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Tag: fraud

  • Scott Rothstein Ponzi/Fraud Probe May Involve $1 Billion

    The probe into the business affairs of Fort Lauderdale attorney Scott Rothstein may involve more than $1 billion directed to a Ponzi and fraud scheme, the FBI said today.

    Earlier estimates had placed the total at up to $500 million, and the FBI has made a public appeal for potential victims to provide information.

    Separately, new allegations emerged that Rothstein had fleeced an 88-year-old Florida businessman out of as much as $57 million in a single deal. The Fort Lauderdale Sun Sentinel reported that the alleged monumental theft involved the forged signatures of a federal judge and a federal appeals court judge on fraudulent court documents.

    The case is riveting the Miami area. No immediate arrests are anticipated, but prosecutors have seized assets tied to Rothstein.

    Rothstein was a friend of the Ed Morse family. Morse made a fortune in the car business, and attorneys now say Rothstein took advantage of Ed Morse’s age to dupe him into believing he had to post a enormous bonds totaling $57 million to enforce a judgment in a case that involved a dispute over interior decorations.

    Here is the FBI’s public request for information on Rothstein:

    The Miami Division of the Federal Bureau of Investigation (FBI) and the Miami Field Office of the Internal Revenue Service (IRS) are seeking information from individuals who have invested in the Rothstein Structured Settlement Investment (RSSI) or from individuals who have information that would be helpful to the investigation. To facilitate information gathering, the FBI has established a dedicated e-mail address and an informational telephone line 1-800-CALL-FBI, “Rothstein Option.”

    Details of the investigation cannot be discussed at this time, as the investigation is ongoing. However, the FBI and IRS are seeking to identify victims and to obtain any information to determine the extent of any potential fraud.

    In an effort to determine the scope of the matter and the amount of losses that may be involved, investigators are requesting that individuals provide:

    • Basic contact information (name, address, telephone numbers, e-mail address.)
    • Amount of investments/losses with the Rothstein Structured Settlement Investment.
    • Whether you can verify your investments by providing the most recent statements.
    • Any additional information that may be helpful.

    Information may be provided via dedicated e-mail address Rothstein.Investment@ic.fbi.gov or to informational telephone line 1-800-CALL-FBI, “Rothstein Option” (1-800-225-5324.) If you have investigative information that may aid the criminal investigation, you may also submit it via email or telephone. For those who would like to return funds received from Rothstein please call the 1-800 number and someone will get back with you with specific instructions on how to return the funds.

    Hard copy documentation may be mailed to:

    FBI Victim Assistance Program
    Rothstein Investment
    16320 NW 2nd Avenue
    Miami, Florida 33169

    If it is determined that you are a victim, the FBI will be in touch with you. Please note that due to the expected number of responses, it may be several days before you are contacted.

    Read the story on Rothstein’s alleged fleecing of 88-year-old Ed Morse in the Sun Sentinel. (Look on the left side of the page, near the top, for links to the allegedly forged court documents.)

  • BREAKING NEWS: Money-Services Business To Pay $18 Million To Settle FTC Claim It Facilitated International Fraud

    David C. Vladeck, FTC
    David C. Vladeck, FTC

    So, you want to offer a money-services business to U.S. customers and not take international fraud seriously?

    Be prepared to pony up $18 million to settle fraud claims when they start rolling in.

    In a stunning announcement today, the Federal Trade Commission said “at least 79 percent of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-induced.”

    MoneyGram International Inc. is the second-largest money-transfer service in the United States. The Minnesota-based company has agreed to pay $18 million in “consumer redress” to settle claims it turned a blind eye to fraud and permitted “fraudulent telemarketers to bilk U.S. consumers out of tens of millions of dollars,” the FTC said.

    Using pointed language, an FTC official said MoneyGram simply could not say no to fees it earned from scammers, including scammers its agents employed.

    “Money transfer services have a responsibility to make sure their systems don’t become conduits to rip people off,” said David C. Vladeck, director of the FTC’s Bureau of Consumer Protection. “In this case, MoneyGram not only ducked this responsibility, but also looked the other way while its agents took part in the scams.”

    Con artists knew a good thing when they saw it, the FTC said.

    “MoneyGram operates through a worldwide network of approximately 180,000 agent locations in 190 countries and territories,” the FTC said. “Con artists prefer to use money transfer services because they can pick up transferred money immediately, the payments are often untraceable, and victimized consumers have no chargeback rights or other recourse.”

    In 2007, 72 percent of all complaints received by the FTC involving Canadian-based fraud reported using money transfer services to make payments, the agency said.

    And it was not a small sampling of complaints, the FTC stressed.

    “Based on the more than 20,600 fraud complaints MoneyGram itself received, U.S. consumers lost more than $44 million to cross-border money-transfer frauds between 2004 and 2008 alone,” the FTC said. “When combined with losses reported by U.S. consumers on money transfers within the United States, that number grows to $84 million.”

    At least 65 MoneyGram agents have been charged by Canadian or U.S. authorities or are under investigation in the United States for fraud, the FTC said.

    MoneyGram made excuses as complaints piled up, the agency said.

    “MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company’s responsibility,” the FTC said.

    “The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents,” the FTC said. “Some employees who raised concerns were disciplined or fired.”

    Read the FTC complaint against MoneyGram.

    Read the stipulated settlement in which MoneyGram does not acknowledge wrongdoing but agrees to pay $18 million to settle the case and to implement a comprehensive anti-fraud and agent-monitoring program.