Over the years, Northeast CONTACT has received complaints from Maine consumers about all kinds of fraud schemes: calls from “relatives” needing cash fast, promising big cash awards or lottery payouts, or working as “secret shoppers.” It turns out a number of those calls were likely from MoneyGram agents who were breaking the law.
MoneyGram International Inc. has agreed to a $100 million settlement of charges that it criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program. If you lost money to a scam involving a MoneyGram agent, you may be entitled to some compensation.
Federal Department of Justice (DOJ) prosecutors say the global money services firm with headquarters in Dallas allowed the rip-offs to go on from 2004 until 2009. And the DOJ news release earlier this month pulled no punches.
“MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims,” said Assistant Attorney General Lanny A. Breuer. Tens of thousands of U.S. and Canadian customers were hoaxed, and complaints grew from 1,575 reported instances of fraud in 2004 to 19,614 instances in 2008. In all, the reported fraud topped $100 million.
Many of those complaints were investigated by MoneyGram’s fraud department, which apparently was routinely overruled by the sales department. DOJ pointed to an April 2007 meeting attended by senior MoneyGram execs in which the fraud department identified 32 of the “worst of the worst” Canadian outlets and recommended they be closed. Sales disagreed. The outlets were not closed and, while the complaints piled up, MoneyGram kept processing transactions from those outlets.
MoneyGram executives have agreed to take a number of steps, including:
• Adopting rules to ensure that company agents at a minimum meet U.S. anti-money laundering standards;
• Adopting tougher due diligence for agents termed high-risk or operating in high-risk areas;
• Creating an independent compliance and ethics committee of the board of directors, overseen by the chief compliance officer and compliance program;
• Setting up a bonus system rating all executives on success of the new compliance requirements (failure would make that executive ineligible for a bonus that year).
MoneyGram has also agreed to hire an independent corporate monitor, who will report regularly to DOJ on the effectiveness of the anti-fraud and anti-money laundering efforts. All of this is spelled out in a deferred prosecution agreement; if MoneyGram lives up to the terms for five years, DOJ will recommend dismissing the criminal information filed in court this month.
In 2009, MoneyGram paid $18 million to settle claims by the Federal Trade Commission that it allowed its money transfer system to be used by fraudulent telemarketers to bilk consumers out of millions of dollars. Part of that settlement required MoneyGram to set up a comprehensive anti-fraud program.
DOJ says it will post information about redress on its website at www.justice.gov/criminal/vns/caseup/. In the meantime, people who believe they were victimized between 2004 and 2009 can provide their contact information by calling toll-free 1-877-282-2610 (it’s a toll call internationally, 317-324-0390).
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email firstname.lastname@example.org.