Kansas City Woman Pleads Guilty in $3 Million Fraud

KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., woman pleaded guilty in federal court today to a nearly $3 million fraud scheme that forced her employer out of business.

Irene Marie Brooner, 52, of Kansas City, pleaded guilty before U.S. District Judge Beth Phillips to bank fraud.

Brooner, a certified public accountant, worked at Galvmet, Inc., a sheet metal fabrication facility and steel service center located in Kansas City, from 2001 until her termination in February 2014. At its peak in 2008, the company had 26 employees and $14 million in annual sales. Galvmet filed for bankruptcy and ceased operations in 2014. At the time of closing, the company had 18 to 20 employees and $10 million in annual sales.

Brooner’s duties as controller included managing payroll, accounts receivable and payable, and maintaining the ledger at Galvmet.

Brooner admitted that, over a period of more than 10 years (January 2004 until February 2014), she created a total of 389 unauthorized Automated Clearing House (ACH) transactions from Galvmet’s bank account to her personal bank accounts. (An ACH is a batch-oriented funds transfer system that includes direct deposits of payroll from companies.) Those unauthorized ACH transactions included 148 payments to her checking account and 133 payments to her savings account. Brooner also defrauded Galvmet by inflating her salary. From March 2004 to December 2011, Brooner manipulated the payroll account to increase her net pay on approximately 108 payroll checks.

Brooner’s fraud scheme resulted in a loss of at least $1,863,914 to Galvmet. As a result, Galvmet ceased operations. While reviewing bank records during the filing of Galvmet’s Chapter 13 bankruptcy in February 2014, the company’s president noticed unauthorized transfers from Galvmet’s payroll account to Brooner’s personal account. He reported the apparent embezzlement to the FBI.

To keep the scheme going, Brooner also falsified documents to support Galvmet’s operating loan with Missouri Bank & Trust, causing an additional loss to the bank of $1.1 million. The total loss from Brooner’s fraud scheme was at least $2,963,914.

Brooner spent the embezzled funds on personal items. According to today’s plea agreement, Brooner spent some of the proceeds to remodel, stock, furnish and decorate the ornately-finished bar in the basement of her new home. The bar, which she called “the Dirty Duck,” includes seating for approximately 15, a granite bar top, four or five tap lines, a refrigeration system, three flat-screen televisions, a smoke machine at the entrance, two couches and stained wainscoting around the room approximately eight feet tall. Mannequins, positioned throughout the bar, are outfitted with authentic U.S. and German uniforms and weaponry from the World War II era, including a Thompson sub-machine gun and multiple M-1 Garands with attached bayonets. Brooner told FBI agents that her husband, a carpenter, remodeled the bar in 2003 and 2004. From 2004 to 2014, Brooner spent $18,383 on alcohol.

Brooner’s spending included paying off her mortgage for $289,290, buying $81,686 in jewelry, and spending at least $400,392 on clothing and other retail, $97,180 on restaurants, $78,439 on vehicles, $169,389 on furniture and home decor, $62,003 on travel, $38,317 on electronics, $21,346 in ATM withdrawals, $59,571 on spa visits and beauty items, $68,745 on tuition for her children, $18,383 on alcohol, $104,060 to her children, $216,377 in assorted checks under $500, $64,557 in donations, $254,168 in other credit cards, and by purchasing other items.

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Facebook helps catch Phoenix woman for insurance fraud

PHOENIX (CBS5)-A Phoenix woman tried to get away with $26,500 after claiming she lost her wedding rings.

But her lie was uncovered when Facebook photos surfaced of her wearing the distinctive rings, according to the Arizona Department of Insurance.

In June 2013, Maria Apodaca Simmons made a claim on her policy through Travelers Insurance Company for rings she said she lost while swimming in the Pacific Ocean a few days after her wedding in May.

She also filed a $14,000 claim on her husband’s wedding band in October 2013, claiming it was lost while he was swimming on vacation.

A State Farm employee thought something was fishy after she interviewed Simmons about her husband’s ring.

Simmons was wearing the rings that matched the photos from the appraisal she used for the Travelers policy, and the state Department of Insurance investigators were called in. They discovered a Facebook page with a photo of her wearing the same rings.

A search warrant was issued and the rings were found.

Simmons first said the rings were duplicates, but the jeweler told investigators that he had only made the one set.

On Tuesday, Simmons pleaded guilty to two counts of insurance fraud, and as part of a plea deal, she’ll be put on probation and pay $26,953.60 to Travelers Insurance and $1,005.11 to the Department of Insurance for investigative costs.

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56 Million Credit Cards Affected in Security Breach

NEW YORK (AP) — Home Depot said Thursday that a data breach that lasted for months at its stores in the U.S. and Canada affected 56 million debit and credit cards, far more than a pre-Christmas 2013 attack on Target customers.

The size of the theft at Home Depot trails only that of TJX Companies’ heist of 90 million records disclosed in 2007. Target’s breach compromised 40 million credit and debit cards.

Home Depot, the nation’s largest home improvement retailer, said that the malware used in the data breach that took place between April and September has been eliminated.

It said there was no evidence that debit PIN numbers were compromised or that the breach affected stores in Mexico or customers who shopped online at Homedepot.com. It said it has also completed a “major” payment security project that provides enhanced encryption of customers’ payment data in the company’s U.S. stores.

But unlike Target’s breach, which sent the retailer’s sales and profits falling as wary shoppers went elsewhere, customers seem to have stuck with Atlanta-based Home Depot. Still, the breach’s ultimate cost to the company remains unknown. Greg Melich, an analyst at International Strategy & Investment Group LLC, estimates the costs will run in the several hundred million dollars, similar to Target’s breach.

“This is a massive breach, and a lot of people are affected,” said John Kindervag, vice president and principal analyst at Forrester Research. But he added, “Home Depot is very lucky that Target happened because there is this numbness factor.”
Customers appear to be growing used to breaches, following a string of them this past year, including at Michaels, SuperValu and Neiman Marcus. Home Depot might have also benefited from the disclosure of the breach coming in September, months after the spring season, which is the busiest time of year for home improvement.

And unlike Target, which has a myriad of competitors, analysts note that home-improvement shoppers don’t have many options. Moreover, Home Depot’s customer base is different from Target’s. Nearly 40 percent of Home Depot’s sales come from professional and contractor services. Those buyers tend to be fiercely loyal and shop a couple of times a week for supplies.

Home Depot on Thursday confirmed its sales-growth estimates for the fiscal year and said it expects to earn $4.54 per share in fiscal 2014, up 2 cents from its prior guidance. The company’s fiscal 2014 outlook includes estimates for the cost to investigate the data breach, providing credit monitoring services to its customers, increasing call center staffing and paying legal and professional services.

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Fourteen Indicted in Identity Theft Crackdown in Puerto Rico

Washington, DC Aug 14 2014 Fourteen individuals were charged in three indictments in Puerto Rico with conspiracy to commit identification fraud, money laundering, aggravated identity theft and passport fraud in connection with their alleged roles in a scheme to traffic the identities and corresponding identity documents of Puerto Rican U.S. citizens.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodriguez-Velez for the District of Puerto Rico, Principal Deputy Assistant Secretary Thomas Winkowski of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI), Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS), Chief Richard Weber of the Internal Revenue Criminal Investigation Division (IRSCID) and Director Bill Miller of the State Department’s Diplomatic Security Service (DSS) made the announcement.

The multi-count indictments were returned by a federal grand jury on Aug. 6, 2014. Since that time, five of the defendants have been found and arrested (four in Puerto Rico and one in Florida). They will be arraigned in federal court this week. Arrest warrants have been issued for the remaining defendants, who will make their initial appearances in federal court in the districts in which they are arrested.

According to the indictments, from at least July 2008 through April 2014, conspirators in the mainland United States and in Puerto Rico sold the identities and corresponding Social Security cards, Puerto Rico birth certificates and other identification documents of Puerto Rican U.S. citizens to undocumented aliens and others residing in the mainland United States.

Specifically, the indictments allege that individuals located in the Caguas, Rio Piedras and San Juan areas of Puerto Rico (suppliers) obtained Puerto Rican identities and corresponding identity documents, and conspirators in various locations in the United States (identity brokers) solicited customers for those identities and documents. The identity brokers allegedly sold the identities and documents to the customers for prices ranging from $700 to $2,500 per set of Social Security cards and corresponding Puerto Rico birth certificates.

According to the indictment, the identity brokers ordered the identity documents from the suppliers by making coded telephone calls, including using terms such as “shirts,” “uniforms” or “clothes” to refer to identity documents. The suppliers generally requested that the identity brokers send payment for the documents through a money transfer service to names provided by the suppliers.

The conspirators frequently confirmed payee names and addresses, money transfer control numbers and trafficked identities via text messaging. The suppliers allegedly retrieved the payments from the money transfer service and sent the identity documents to the brokers using express, priority or regular U.S. Mail.

According to the indictments, once the identity brokers received the identity documents, they delivered the documents to the customers and obtained the remaining payment from the customers. The brokers generally kept the second payment for themselves as profit. Some identity brokers allegedly assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation.

As alleged in the indictments, the customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and obtain additional identification documents, such as state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and others attempted to obtain U.S. passports.

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Wannabe Beauty Queen’s High-Heel Video Brings Insurance Fraud Bust

A beauty contestant from Riverside, California, has been arrested for workers’ compensation fraud after authorities discovered her featured in an online video competing in high heels – all while she allegedly was collecting disability over a foot injury claim.

Shawna Lynn Palmer, 22, who participated in this year’s Miss Toyota Long Beach Grand Prix Beauty Pageant in April, was arrested Friday and booked into Robert Presley Detention Center on three felony counts of defrauding an insurance company, center records showed. Jail records showed that she was released the same day on $5,000 bail.

“Palmer worked as a clerk at Stater Brothers [market], and on March 10, 2014 she reported to her employer that she fractured a toe on her left foot at work,” California Department of Insurance Commissioner Dave Jones said in an official statement. “During multiple doctor visits, Palmer claimed that she could not place any weight on her foot, could not move it in any direction, or wear a shoe for any length of time. Palmer stated that she was not able to work due to her foot injury and continued to collect workers’ compensation benefits.”

Palmer’s doctor provided an orthopedic shoe and crutches and issued orders for her to refrain from working and elevate the foot whenever possible, according to a California Department of Insurance statement.

California insurance officials added that while collecting workers’ comp benefits, Palmer participated in at least two beauty contests wearing high heels and walking without any signs of discomfort.

“You can’t post things to social media while claiming that you’re legitimately injured, taking a check from the state for worker’s compensation benefits and expect not to get caught,” Byron Tucker, deputy commissioner at the California Department of Insurance, told ABC News station KABC.

“This suspect made the job of our departments’ detectives easier by openly participating in high-profile events,” Jones said.

ABC News’ efforts to reach Palmer have been unsuccessful, but her father told KABC he rejected the charges.

“All we’re going to say is that it’s absolute crap,” he told one of KABC’s reporters.

Palmer’s former manager at Stater Brothers, who did not want to reveal his name, told ABC News he had no comment beyond saying Palmer no longer was employed there.

Jail records showed that Palmer was expected to appear for a court hearing at Riverside Hall of Justice on Oct. 3.

If convicted, Palmer faces up to one year in county jail, three years of probation, and restitution of $24,000, state officials said.

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Guy brags about gift card tinkering at new job, gets house raided by feds

Three years ago, Muneeb Akhter and his twin brother Sohaib, then 19 years old, were featured in the Washington Post in a story headlined “George Mason’s youngest grads.”

They had graduated from George Mason University, in Washington, DC, with degrees in electrical engineering – “arguably the school’s toughest program”, the Post noted – after three years.

They reportedly liked to invent robots.

“I think we’ll be hearing more about these guys”, the Post’s Tom Jackman wrote.

Yes, indeed, starting now.

Muneeb Akhter is under investigation after admitting that he inflated the value of gift cards for companies including K-Mart, Shell Gas, Whole Foods, Starbucks and Dunkin Donuts, all without spending any money to do it.

He admitted, in a sworn, signed statement referenced by the Department of Homeland Security in an affidavit, that he had illegally accessed the companies’ e-commerce sites to pump up the cards.

From the affidavit, via NBC Washington:

Subject admitted to creating computer codes on his personal notebook computer to gain unlawful access to multiple e-commerce sites, including Shell Gas, Whole Foods, [K-Mart], Starbucks and Dunkin Donuts. Akhter has used his codes to trick the e-commerce systems into adding funds to gifts cards he has possession of without actually expending any money to do so. He admitted to using his program to add funds to other individuals’ gift cards without the need to actually expend funds.

Akhter said he loaded a Sears card with at least $500, a K-Mart card with $495, a Whole Foods card with $300 and a Starbucks card with $100.

Akhter reportedly landed a cyber security job last month and began work in late June.

At his new job, he couldn’t resist boasting to a colleague about the code he’d cooked up that enabled him to take an ordinary $25 pre-paid gift card and add value to it.

NBC quotes him:

I told my co-worker I used to own my own company and we were doing attacks against smart cards, gift cards and those things. I had a few gift cards with me and I showed him the gift cards and said ‘I know how to reload them for free.’

Well, helloooooo, Homeland Security agents!

Akhter’s co-worker went straight to his manager to tell him about the new hire’s skills – credentials that he apparently had neglected to put on his resume.

A Homeland Security agent questioned him. His badge and parking pass were quickly revoked, but the agent initially told him he was being considered for a higher position.

He said the agent told him:

We’re interested in your skill set. We need you for this high level position but I need to know exactly what you did.

Homeland Security and Secret Service agents paid a visit to Akhter at his home, again asking about his code.

He was, in fact, oblivious to the fact that he was under investigation until 24 July, when a team of 11 agents ransacked his house, seizing computers, phones and other electronics.

Scammers posing as Treasury officials

Doris Teno, of Rockford, admits panicking when she recently took a call from someone claiming to be with the Treasury Department who complained that she and her husband hadn’t properly filed their taxes for 2010.

He told her she had to pay him $1,000 or the U.S. marshal would arrive at her house to arrest her and seize her properties.

“He threatened me, since I wasn’t cooperating,” she recalled. “And then he said he’d arrest my husband too.”

Teno was one of thousands nationwide targeted by scammers who pose in calls or emails as Treasury or Internal Revenue Service officials threatening arrest, deportation or loss of property, authorities say.

The thieves seek personal identification information, money orders or prepaid credit or debit cards in order to void the phony arrest warrants, according to Thomas Bruton, clerk of the U.S. District Court for the Northern District of Illinois.

The Better Business Bureau of Chicago and Northern Illinois estimated that victims have lost a combined $1 million.

The scammers claim to have arrest warrants for offenses ranging from missed jury duty to bank fraud and money laundering. The bogus warrants display logos of unspecified district courts and false case numbers.

The Better Business Bureau said wrongdoers leave voice mail messages warning victims to immediately contact the IRS or face legal consequences. Other voice mails have threatened arrest by deputy marshals for failure to pay taxes in full.

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Boston Gang May Be Behind Car-Wash Credit-Card Thefts

At some car washes, it wasn’t just the cars that were getting cleaned out: Members of a Boston street gang were allegedly logging into the computerized cash registers of car washes across the United States, stealing credit card data and using the cloned cards to transfer money to prepaid gift cards.

The dirt on this squeaky-clean case was unearthed last month, when a South Carolina sheriff’s department contacted police in Everett, Massachusetts, because a South Carolinian’s credit card had been fraudulently used several times at a Dollar Store in Everett.

Detective Michael Lavey of the Everett police department found that a few people were visiting Dollar Stores in and around Everett, always in pairs. They would routinely purchase $500 in prepaid gift cards, paying with several different credit cards until one of the credit cards was approved, Lavey told independent security expert Brian Krebs.

Lavey posted store security footage online, but the suspected bandits behind this money-laundering scheme weren’t caught until one ended up in a Boston hospital, having been stabbed in an unrelated robbery.

Police recognized the man, allegedly a member of a local Bloods gang, from the security tapes. When his bloody pants were confiscated as evidence, police found a large number of credit cards in the pockets.

Lavey found at least one card had been cloned from a card whose data had been stolen from a Splash Car Wash in Connecticut. This led Lavey to connect with Monroe, Connecticut police detective Michael Chaves.

Chaves had been investigating card-data thefts at 14 car washes in Connecticut. He discovered many of the car washes used an outdated version of a point-of-sale software system developed by Randolph, New Jersey-based Micrologic Associates — and which could be accessed via the aging pcAnywhere remote-desktop software, sold until last month by Symantec.

Micrologic had created default pcAnywhere login credentials for its products, but many clients never changed the defaults, which stayed the same for years, Chaves told Krebs.

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The ABC7 I-Team exposed a surge of calls hitting Chicago and the suburbs where thieves are asking for your information. The scheme involves technology known as “telephone spoofing.”

It starts with a mysterious call from what may look like a legitimate local number. It can end with you giving a scam artist your check or credit card information.

In recent weeks, consumer activists say the Chicago area has been hit hard by people who are “spoofing” and trying to rip you off.

The call can come from an unknown number, or even one with a Chicago area code, ut the people on the other end are most likely overseas. Federal authorities say they’re using technology to fool you into thinking the number is local – a technique called spoofing.

“I answered it and it was an automated computerized voice telling me that my Chase card had been locked in that up I wanted to reactivated I need to press one so I pressed one at that point the automatic voice asked me to enter my card number,” said Cheryl Kopczyk.

Instead, Joliet resident Kopczyk hung up, then called the number on the back of her Chase card. The bank and consumer experts say she could have been several digits away from allowing someone to access her checking account.

“Until they asked for my credit card information, that’s when it threw up the red flag,” said Kopczyk.

A Chase spokesperson tells the I-Team that it is warning consumers about the scheme and telling them to handle the situation like Kopczyk did. But the Better Business Bureau says people have fallen for it and this pitch can be convincing.

“There is a problem with your credit card and you got to take immediate corrective action and call up and they want you to verify it’s you by giving your credit card number ,” said Steve Bernas, Better Business Bureau.

BBB president Bernas and federal investigators suspect the people making the calls somehow buy lists of cell and home phone numbers, or use robo-call capabilities to randomly dial. Bernas says the Chicago area has been flooded with these calls in the last few weeks.

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Airline Employees Charged in Cash-Smuggling Sting

Five airline employees were charged Thursday in a sting operation with using their security clearances to secretly smuggle more than $400,000 in cash through Boston’s Logan Airport.

Four ground operations crew members of JetBlue Airways and one Delta Air Lines customer service ramp agent were arrested on charges of conspiracy to commit money laundering and conspiracy to defraud the Transportation Security Administration.

Federal prosecutors said they used their security clearance to circumvent TSA checkpoints and smuggle cash to secure areas such as passenger departure gates. In return, each allegedly received a payment from a cooperating witness who posed as a member of a drug-trafficking organization while working with law enforcement.

“Security at our nation’s airports is paramount and the conduct alleged today is alarming,” said U.S. Attorney Carmen Ortiz. “Thanks to the hard work and commitment of the federal and state investigators and airline security personnel, a potentially dangerous breach in security was identified.”

Prosecutors identified the JetBlue employees as: Rupert Crossley, 25, of Lynn; Alvin Leacock, 27, of Hollywood, Florida; Eric Vick, 24, of Boston; and Anthony Trotman, 24, of Boston. The Delta employee was identified as Dino Dunkley, 31, of Boston. Vick and Dunkley are accused of taking the smuggled cash aboard airline flights from Boston to Florida.

Trotman’s attorney, Keith Halpern, said his client will plead not guilty.

“This is a case where the government created a crime, where they sent someone who was working for the government out with huge amounts of cash to see if they could entice people to do illegal activities,” Halpern said.

Vick’s attorney Ed Hayden said his client also is pleading not guilty. “We intend to investigate the government’s role in instigating the offenses,” Hayden said.

Attorneys for the other men did not immediately return messages seeking comment.

They made their initial court appearance Thursday and were ordered held until a detention hearing next week. If convicted, each faces up to 20 years in prison.

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