My CU Fraud Update: Two Charged in Phony CU Scam

Two charged with felonies in phony CU scams

ALEXANDRIA, Va. (6/17/04)--Canadian authorities have arrested two men in Ontario as suspects in a multi-million-dollar boiler-room scam involving bogus U.S. credit unions, NCUA announced Wednesday.

NCUA has been working with Canadian authorities for the past 10 months after people in 23 states reported they were bilked by fraudulent advertisements placed by scam artists claiming to be legitimate credit unions.

Leslie Card, 35, and Kevin Card, 33, both Jamaican nationals, were arrested and booked on 22 felony charges, including defrauding the public in an operation involving the so-called "America's Choice" and "Heartland" credit unions. Canadian authorities estimate the ongoing scam averaged $10,000 per day.

CUNA had been working with the Department of Justice and the FBI, providing documentation of the ads as incidents occurred.

The scamsters reserved ads in newspapers throughout the U.S. with information from stolen credit cards. The ads posted toll-free 866 telephone lines so victims could call and apply for a loan.

"They advertised low-interest loans for people with bad credit and then demanded people send cash 'origination fees' and five-month cash advance payments to Western Union in the Toronto area, where the money was picked up under assumed names," said NCUA General Counsel Robert Fenner. Victims received forged documents purporting to be federal disclosure papers on loans or never heard from the bogus operation again.

Numerous warnings from state and federal regulators and credit union leagues the past 10 months have warned credit unions and consumers across the nation that the scam was underway. NCUA subpoenaed documents and statements from victims and notified the American Newspaper Association, which sent 7,000 letters to newspaper publishers and advertising department heads to warn against publishing the ads. Leagues worked with their state newspaper associations in providing information.

The arrest stemmed from an international coalition including the Toronto Police Service Fraud Squad, the Ministry of Consumer and Business Services, OPP Anti-Rackets, the Competition Bureau, the York Regional Police Service Fraud Squad, the Royal Canadian Mounted Police, the Peel Regional Police Service Fraud Squad, the U.S. Federal Trade Commission and the U.S. Postal Inspection Service, with assistance from the Durham Regional Police Service Fraud Squad and Tactical Unit.