Department of Justice Charges Unprecedented Number of Elder Fraud Defendants Nationwide and Launches Hotline

SALT LAKE CITY – U.S. Attorney John W. Huber of Utah joined Attorney General William P. Barr, FBI Director Christopher A. Wray, and Chief Postal Inspector Gary R. Barksdale today in announcing the largest coordinated sweep of elder fraud cases in history.  This year, prosecutors charged more than 400 defendants, far surpassing the 260 defendants charged in cases as part of last year’s sweep.  In each case, offenders allegedly engaged in financial schemes that targeted or largely affected seniors.  In total, the charged elder fraud schemes caused alleged losses of more than $1 billion dollars.

            Four Utah cases (20 total defendants) are included in the coordinated sweep.         

• U.S. v Fairbanks:  Thomas Fairbanks of Logan is charged with wire fraud, securities fraud and money laundering in what the indictment alleges was a fraudulent investment scheme.  As a part of the scheme, the indictment alleges Fairbanks gained the trust of a vulnerable adult and diverted at least $462,000 of her money for personal use. Trial is set for June 8, 2020, in the case.
• U.S. v Anyanwu:  Eight individuals are charged in connection with a fraud scheme primarily targeting widowed women over 65 years old. The indictment alleges that over approximately two years, the defendants defrauded dozens of victims out of more than $6 million. The defendants and coconspirators used social media and social gaming applications to target widows. The indictment alleges they created false identities to befriend potential victims, feigned romantic interest, and eventually pressured them to send money to the defendants. Trial is set for May in the case.
• U.S. v Powell:  Eight individuals are charged in connection with an alleged fraud scheme to obtain money and assets from a 90-year-old widow in Washington, Utah. The charges allege the defendants, who have family relationships, conspired to obtain money and assets from the victim in exchange for false promises to perform work on her property.  To further advance the scheme, one of the defendants engaged in romance fraud by enticing the victim to enter into a romantic relationship.  The charges alleges he used the romantic relationship to manipulate the victim into giving him money and assets. An April trial has been set in the case.
• U.S. v Rust:  For a period of at least 20 years, Gaylen Rust and others offered and sold investments to at least 500 investors located throughout the United States. Within the past five-year period alone, these co-conspirators collected an estimated $193 million dollars in connection with these investments.  They promised investors secured high interest returns through buying, selling and trading silver, according to the indictment.  In reality, besides making about $150 million in Ponzi payments, investor funds were used to support the Rust’s lifestyle. 
   
  Investors were encouraged to pull funds from their home equity, IRA, 401K or other retirement savings accounts or otherwise liquidate from other securities to invest as much as they could for optimum success, charges allege.  Approximately 45 percent of the investors are retirees who used retirement funds to invest with Rust.  The average age of investors is 60. The oldest investor 94.  The case is set for trial in May.
   
  “Americans are fed up with the constant barrage of scams that maliciously target the elderly and other vulnerable citizens,” said Attorney General William P. Barr.  “This year, the Department of Justice prosecuted more than 400 defendants, whose schemes totaled more than a billion dollars. I want to thank the men and women of the Department’s Consumer Protection Branch, which coordinated this effort, and all those in the U.S. Attorneys’ Offices and Criminal Division who worked tirelessly to bring these cases. The Department is committed to stopping the full range of criminal activities that exploit America’s seniors.”
   
  “We brought four significant cases to federal court as a part of this initiative, lodging allegations against 20 individual defendants. Protecting elderly and vulnerable members in Utah communities is one of our highest priorities.  Those who target and take advantage of them should know that we will hold them accountable,” U.S. Attorney John W. Huber said today. “As I have stated many times, we don’t defraud our elders.  We revere them.”
  Huber also expressed appreciation to the many law enforcement partners and other agencies who investigate or assist with the prosecution of elder fraud and abuse cases, including the FBI, U.S. Postal Inspectors, the Security Exchange Commission, the IRS, the Utah Division of Securities, the Commodity Futures Trading Commission, the Utah Attorney General’s Office, and Utah Adult Probation and Parole.
   
   
  Elder Fraud Hotline
  Attorney General Barr also announced the launch of a National Elder Fraud Hotline, which will provide services to seniors who may be victims of financial fraud.  The Hotline will be staffed by experienced case managers who can provide personalized support to callers.  Case managers will assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed.  When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller.  The Hotline’s toll free number is 833-FRAUD-11
  For the second year, the Department of Justice and its law enforcement partners also took comprehensive action against the money mule network that facilitates foreign-based elder fraud. Generally, perpetrators use a “money mule” to transfer fraud proceeds from a victim to ringleaders of fraud schemes who often reside in other countries. Some of these money mules act unwittingly, and intervention can effectively end their involvement in the fraud. The FBI and the Postal Inspection Service took action against more than 600 alleged money mules nationwide by conducting interviews, issuing warning letters, and bringing civil and criminal cases. Agents and prosecutors in more than 85 federal district participated in this effort to halt the money flow from victim to fraudster. These actions against money mules were in addition to the criminal and civil cases announced as part of this year’s elder fraud sweep.

These outreach efforts have helped to prevent seniors from falling prey to scams and have frustrated offenders’ efforts to obtain even more money from vulnerable elders.

The charges announced today are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.