ACC693: Case Study

Read the following case. Please identify any suspicious activity and indicate what Bank Secrecy Act forms need to be completed. Identify the government forms required in each account summary. Write an explanation of why the form needs to be completed and whether you see any red flags in the activity. Explain why the form(s) need to be completed.

Aaron Adams

Aaron Adams of New York City is suspected of a scheme to defraud high-net-worth individuals. Through your investigation, you have identified bank accounts of seven individuals and one corporate account that were part of Adams’ scheme. The accounts are listed as follows:

Two accounts owned by a pre-existing customer (Matthew Rogers) were liquidated into cash, but no funds left the firm.

Four fraudulent accounts were established under the identities of individuals who were not existing customers. No transactions ever took place in these accounts.

One fraudulent account was established under the identity of a pre-existing customer (Terrence Smith). No transactions took place in the fraudulent account and the customer’s existing account was not compromised.

Two accounts belonged to the bank chairman, and your investigation determined that no transactions took place. However, some account information was disclosed by a phone representative.

A corporate account was established with a counterfeit corporate check (Bazooka Corporation).

Matthew Rogers (53 Hollis St., Nashua, NH) was a customer for the past three years and whose two accounts (abc012345 and abc234567) were subjected to liquidation of Certificate of Deposits totaling approximately $1.5 million on September 11. This transaction was conducted over the telephone, wherein the caller provided the customer name, Social Security number, and account number of a closed account (abc123456). (The call was verified through approved authenticators, i.e., Social Security number and account number). On September 14, the caller again telephoned to transfer the funds in the Rogers accounts to a bank in Australia; however, this was not processed due to a lack of written instructions. Follow-up by the bank with the customer on the attempted transfer detected the scheme. The bank assigned new account numbers to Mr. Rogers and repurchased his Certificates of Deposit at a loss of approximately $8,000.

On October 16, the caller made a second attempt to compromise the customer’s accounts via telephone by changing the address on the account to P.O. Box 1534, Main Street, Manchester, NH, and obtaining customer withdrawal checks. The checks were mailed to the provided address. As soon as the problem was detected, the bank notified the true customer, who independently retrieved the checks at the provided address.

On October 12, a customer account was established via the internet in the name of Steven Jobs. That account was never funded and no transactions ever took place. The account was not linked to any existing customer accounts. The bank determined this account was related to the alleged fraud when notified by local law enforcement.

On October 23, a customer account was established via the internet in the name of William Gates. That account was never funded and no transactions ever took place. The account was not linked to any existing customer accounts. The bank determined this account was related to the alleged fraud when notified by local law enforcement.

On November 1, a customer account (def123456) was established via U.S. mail in the name of Bazooka Corporation, naming James Seaman, the purported president of the company, as the authorized party. The account was subsequently funded through the mail with a $6.5 million check drawn off a Bazooka Corporation account. The bank’s procedure to verify certain types of checks identified it as a suspicious item, and the check was subsequently confirmed to be a counterfeit item; therefore, the check was not deposited. On or about November 15, a local police detective contacted the bank’s legal department about his ongoing investigation into an alleged credit card fraud scheme and sought information about several phone numbers related to his investigation. The matter was referred to your investigations group. Follow-up determined one of the phone numbers to be the same used by the alleged fraudster in the Bazooka investigation as well as two other fraud investigations (see #5 below). This information was relayed back to the local police detective in writing on November 22.

On November 17, a customer account (ghi123456) was established via U.S. mail in the name of James Seaman. That account was never funded and no transactions ever took place. Through the bank’s proactive fraud early warning procedure, the account was immediately determined to be linked to the Bazooka Corporation account and closed.

On December 12, a telephone caller requested balance information on the accounts of the bank’s chairman, Edmund Jones. The caller provided Mr. Jones’ name and Social Security number. The representative provided balance information and the last two digits on several accounts. Your investigation of Mr. Jones’ accounts determined that no monies were disbursed from any of his accounts.

On January 26, a customer account (jkl123456) was established via the internet in the name of Terrence Smith. A caller telephoned the bank the same day to inquire about the account. Since Mr. Smith had previously notified the bank of an attempt to compromise his account at Bank of America, the telephone representative escalated the issue. That fraudulent account was never funded and no transactions ever took place on either account. Due to Mr. Smith’s previous notification of the Bank of America attempt to local police, that agency contacted the bank on January 26 to determine if the bank had encountered any of the account identifiers that were used during the Bank of America attempt. The phone number provided by the alleged fraudster on the fraudulent Smith account application was determined to be same callback number provided by the caller in the Rogers matter and listed on the Bazooka and Seaman account applications.

On February 8, a customer account (mno123456) was established via the internet in the name of Paul Allen. That account was never funded and no transactions ever took place. The account was not linked to any existing customer accounts.