Banking fraud on the increase and getting sophisticated

By Al Edwards, Acting Financial Editor

Maxwell

ACCORDING to the Jamaica Bankers Association (JBA), local banks are detecting an increasing number of incidents where customers are contacted by persons from overseas who seek to retain the services of, or purchase goods from its customers.

Advance payments are offered and customers divulge their account information to facilitate telegraphic transfer of these payments in their accounts.

Instead of making payments by telegraphic transfers, these persons are lodging to customers' accounts, forged cheques (purported to be drawn on overseas banks) of larger amounts than required for downpayments. The fraudulent cheques are lodged to customers' accounts by accomplices in Jamaica. The tricksters then contact customers for reimbursements of the overpaid amounts.

Customers who have sufficient funds in their accounts then reimburse these persons, usually by sending the payments to accounts designated by them. The money is withdrawn and customers suffer losses when after several weeks, cheques are returned unpaid by the overseas banks.

The JBA's executive director Shirley-Ann Eaton said: "Customers are being reminded that they are not to divulge information to persons about their accounts, and in particular, they are not to disclose their account numbers.

"I cannot stress enough that customers should be vigilant in their business affairs and in accepting cheques purported to be drawn on overseas banks by persons unknown to them. Where payments are promised by telegraphic transfers customers must confirm with their banks that payments were made to their accounts by that means."

THE MODUS OPERANDI

Speaking to the Financial Gleaner yesterday, Miss Eaton said that the JBA had noticed that the legal profession in particular, was being targeted. She said the latest case was where a request was made retaining the services of an attorney here in Jamaica. A cheque was then sent possibly by courier for a sum over the amount agreed upon. The person then asked, "Can you return the difference into a specific foreign account?", waited a few days and then pocketed the difference. In the meantime, the cheque that was initially sent was not honoured.

Miss Eaton said many companies' accounts are filled with clients' funds and so are not regularly checked and so the deception can go undetected for months. She drew attention to the fact that these fraudsters were adept at taking advantage of the time frame it takes for cheques to clear in foreign accounts.

She observed that many companies are being ripped off by their employees entrusting them to handle their accounts and have no idea just how much revenue they are losing through fraud.

A case in point was that of the former national football coach, Geoffery Maxwell, who was convicted of fraudulent conversion and sent to prison in March of this year. He defrauded his former employers H.D. Hopwood of $22 million which ought to have been used to buy foreign exchange.

H.D. Hopwood gave Mr. Maxwell, its chief accountant, the responsibility to buy foreign exchange on its behalf.

Between September 1997 and 1999, 12 cheques totalling $22,291,500 were drawn to buy US$60,000. The foreign exchange was bought but was not handed over to the company. Following an internal audit, the matter was detected.

The methods of defrauding financial institutions in Jamaica are becoming increasingly sophisticated. Only this week a fraudster took advantage of a branch of one of the country's leading banking institution's telephone systems going down. All the telephone lines were down bar one.

When that number was dialled, a female voice answered purporting to be an employee of the finance house. However, when a request was made to speak with a bona fide employee, the female on the telephone advised that the individual was not in.

A few minutes later, members of the compliance department called that line and a female voice answered and identified herself as Faye Harvey, an employee of the finance house (no employee at that branch has that name). She was told that they were calling to verify a cheque.

She then proceeded to give out information on a cheque dated that very day for a sum of approximately $2.5 million payable to a leading cambio. The woman then said that a Mr. Patrick Pink and Donald Fagan signed the cheque (No cheque signatory at the branch has those names).

The details of the cheque were correct as the cambio confirmed that the cheque was tendered to them and sold for US$65,000.00 to the customer in the form of a cheque. Fortunately, the US$ cheque had an error in preparation and was to be collected later that day. To date, the customer has not returned for it.

Contact was made with the telephone company which confirmed that lines were restored before their technicians visited the site. The meeting is to be convened with representatives of the telephone company's fraud unit to discuss the matter. The telephone company would not comment any further on the incident.

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