Crackdown Takes Aim At Check-Cashing Scams

By Anita Huslin
Washington Post Staff Writer
Thursday, October 4, 2007

The general pitch may be built around a sob story, a promise of lottery winnings, a foreign business offer or a work-at-home opportunity. But the bottom-line offer is the same: We'll send you a check, you cash it at your bank, and you keep a portion and send the rest back to us.

Americans appear to be increasingly susceptible to such scams, according to U.S. Postal Inspection Service investigators, who yesterday announced a crackdown. They said they intercepted 540,000 checks worth more than $2.1 billion mailed to U.S. residents in the first eight months of the year. They said 77 people had been arrested in connection with the schemes -- 60 in the Netherlands, 16 in Nigeria and one in Canada.

Aided by authorities in those countries and in Britain, investigators said, they had traced many of the come-ons to a shifting network of Nigerians who, with a few computers, cellphones and bank routing numbers, have been cashing in on the naivete, goodwill or complicity of Internet users.

Three of the alleged perpetrators are in prison in New York awaiting trial, they said; four others will be extradited to the United States from the Netherlands for prosecution. Individuals on the check-cashing end of the scheme in the United States have been questioned, they said, though none has been prosecuted.

"A year ago, we started to see an increase in the number of fake checks coming into the United States," said Greg Campbell, the inspector in charge of global security and investigations for the inspection service. "The financial industry was losing approximately $1 billion a year."

People ranging from high school students to senior citizens have bitten, investigators said.

Sometimes, the story might go, the target has won money in a lottery; the "lottery" sends a check and asks the winner to wire or send back "transfer fees." Or the scammer will say he is a foreign businessman who needs help transferring money out of his country and offer payment to an American who will help by cashing his check.

In one case in New York, a university professor was taken for $1.2 million by a story that he had inherited $40 million. In another, the victim believed that the check was an advance on a government grant and that he needed to send a check to receive the full amount.

Officials said they had frozen the Nigerian assets of the alleged scammers, including $50,000 in a bank account in Lagos, several houses and at least one Mercedes. Much of the money gained through fake-check scams fuels prostitution and drug and human trafficking from Nigeria, said Johan van Hartskamp, who as Amsterdam police commissioner worked with the United States on what was dubbed Operation Dutch Treat.

He described the delivery system for fake checks: To avoid the scrutiny a Nigerian postmark would draw, operators would smuggle the checks out of the country by hiding them behind paintings, in shipments of shoes with secret compartments or sewn into suits and other clothing. Then, other members of the cells would mail the checks to Canada or Spain, and then to the United States.

People who cashed the checks would send back most of the money to their contact and keep a percentage. But then their banks would inform them that the checks were not real, and that they wanted their money back.

Investigators said it may be that Americans are susceptible to such scams because they assume banking industry laws will protect them. Plus, "it's always exciting for people to learn they've won anything," said Susan Grant, vice president of public policy at the National Consumers League. "Those types of scams are particularly seductive."

Yesterday, the Postal Inspection Service announced a public information campaign -- its Web site is to educate consumers about such fraud.

© 2007 The Washington Post Company