The feds say the scams targeted seniors, including a Fayetteville man, who paid with gift cards
Forfeiture in rem
A civil judicial forfeiture is an action in rem (against property) brought in court against property or money. The property or money itself is the defendant, and no criminal charges against the owner are necessary. An owner or property interest holder may file a claim against the property and request a hearing to decide the validity of the owner’s or property interest holder’s claimed interest.
Source: US Treasury Department
FAYETTEVILLE — Federal law enforcement officials are seeking the forfeiture of nearly $4 million they say came from scams targeting more than 2,000 seniors in multiple states who were instructed to pay the crooks with Walmart gift cards, according to documents filed in U.S. District Court on Friday.
The total loss in the scams between April 5, 2016 and November 6, 2018 was $4,403,750, and the total recovered amount seized by the government was $3,958,061.
The scams were first noticed by Walmart investigators looking for fraudulent financial transactions. Walmart officials froze the suspicious accounts and notified the US Secret Service in December 2018, according to court documents. Walmart deposited the money in a safe bank account last November.
The Secret Service worked with Walmart to identify the victims so their money could be returned.
In the fall of 2015, Walmart’s Global Investigations team noticed a pattern of regular investigations by local law enforcement regarding reports filed by victims of unspecified scams who, as part of the scam, had been asked to buy Walmart gift cards with values usually in the sum. of $500 and $1,000, according to court documents.
Walmart used video surveillance of gift card purchases in its stores, which typically happened at Walmart cash registers, and determined that a disproportionate number of victims were elderly, according to court documents.
CCTV typically showed the victims using their cellphones to forward Walmart gift card numbers to strangers they were communicating with. The calls lasted just long enough for the victim to complete the gift card transaction.
Further research confirmed that the timing of the phone calls correlated with someone checking the Walmart gift card balance, either while the victim was on the phone with the scammer or shortly after.
Walmart reviewed its gift card system and detected patterns where large numbers of $500 and $1,000 gift cards were purchased from stores across the United States and immediately verified the value of the card abroad. Walmart determined that gift card numbers were then used to make purchases in a different state than the state where the gift card was purchased, with purchases occurring within minutes or hours of loading the card -gift.
In February 2016, Walmart began tracking overseas balance checks and developed a system to identify and recognize what it believed to be fraudulent schemes, according to court documents.
Walmart compiled a list and identified approximately 10,639 suspicious transactions worth $4.4 million, which took place in all 50 states, as well as Washington, DC and Puerto Rico, and included both cash and credit card purchases of gift cards.
In July 2017, Walmart froze funds from Walmart gift cards that were determined to be linked to the alleged fraud and placed the frozen funds in a bank account, according to court documents. The scammers did not try to claim the money.
The Secret Service contacted a number of victims, or their family members, according to an affidavit filed in the case. One told them he had been contacted by a man with a Middle Eastern accent who said he was a bill collector for an apartment complex in Michigan and that the man owed $1,000 in back rent, but could pay the debt with two $500 Walmart gift cards. A week later, the scammer tried the same thing again.
Another 70-year-old man was told he would be hacked and was offered protection. The person reported being the target of various scams amounting to $37,000 over a 21 month period. One victim described a scammer as having an Indian accent who identified himself as an undercover FBI agent in Sri Lanka. The victim also allowed the scammer to access his personal computer.
Shortly after, another man attempted the same scam, which apparently upset the original scammer, according to court documents. The original scammer told the victim that he caught and “locked up” the second scammer.
An Alabama man with dementia learned he owed back taxes to the IRS and could pay them by buying $1,500 in gift cards and providing the numbers to the caller.
A Fayetteville man was also told he owed the IRS $3,000 in back taxes and would be arrested if he didn’t buy gift cards and provide the numbers.
A 92-year-old man responded to a pop-up message on his computer in 2018 saying his computer was infected with a virus and he needed to download an app to fix the problem. The man’s family told investigators he complied with the pop-up’s request and allowed a third party to take control of his computer.
The man was approached by someone with an Indian accent and convinced to buy Walmart gift cards to prevent his computer from being locked out. The stranger said he had access to the man’s financial accounts and would steal all of the man’s money if he didn’t pay $5,000 in Walmart gift cards. The stranger then convinced the victim to purchase an additional $10,000 worth of gift cards, for a total of $15,000 over four days.