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Bank Account Fraud

Tenacity Reaps Results in Perplexing Maze



July/August 2008

Case in Point   

This FBI financial analyst has worked on numerous cases, but there's one that sticks in her mind because she wasn't sure if she and the case agent would ever solve it. It was a "hit and run" bank account fraud that involved stolen identities, frustrating twists and turns, and just enough good luck to crack it.  

Have you ever had a case that you just couldn't get off your mind - one in which you have no problem remembering the players and minute details? Or a case in which you wondered if you'd ever solve it because the trail had run cold and clues were elusive. Well, this case falls into both categories. It wasn't the biggest case I've ever worked or the one with the largest losses, but it was memorable for all its twists and turns.

I worked this case as an FBI financial analyst, along with the assigned FBI special agent. I've changed the names, but many of the facts are the same.

In the third week of May 2000, a man using the name of Martin Horgan opened up four different bank accounts at three different banks in Omaha, Neb. At the time each account was opened, between $25 and $200 cash was deposited. Horgan used the same scam at each bank; he would deposit a check into his new account and simultaneously withdraw a substantial amount of cash against the check.

For example, on May 26, he deposited a $1,500 check and at the same time withdrew $1,100 in cash. He repeated the same process with similar amounts at two other banks until he walked away with $36,000. On June 1, the first checks bounced and by June 9 the bank determined - as the other banks also would - there wasn't much chance of recovery on the account, and it closed the account citing fraudulent activity.

The three banks notified law enforcement of the losses through a suspicious activity report (SAR). According to the ACFE's Fraud Examiners Manual, effective April 1, 1996, the Office of the Comptroller of the Currency (OCC) requires national banks to submit SARs (12 C.F.R. 21.11, as amended) if there's a known or suspected criminal violation committed against the bank or involving a transaction conducted through the bank, and: the bank has a substantial basis for identifying responsible bank personnel; or the amount involved is $5,000 or more and the bank has a substantial basis for identifying a possible suspect, there's a potential for money laundering, or the Bank Secrecy Act is violated (for example, when a customer appears to be structuring a transaction to avoid the filing of a Currency Transaction Report, such as depositing $9,900 in cash); or the amount involved is $25,000 or more. The bank is then required to report even if the bank doesn't have a substantial basis for identifying a suspect.

All the accounts were opened in the name of Martin Horgan, so, of course, we thought he was our guy. But a review of his criminal history showed that Horgan was in prison in Georgia for an unrelated crime when the bank frauds occurred. So who was the real fraudster? It was time to take a closer look at the evidence.


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