FRAUD SQUAD

Romance Scam to Money Mule

Tuesday, February 13th, 2024

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Romance scams continue to gain prevalence as scammers use online dating platforms and social media to prey on vulnerable individuals looking for love.  Continue reading to learn how a man nearly fell victim to a romance scam where the perpetrator intended to use him as a money mule, but the scam was stopped before any transactions occurred, thanks to a concerned bank employee.

The Scam: Romance scams continue to gain prevalence as scammers use online dating platforms and social media to prey on vulnerable individuals looking for love. Most romance scams involve a fraudster who gains a victim’s trust and then convinces them to directly wire transfer money, send gift cards, or invest in cryptocurrency. Often, they present a story where they are in dire need of financial support, collect the money, and then disappear, but in other instances, some victims are used as money mules.

The victim may not be losing money, but they are moving illegally acquired funds, which is a punishable crime whether they are aware of it or not. According to the Federal Bureau of Investigation (FBI), “Criminals recruit money mules to help launder proceeds derived from online scams and frauds or crimes like human trafficking and drug trafficking. Money mules add layers of distance between crime victims and criminals, which makes it harder for law enforcement to accurately trace money trails.” In this story, a man nearly fell victim to a romance scam where the perpetrator intended to use him as a money mule, but thanks to a concerned bank employee, the scam was stopped before any transactions occurred.

The Scheme: 65-year-old retired pastor Barry [whose name has been changed to protect his identity] went to the Hurstville branch of the National Australia Bank (NAB) to request a money transfer of approximately 1 million dollars. He instructed the bank to send the money to three different accounts for his fiancé. Customer Advisor at NAB, Rosa Sakr, immediately inquired about the details of the transfer – the purpose, the amount, etc. When Barry could not answer her questions clearly, Sakr became extremely suspicious of the request and enlisted the help of her branch manager, Clement Tan. Upon further questioning, it was revealed that Barry had never met his fiancé in person, and the funds he requested to transfer were previously deposited into his account. The bank employees immediately identified these as red flags and refused to complete the transactions.

They counseled Barry, explaining that he was likely the victim of a romance scam and being used as a money mule. The man was adamant that he and his fiancé had been engaged for months and that the relationship was legitimate. Becoming upset by the questions and refusal to complete the transfers, he then pleaded with them to send the money to his fiancé but to no avail. Sakr and Tan blocked the transaction until further investigation. It was discovered that the initial $1 million deposited into Barry’s account was linked to an Australia and New Zealand Banking Group Limited (ANZ) customer who unknowingly fell victim to an invoice scam. With his family abroad, Sakr and Tan contacted two organizations to support him during this devastating event and then contacted Group Investigations and Fraud to continue investigating.

Barry never believed he would fall victim to such a scheme, and he has that bank employee to thank for asking the right questions and identifying the scam. According to a NAB bank representative, “I want people to know not to be embarrassed – it can happen to anyone. Scams can be complex and subtle, and we’re here to protect customers, even when they don’t know they need protecting.” Although many of these stories end in devastation, this particular one has a happy ending. The victim was prevented from unknowingly participating in illegal activity, and the stolen funds were returned to the original ANZ bank victim.

Fraud Geek Explains

In this scenario, the victim did not even consider he was being conned because the fraudster posing as his future wife had deposited money into his account and never requested money. In reality, he was not losing money by performing the wire transfers; however, what he didn’t realize was that the funds were acquired illegally, and by making the transactions back to his “fiancé,” he would have become an accomplice to the crime. The FBI warns that engaging in the illegal activity, whether aware of it or not, still comes with legal repercussions. Money mules, if convicted, face prosecution and incarceration as part of a criminal money laundering conspiracy.

In one such situation, The FBI reported that an 81-year-old victim, Glenda Seim, fell in love online with a scammer who claimed to be a US citizen, actively employed in Nigeria. His first attempts were money requests with an urgent plea for assistance in paying the Nigerian government taxes, fees, and penalties he owed, or he wouldn’t be able to return to the US. When Seim wasn’t able to deliver the cash, he sent electronics for her to pawn and send the money back to him. He then directed her to open bank accounts and began sending her funds to deposit and then transfer back out. Despite being warned by numerous bank employees and law enforcement that the relationship was a scam, Seim continued to accept deposits and wire transfers, many from unknown senders.

According to the U.S.  Attorney’s Office of the Eastern District of Missouri, “In November 2021, Seim pled guilty to two felony counts of identity theft related to her participation as a ‘money mule’ in various fraudulent transactions totaling up to $1.5 million on behalf of her online romantic interest.” The recommended sentence was 4 years in prison; however, the judge agreed to 5 years of supervised probation, repayment of stolen funds to the victims, and participation in a public service announcement to teach others the perils of romance scams and participating in illegal activity as a money mule. Having fallen deeply in love, she refused to believe it was a scam until it was too late.

There has been much controversy surrounding whether or not financial institutions (FIs) have the right to ask for specific details about sending wire transfers, large deposits, or withdrawals. However, questions like “What is the purpose of this transaction?” are simply meant to protect customers like these unsuspecting victims against financial scams.

Fraud Geek’s Advice

Consumers should look for the tell-tale signs of a romance scam and be wary of red flags that may indicate they are being exploited as a money mule.

Some red flags of romance scams include: 

  • Love bombing and promises of marriage within a very short time frame.
  • Refusal to meet in person or engage in video calls.
  • Involvement in extenuating circumstances that require immediate payment or large sums of cash – medical problems, legal fees, travel expenses, and ransoms.
  • Money requests through wire transfers, gift cards, cryptocurrency, and investments.
  • Requests to open accounts and accept wire transfers and deposits, only to then be asked to send the money elsewhere.
  • Requests to pawn items, mortgage your house, and sell your belongings in an effort to acquire cash.

Check out our previous Fraud Squad on the Case: Love, Lies, and Deception – A Romance Scam for more tips on how to protect yourself from becoming a victim.

Romance scams are a common method for recruiting money mules, but there has been a rise in employment scams with the same purpose.

Avoid becoming a money mule:

  • Do not open bank accounts for the purpose of depositing money from someone you don’t know, even if you’re in a relationship. If you have never met them and they ask you to accept money on their behalf, DON’T – IT’S A SCAM.
  • Never share passwords, account information, or credit card information.
  • Be wary of an employer or new love interest who asks you to receive funds in your bank account and then “process” or “transfer” funds out via: wire transfer, ACH, mail, or money service business (such as Western Union or MoneyGram).
  • If a banking employee asks questions about your large withdrawals, answer them honestly! They may identify a red flag that you missed!

Remember: Money mules are legally responsible and could suffer prosecution and frozen accounts, as well as the requirement to repay stolen funds.

If you believe you’ve been exploited as a money mule:

  1. Stop accepting deposits/wire transfers and contact your financial institution immediately.
  2. Stop communication with the fraudster.
  3. Retain all relevant communications and receipts, which include messages on apps, texts, emails, chats, invoices, etc.
  4. Contact the Federal Bureau of Investigation (FBI) Internet Crime Complaint Center (gov) or call the FBI Washington Field Office at 202-278-2000.
  5. Contact the Federal Trade Commission (FTC)–ftc.gov.

Financial Institutions: Keep Your Customers Protected:

  1. Evaluate your current fraud detection processes and technology. FIs often employ fraud-detecting software that flags transactions once they’ve occurred, but the money has already been removed from the account by then. Consider fraud detection technology that can monitor for unusual behavior, which could proactively identify fraud.
  2. Train employees to ask appropriate questions, and recognize/report suspicious activity like unusually large or frequent transfers of money, especially within a short time frame and multiple account creation.
  3. Establish protocols: If an employee catches a red flag, ensure they have support from managers or supervisors to follow through with investigations and reporting. Do employees know what steps to take if a customer’s situation indicates a possible scam?

The DefenseStorm Difference:

DefenseStorm approaches fraud differently by looking at both monetary and non-monetary transactions to catch fraud before funds leave the bank. Our GRID Active Fraud Detection product can flag unusual patterns, such as large deposits and wire transfers across different accounts, which could be considered inconsistent with normal activity. Our ability to monitor, detect, and alert on suspicious activity across all departments –including Originations, Online and Mobile banking, and Internal Fraud – allows the FI to stop fraudsters before funds leave the account.

Resources:

https[:]//news[.]nab[.]com[.]au/news/no-love-lost-nab-banker-breaks-up-a-romance-scam/#:~:text=Despite%20being%20caught%20up%20in,asking%20the%20very%20same%20question.

https[:]//www[.]fbi[.]gov/how-we-can-help-you/scams-and-safety/common-scams-and-crimes/money-mules

https[:]//www[.]fbi[.]gov/video-repository/sl-money-mule-psa-110221.mp4/view

 https[:]//www[.]timesnewspapers[.]com/webster-kirkwoodtimes/woman-sentenced-after-helping-scam-artist/article_1b2ae9e0-9b02-11ec-bb64-5ff45577d3b2[.]html

Adam

Adam Barrett

Sr. Product Manager, Fraud Detection

Adam is the DefenseStorm Fraud Geek with an extreme passion for protecting financial institutions and the people who trust them to provide a safe banking experience. He is currently the Senior Product Manager for DefenseStorm GRID Active Fraud Detection product. With 25 years of experience in banking operations, fraud and risk, you would think he’s seen it all, however, the constantly evolving schemes keep him motivated to stay in the fight.