Gang charged in $400,000 ATM scam

Gang charged in $400,000 ATM scam

Authorities in New York have arrested four people accused of stealing $422,000 by exploiting a regulation requiring banks to reimburse the accounts of customers who claim their ATM cards have been used without their permission.

The four defendants - Lam Dang, Eric Manganelli, John Tluczek and Marzena Tluczek - are charged with making false claims totalling more than $700,000, to more than 20 banks, including HSBC, Wachovia and Chase.

In each case, the defendants opened accounts and padded them with large deposits over the course of several months before draining them again, with withdrawals of $500 to $1000 per day, say prosecutors.

Once the accounts were empty, the scammers would contact the bank and say their ATM cards had been stolen or lost and that the withdrawals were unauthorized. After the banks reimbursed the "stolen" money, the defendants would close the accounts, according to the indictment.

The four are accused of exploiting regulation E of the federal Electronic Fund Transfer Act, which requires banks to reimburse victims within 10 days of reporting the fraud.

Banks are then supposed to look into the validity of the claim, but in this case, the defendants withdrew the reimbursed funds before the investigations could be completed.

Prosecutors say the defendants used their knowledge of the law and the finance industry to further the fraud - Manganelli is a lawyer, Marzena and John Tluczek have both worked at various banks, and Dang is currently employed as a financial advisor.

To ensure cameras could not be used to identify them when making ATM withdrawals, the defendants wore motorcycle helmets, hoods or covered by masks.

Charles Hynes, Brooklyn district attorney, says: "These defendants corrupted a law created to help fraud victims and used it to facilitate a tremendous fraud of their own."

The defendants are charged with 23 counts of grand larceny in the third degree, 25 counts of falsifying business records in the first degree, nine counts of attempted grand larceny in the third degree, eight counts of perjury in the third degree, four counts of scheme to defraud in the first degree, and one count of attempted grand larceny in the second degree.

Comments: (2)

A Finextra member
A Finextra member 31 July, 2009, 17:11Be the first to give this comment the thumbs up 0 likes

Great argument for requiring stronger identification (not to neccesarily be confused with authentication) for every bank customer that files a identity fraud claim! Javelin scores every major US bank and credit card issuer on their stated fraud resolution policies (using mystery shopping methods) and the data state that resolution policies are universally improving with each year. So what we have is a new vulnerability stemming from this improvment! 

A Finextra member
A Finextra member 31 July, 2009, 17:41Be the first to give this comment the thumbs up 0 likes

Actually I was inspired to post a full blog re this article (viewable either on Finextra or the Javelin site)