Asian Check Fraud: A National Problem

by William (Bill) Gearin

Some financial institutions throughout the country have sustained catastrophic losses to a highly organized group of Vietnamese who are using counterfeit checks.

These small groups of Asians travel to various cities in the country, with their expenses paid in full by the organization. They are also provided with appropriate identification (I.D.) for the target area, i.e., driver's licenses or photo I.D.s. A group leader makes all the necessary arrangements.

The group will fly into an area and set up its operation in hotels or rented apartments or houses. They are given the I.D.'s, etc., and counterfeit checks drawn on the targeted local financial institution. The person who actually walks up to the teller is called a "mule." Each "mule" is paid a percentage of the total amount of checks he or she cashes.

The only contact the "mules" have with the organization is with their leader. From information developed thus far from law enforcement agencies and from FDIC Fraud Alerts published in July of 1995 the following six points of information have been developed:

Legitimate checks in process from all over the country, drawn on recognized accounts, are intercepted in a bank operations center believed to be in southern California.
These checks are scanned and reproduced on desktop publishing systems and other high tech equipment. Original checks are then placed back in the collection process and continue through the collection system.
A supply of these checks is produced and sent via Fed-Ex, UPS, Express Mail, etc. to group leaders in various cities.
Checks are passed by Vietnamese teams, some male, some female, or, in some cases, photos have been obtained of female-male teams. From reconstructed cases teams begin early in the day and finish at closing time-often visiting 20-25 branches of the targeted bank in a single day.
Check amounts are generally in the $800-900 range. In some cases checks are cashed without violating that bank's check cashing policy, i.e., if the check is drawn "on us", a collected balance is available, suitable I.D. is provided- then the check is cashed with little or no inquiry.
Check cashing activity terminates after two to three days in the area. The whole group is then flown to the next targeted city or area where checks are picked up at pre-determined locations. I.D. from that area is obtained and the process begins all over again.

Two observations noted and passed on by the Secret Service:
In many cases, the local I.D. has been issued a day or two before the counterfeit check is presented for encashment by the "mule."

Look for the clue that the item is counterfeit! In many instances the MICR encoded numbers on the bottom of the check are in incorrect positions. The last digit of the second series of numbers on commercial checks should positioned exactly 4 1/4" from the right hand edge of the check. A majority of the counterfeit checks reviewed by investigators in banks in New England are incorrectly structured on the MICR line.

Information and/or questions regarding this operation should be diverted to the nearest office of the United States Secret Service of the Law Enforcement White Collar Crime Task Force in your area.

Bill Gearin, President, Worcester County Fraudulent Check Association
12 High Street, Worcester, MA 01608
(508) 756-8383

Copyright © 1996 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 6, No. 5, 3/96