placed on the check until it clears.
"Clears" is an electronic term. It means that the amount of
the check is electronically conveyed to the account holder's bank as a
debit, followed by the physical check which travels in what are called
"batches" to a check clearing house. Again, I'm simplifying
but it's not much more complicated than that. Basically, Brinks picks up
a bag (batch) of checks from JoesBank at the end of the banking day,
drives them to the local check clearing house, and from there the checks
are sent off to the various banks they came from. Back
to clearing the check. A check travels through the system electronically
and physically. The check owner's bank acknowledges receipt of the
debit, debits the check owner's account, and forwards the funds back
through the system to be credited to JoesBank, then to Joe's account.
Depending on the "route" (how many credit and debit processes
the check owner's bank is from JoesBank), the entire process can take
from just a few days to a couple of weeks. Now
comes the sticky part Remember
the physical check that Brinks picked up and transported to the clearing
house? It is finally verified by actual eyes and declared invalid. If
it's a Cashier's Check or Money Order, that happens fairly quickly. If
it's a corporate or personal check, eyes-on can take weeks depending on
when statements are sent out and when the account holder actually
eyeballs the check. Or verifies his account balance. Once
the check has been declared invalid (this includes Cashier's Checks,
Money Orders, Traveler's Checks, what have you), the check owner's bank
sends a debit through the system, debiting JoesBank for the amount in
full, plus handling fees. JoesBank has no choice but to allow the debit
to be taken from its "safe." That
specifically means a portion of the sum total of the money that Joe's
neighbors have left with JoesBank for safekeeping, minus that which is
out on loan and invested. That's how the ledger is kept. Depositor money
in, depositor money out. Because of the bank's license, it is the bank's
fiduciary responsibility to retrieve those funds by whatever manner
possible. Since
it was Joe's contractual responsibility as an account holder to be
responsible for the true value of what he deposits into his account, Joe
is the one to whom the bank turns. Bad
checks Bad
checks are a daily cost of doing business for any company. Happens all
the time. Sometimes the company can recoup on a bounced check, sometimes
its charged off to Bad Debt and becomes a Loss on the company's books.
The company is out the amount of the check, plus the bounced check
charge, plus the value of the product or service the check was written
for. This may be tough on a company, but the financial consequences are
far worse for the individual like Joe. In fact, the consequences can be
overwhelming. Many
banks in the Wiring
funds through the banking system When
you wire funds from your checking account to your cousin's checking
account in Wiring
funds through Western Union That's
not the case at all when you use Once
the funds are in a central account, the actual money can be picked up at
any office covered by that account. Just because you were told to
wire money to such-and-such a fellow at such-and-such a Federal
Counterfeit Check Law The
laws that affect you as the holder of a Nigerian Counterfeit Check US
Criminal Code, Title 18, Section 113 Sec.
472. - Uttering counterfeit obligations or securities Whoever,
with intent to defraud, passes, utters, publishes, or sells, or attempts
to pass, utter, publish, or sell, or with like intent brings into the
United States or keeps in possession or conceals any falsely made,
forged, counterfeited, or altered obligation or other security of the
United States, shall be fined under this title or imprisoned not more
than 20 years, or both. Sec.
473. - Dealing in counterfeit obligations or securities Whoever
buys, sells, exchanges, transfers, receives, or delivers any false,
forged, counterfeited, or altered obligation or other security of the
United States, with the intent that the same be passed, published, or
used as true and genuine, shall be fined under this title or imprisoned
not more than 20 years, or both. Sec.
479. - Uttering counterfeit foreign obligations or securities Whoever,
within the United States, knowingly and with intent to defraud, utters,
passes, or puts off, in payment or negotiation, any false, forged, or
counterfeited bond, certificate, obligation, security, treasury note,
bill, or promise to pay, mentioned in section 478 of this title,
whether or not the same was made, altered, forged, or counterfeited
within the United States, shall be fined under this title or imprisoned
not more than 20 years, or both .
Sec.
480. - Possessing counterfeit foreign obligations or securities Whoever,
within the United States, knowingly and with intent to defraud,
possesses or delivers any false, forged, or counterfeit bond,
certificate, obligation, security, treasury note, bill, promise to pay,
bank note, or bill issued by a bank or corporation of any foreign
country, shall be fined under this title or imprisoned not more than 20
years, or both. What
to do if you receive a Nigerian 419 fraud US
Nigerian Complaints If
you are a United States Citizen or Resident and have suffered No
Financial Loss write "No inancial Loss - For Your Database" on
the documents you received and Fax them to the US Secret Service Task
Force handling Scam matters at (202) 406-6930 or (202) 406-5031. Actual
hardcopy of the 419er document(s) is required to add your 419ers
information to the Task Force Database for legal reasons, merely telling
Task Force about it will NOT suffice. You
may also email the 419er documents, especially any Banking Data they may
have given you, marked No Loss, to Task Force Main in DC at 419.fcd@usss.treas.gov;
that is also acceptable. Since
Task Force is Very Busy dealing with cases in which there have been
financial losses, it is NOT customary for them to contact you in
cases where there has been No Loss. If
you are a United States Citizen or Resident and YOU HAVE SUFFERED A
FINANCIAL LOSS write "Financial Loss - Contact Me ASAP"
on the documents you have received and Fax them to the Task Force at
(202) 406-6930 or (202) 406-5031 and give your telephone number(s). A
Secret Service Agent will call you back as soon as possible to discuss
the matter with you. You may also email
the 419er materials, especially any Banking Data they have given you, to
Task Force Main in DC at 419.fcd@usss.treas.gov marked Financial Loss
- Contact Me ASAP and give your phone number. Please
Note: If
you don't get contacted by a Special Agent soon enough to suit you, call
the Task Force Voice at (202) 406-5850 and tell the Operator (or
voicemail) that it's Urgent, you want to talk to an Agent as soon as
possible, and give your name and telephone number(s). Thank
you for allowing us to serve you. Peter
Hampton Director
- International Web Police Director@Web-Police.org |