Former MoneyGram And Western Union Outlet Operator Sentenced To Federal Prison For Consumer Fraud And Money Laundering
The United States Attorney’s Office for the Middle District of Pennsylvania, announced that today in Harrisburg a Texas man was sentenced by Chief U.S. District Court Judge Christopher C. Conner to 168 months’ (14 years) incarceration plus 3 years of supervised release and ordered to pay restitution for his role in defrauding over 1,200 consumer fraud victims out of $3.9 million and for laundering the proceeds.
According to U.S. Attorney Peter Smith, following a week-long trial in Harrisburg in July 2013, Olufemi Adigun, age 28, of Houston, Texas, was convicted by a jury on 14 counts, including conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, unlawful monetary transactions, and money laundering.
Evidence at trial revealed that in 2008, Adigun operated MoneyGram and Western Union outlets out of an empty Houston storefront known as FAB Tax Services, a phony tax service provider. The location was used by Adigun and two conspirators, Benjamin Chikwe and Stanley Ohiri, to intercept $3,919,721 sent by approximately 1,240 victims from across the United States, including victims in Central Pennsylvania who were induced to send the transfers through mass marketing consumer fraud schemes.
The schemes relied on MoneyGram and Western Union money transfer systems for success. Commonly known as Secret Shopper, Grandma Scams, Advance Fee, or Canadian Lottery scams, these schemes have defrauded more than 500,000 Americans out of an estimated $1 billion since 2004. Typical victims are the elderly.
Many fraudsters contact victims via the U.S. mail, interstate courier, or the Internet promising cash prizes, lottery winnings, fictitious loans, or other payments. Counterfeit checks are then sent to the victims who are induced into cashing them and returning a portion of the funds to the fraudsters via the MoneyGram and Western Union money transfer systems. Victims eventually suffer a financial loss after the counterfeit checks bounce. Other Internet-based schemes induce the victims to purchase non-existent merchandise, such as automobiles and motorcycles, via “too good to be true” pricing.
The fraudsters exploit the way MoneyGram and Western Union operate their money transfer systems to conceal their identities and enlist corrupt MoneyGram and Western Union agents like Adigun to help launder the proceeds. Adigun entered false payee addresses, telephone numbers, and identification information into the MoneyGram and Western Union data-bases, thereby maintaining the anonymity of the fraudsters and creating the illusion that a bona-fide payee had physically entered the receiving outlet.
The victims were instructed to provide the Money Transfer Reference Number (MTRN) immediately after the money is sent. Armed with the MTRN, corrupt MoneyGram or Western agents in the United States could intercept and remove the funds from the systems, even though Adigun was physically located in Texas, thousands of miles away from the intended destination.
After Adigun and his co-conspirators intercepted the $3.9 million, they laundered the funds by converting, approximately $3.1 million into cash. Adigun, who controlled three FAB bank accounts, personally withdrew $1,453,146 cash from the accounts by making 203 withdrawals from 17 different bank branches. On many days, Adigun’s cash withdrawals totaled $40,000 to $70,000.
Other funds were laundered by transferring a portion of the proceeds, approximately $746,000, to other bank accounts before removing the money via cash withdrawals. Other proceeds, approximately $690,000, were sent via the Western Union and MoneyGram money transfer systems to destinations around the world, including in Canada, Nigeria, and Romania.
Adigun’s Indictment identified five mid-state residents from Chambersburg, Hanover, State College, and Mechanicsburg who each lost approximately $3,000 as a result of a mass marketing, consumer fraud scam during the summer of 2008. Their money was intercepted and removed from the MoneyGram transfer system by Adigun and his co-conspirators.
One of Adigun’s conspirators was Benjamin Chikwe, age 33, also of Houston, Texas, who was indicted with Adigun and pleaded guilty to conspiracy to commit money laundering charges pursuant to a cooperation-based plea agreement last year. In December 2013 Judge Conner sentenced Chikwe to 33 months in prison. The third conspirator, Stanley Ohiri, is a fugitive who may be in Nigeria.
Adigun began operating FAB as a Western Union outlet in December 2007 and as a MoneyGram outlet in May 2008. Shortly after, dozens of customers filed Consumer Fraud Reports with MoneyGram and Western Union. MoneyGram did not close FAB until August 18, 2008; Western Union did not suspend FAB until September 2, 2008.
In November 2012, charges of aiding and abetting wire fraud and willful failure to implement an effective anti-money laundering program were filed against MoneyGram in Harrisburg by the U.S. Department of Justice and the U.S. Attorney’s Office for the Middle District of Pennsylvania.
The charges were, in part, based on the company’s failure to terminate dozens of corrupt, agents in the United States and Canada, like FAB Tax Services, between 2004 and 2009. MoneyGram entered into a Deferred Prosecution Agreement with the government. That required MoneyGram to forfeit the sum of $100 million, implement improvements in the way it conducts its anti-money laundering program, undergo a five-year period of evaluation and oversight by a Corporate Compliance Monitor selected by the Department of Justice, and cooperate with the government. If MoneyGram successfully completes the five-year program, the government has agreed to dismiss the charges. The government is utilizing the forfeiture to establish a consumer fraud victim restitution fund. The U.S. Postal Service has distributed $46,371,155 of the $100 million to 18,784 victims across the country.
The case is part of a long term continuing investigation by the Harrisburg Office of the U.S. Postal Inspection Service. The Adigun, Chikwe, Ohiri, and MoneyGram prosecutions are being handled by Assistant United States Attorney Kim Douglas Daniel.