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$750m bank fraud - Rackets surge as most scammers go unpunished

Published:Sunday | May 19, 2019 | 12:00 AMNadine Wilson-Harris - Staff Reporter
Anti-Fraud Committee co-chair Lloyd Parchment in an interview with the Gleaner on Thursday, May 16, 2019.

The Jamaican law-enforcement and justice systems appear incapable of clamping down on wide-scale fraud that caused domestic banks and other financial institutions to haemorrhage $750 million last year, a Sunday Gleaner investigation has unveiled.

Though nearly 3,400 alleged cases have been reported to the police Fraud Squad from 2013 to 2018, data from the Jamaica Constabulary Force indicate that the conviction rate lags arrests, with only 115 persons found guilty out of 1,029 held for various rackets. And even with a conviction rate of 10 per cent, more than half of the 115 convictions – 62 – over the five years took place last year.

In 2015 and 2016, the Fraud Squad secured three convictions all told, according to police data.

Arrests, too, lag reports by more than 50 per cent. In the five years to 2018, there were 1,982 reports of regular fraud, with 904 arrests.

Electronic fraud arrests are far fewer.

But the Duke Street-based Fraud Squad, The Sunday Gleaner understands, is highly under-resourced and understaffed, with fewer than a dozen investigators tasked with tackling fraudsters across much of Jamaica. And even with negligible manpower, officers there are sometimes redeployed to other security duties such as zones of special operations and the state of emergency in western Jamaica.

Anti-fraud expert at the Jamaica Bankers’ Association, Lloyd Parchment, has attributed the low conviction rate for fraud here to the ambivalence of officialdom to white-collar crime.

“The justice system does not recognise fraud as a very important area of criminal activity; they do not treat it seriously. We in the banking sector have continuously been pressing the justice system to recognise fraud for what it is, because we are contending that fraud and the money gained from fraud is fuelling more serious hardened criminal activity that the system isn’t looking into,” Parchment told The Sunday Gleaner.

“They are just seeing fraud as a benign type of white-collar, no-victim, the bank money-is-insured-anyway thing,” he said.

And attempts by the banking sector leaders to engage with the justice ministry have been lukewarm, Parchment added.

Although 551 fraud cases were reported to the Fraud Squad in 2018, Parchment noted that industry leaders had little confidence that serious results would come out of those investigations.

“In some cases, banks have chosen not to even report anymore because it makes no point in sending it there [to the Fraud Squad],” he said.

“We had a guy recently who reaped millions of dollars in fraudulent funds from the banking industry through debit card frauds, and when we managed to engineer his arrest and he was brought to court, he immediately pleaded guilty,” Parchment recounted.

“He was slapped with a $200,000 fine. He then went and stole the money from a customer’s account to pay the fine. It didn’t even come out of his pocket and he is back working the next day and continues to work right now. I have the evidence of that because we have the camera system,” he said.

The backlog of cases is reportedly causing fraud victims to lose interest in making, or following up, reports to the Fraud Squad. A businesswoman with whom The Sunday Gleaner spoke last week revealed that a report to the Fraud Squad in early 2018 had still not been investigated more than a year later, having checked with personnel there recently.

Acting Superintendent of Police Albert Diah, who heads the Fraud Squad, declined comment on claims that the Fraud Squad was undermanned.

“Please understand that a growing concern is how information is sanitised and repurposed to serve a narrative that at times cannot be retracted when misinformation is communicated,” he responded in an email.