Recruiting Chinese and Taiwanese people temporarily living in the United States to open personal accounts and defraud banks by falsely claiming that bank transfers were unauthorized.
FBI Assistant Director Smith said this complex fraud harmed the interests of banks and made it more difficult to report suspicious money transfers. (Shutterstock)
[The Epoch Times, November 17, 2023](Epoch Times reporter Cai Rong reported in New York) The Federal Prosecutor for the Southern District of New York and the FBI announced yesterday (November 16) that three Chinese citizens were arrested on the same day. Participated in a bank fraud conspiracy to steal over $10 million from banks and quickly transfer the funds to foreign crypto exchanges.
According to charges filed by the U.S. Attorney’s Office for the Southern District of New York, 31-year-old Flushing resident Zhong Shi Gao (transliteration), 37-year-old Oklahoma resident Naifeng Xu (transliteration) and 41-year-old Brooklyn resident Fei Jiang also faces charges of wire fraud, money laundering and aggravated identity theft. If found guilty, they could be sentenced to up to 82 years in prison.
According to the indictment, from 2018 to 2022, the three suspects recruited individuals, most of whom were Chinese and Taiwanese temporarily residing in the United States, to open bank accounts in New York City and elsewhere. These temporary residents then handed over control of their accounts to Gao, Xu and Jiang. These are also commonly known as “head accounts.” When police trace the accounts, they can only find the account provider who does not know the details, also known as “head accounts.”
Gao, Xu and Jiang then arranged for deposits and transfers of funds between these “capitation accounts.” Gao, Xu, Jiang and others then submitted fraud reports to banks, falsely claiming that the wire transfers were unauthorized. This prompted banks sending and receiving wire transfers to temporarily top up the transfer amounts into the relevant accounts, effectively doubling the amount of money originally deposited into those accounts, even though Gao, Xu, Jiang and others actually authorized the transfers and Always control the transferred funds.
Prosecutors allege that the defendants had people quickly withdraw the funds or convert them into cryptocurrency and transfer them to foreign cryptocurrency exchanges before the bank realized that the unauthorized transfer reports were fraudulent. This allowed them to withdraw nearly twice the amount they originally deposited, while leaving the bank with an account with a negative balance.
The core of this case is the use of Bank of America’s “customer-centric” system. For example, the credit card fraud protection clauses of most major banks can compensate customers for losses within 60 days after theft. When you report to the bank that your credit card has been stolen, 100 US dollars, without authorization, the bank will temporarily credit 100 US dollars to your relevant account, and then the bank will leave you with 100 US dollars available during the investigation (equivalent to a temporary loan of 100 US dollars to you), the cardholder has 60 days ” Zero responsibility”. But this system is taken advantage of by bad guys, who will withdraw all the $100 that the bank temporarily replenishes in your account.
According to the indictment, Gao, Xu, Jiang and their associates caused a total of more than US$10 million in actual losses to more than a dozen banks and financial institutions.
FBI Assistant Director James Smith said in a statement that this type of fraud not only hurts banks, but also makes it more difficult to report suspicious money transfers. He said the arrests of the three men were a warning to anyone trying to participate in bank fraud. The FBI will hold them accountable in the criminal justice system.
Damian Williams, U.S. Attorney for the Southern District of New York, said these charges are a warning to scammers and cybercriminals who think they can hide their identities through cryptocurrency, and prosecutors will work with partners to track down and hold them accountable. Responsibility.
If convicted, each of the three suspects could be sentenced to up to 82 years in prison. Prosecutors are also seeking to seize their assets.
Editor in charge: Chen Minqi