Foreign Lottery Scam Bilks State’s Seniors
Editor’s Note: The following article was originally published on March 28, 2006, in The Press of Atlantic City and is reprinted here with permission. It provides valuable information about a lottery scam targeting senior citizens that bankers can share with their customers. NJBankers operates FinCrime, an Internet-based financial crimes reporting, tracking and alerting system that can be useful in helping to prevent such scams from proliferating. Information about FinCrime is available from www.njbankers.com.
By Michael Pritchard
Stephen S. Petti, head of security for Cape Savings Bank, is getting tired of being the bad guy. And all because his customers haven’t won the lottery.
Petti, like bankers throughout the state, has a pile of worthless checks on his desk that were deposited by victims of a recurring lottery scam that is bilking thousands of dollars from state residents.
The letter usually starts with a line telling the recipient they have won some type of international lottery, from the European Lotto to the Canadian Lottery. A prize of several hundred thousand dollars awaits, but first, the recipients must pay fees on the winnings or take out insurance on the amount.
Enclosed is a check – a partial payment of the winnings – to pay those fees. Recipients deposit those checks and then wire the money to another location. The victim eventually finds out the check is a fraud.
The money transferred from the bank, however, is real. The checks involved are usually counterfeit or stolen cashier’s checks, which banks will honor more quickly than personal checks.
“That’s when we have to play the bad guy,” Petti said. “They’ve been victimized, but when the check turns out to be a fraud, we have to try and recoup the money. Then we’re seen as the evil bankers trying to get their money. And these scams have a way of targeting people who need money the most. One victim even used the money to buy furniture he needed. It’s a very hard situation.”
The checks and the accompanying letter are so convincing that often victims refuse to believe they haven’t won. They see the bank, and sometimes even law enforcement, as trying to keep them from what’s rightfully theirs.
“I even get that kind of resistance,” said Cindy Boyd, a senior investigator with the Ocean County Prosecutor’s Office who heads the county’s Senior Scam Task Force. Seniors are the predominate victims of e-mail and letter frauds.
“People sometimes see me as trying to keep them from getting their money,” she said. “I’m with law enforcement and have investigated hundreds of these scams. But they still refuse to believe it’s a scam. These are rational, intelligent people, but they think either I’m trying to steal their money or the bank is.”
Part of the reason comes from the adaptability of the scammers themselves. Lottery scams have been around for a long time, but Boyd says that in the past two years, thieves have been refining their tactics.
“Almost always, these scams are designed to get the money out of the country,” Boyd said. “Many of these scams originate in Nigeria or, lately, we’ve been seeing a lot of the money go to Canada. But the word got out on some of these overseas scams, so now you’ll see them trying to use U.S. addresses. They just hire someone to relay the money to them, and they get to use an address within the United States.”
For example, some of the scam letters Petti has seen use names such as USA Survey Network or USA Lotteries. A recent case in Ventnor identified a fictional company out of Las Vegas.
Other letters carry foreign addresses. Some even use the names of bogus law firms. Often, they provide seemingly plausible explanations for how the person could have been involved with an international lottery drawing without their knowledge.
THE CHECK IS THE THING
Although the letters have different explanations, they all revolve around the mailing of the check.
“All the checks I’ve heard about are between $2,500 and $7,500,” Petti said. “If they sent you a check for $100,000 you’d probably be suspicious. But these are reasonable amounts that are more believable to people.”
The scammers go to great lengths to make sure the checks are believable.
“For a while, they were mostly using counterfeit checks,” Boyd said. “But some of the larger banks started to get wise to the counterfeits. So they adapted. Now they’re stealing actual checks. All the information on the checks – the bank, the codes – is accurate. But when the bank tries to collect they find the check was stolen. Then they have to go back to the victim.”
Many other scams are designed to steal identity information or bank account numbers. This scam, however, directly involves the bank as the victim becomes overdrawn on his or her account.
“These scams have had an effect on how banks do business,” said Timothy E. Doherty, spokesman for the New Jersey Bankers Association. “This is forcing banks to be much more vigilant in transactions, and also banks are spending much more time on in-depth programs to educate their customers. The simple fact is that the crooks are getting smarter, and we have to get smarter as well.”
In the meantime, bankers are left to deal with the victims.
“Basically, it comes down to this,” Petti said. “If you receive a check and a letter in the mail, 99.9 percent of the time, it’s a scam.”
Copyright 2006, South Jersey Publishing Co. trading as The Press of Atlantic City.