New York City – Feds Announce Check Fraud Bust

New York City – A brazen ring of thieves enlisted crooked bank tellers to run a shockingly widespread check-fraud scheme that was brought down only when they forged checks on an NYPD account, authorities announced today.

Two computer-savvy ringleaders allegedly concocted the counterfeit scam, using a veritable army of 950 “soldiers” to deposit and cash millions of dollars in counterfeit checks, Manhattan District Attorney Robert Morgenthau said.

Banks across Manhattan were targeted, but the high-roller ring masters, Jasper Grayson and James Malloy, both 26, more often preferred JP Morgan Chase, HSBC and TD Bank as targets for setting up accounts.

“By fraudulently cashing and depositing the counterfeit checks the defendants stole over $1.4 million,” from Chase, Morgenthau said, but he declined to put a total figure on the money making operation.

Three former tellers, one each from Chase, HSBC and TD banks, were also arrested. They were apparently in on the deal, selling customer profiles that included names, Social Security numbers, account numbers and balances.

Bank tellers would also provide the scammers with legitimate canceled checks, which they would use to make forgeries, according to law-enforcement sources.

Most of deposits were between $1500 and $2000, Although some went as high as $13,000.

The ring operated between Oct. 1, 2007 and Feb. 10, 2009 and is considered one of the largest frauds of its kind, in terms of scope, that the DA’s office has ever handled.

The “soldiers” cashed or deposited at least 1,000 checks phony payroll checks and had 350 checking account

By purchasing payroll stubs from employees the ring was also able to hack into real accounts belonging to Bed Bath & Beyond; clothing designer Diane Von Furstenberg and Mt. Sinai Medical Center, among a slew of others. They printed the checks with the business logos copied off the internet.

The ring also hit the city coffers of the Board of Education and the Finance Dept.

So far 18 people including the two ring leaders have been arrested but as many as 40 suspects have already been arrested, sources said.

The sophisticated scam was eventually uncovered when the NYPD’s Special Fraud Squad became aware of the scheme in May 2008 after the department’s Property Clerk’s Office found several checks that couldn’t be accounted for.

After months of forensic accounting, it was determined that the ring had written hundreds of bogus checks for millions of dollars drawn on accounts of about 20 large companies and city agencies, the sources said.

The ringleaders would then hire hundreds of people to go into branches with forged checks made out in their names for several thousand dollars and deposit them into new accounts.

They would immediately withdraw as much of the newly deposited money as the bank would allow — and give it to the ringleaders.

Investigators believe that as many as 20 tellers were involved.

The master forger Malloy, 25, of The Bronx, who has already pleaded guilty to a similar scam in federal court, but who allegedly continued running the bank scheme while he awaited sentencing.

“He was waiting to go in and running amok,” a source said.

He was arrested in February and authorities believe he may have stolen as much as $2 million.

In the criminal complaint against him, he was charged with counterfeiting 81 checks for $99,000 from the Center for Employment Opportunities, a job-placement firm.

He also allegedly stole $79,000 using 66 checks from SCAN New York, a children’s advocacy group, and $20,000 using city Housing Authority checks.

When he was arrested, cops found in his apartment 200 counterfeit corporate and personal checks, stolen bank-customer profiles, forged debit cards and magnetic paper for making checks, police said.

They also found a ledger containing the names of the soldiers and the amounts stolen.

Investigators think the men used most of the proceeds to finance a high-flying lifestyle of club-going, Cristal champagne and expensive meals