Unless you have been living under a rock you have definitely heard of the Wells Fargo fraud case.  In this case Wells Fargo was pushing customers, without their knowledge, into fee generating accounts.  Wells Fargo employees were assigned a quota by their employer and received commissions to sign up customers into these accounts.  This fraud has cost Wells Fargo in excess of $185 Million in penalties and over $5 Million in customer reimbursements.  This does not take into account the customers and revenue the bank has lost because of the hit to their reputation.

Often, big banks are targets of fraud.  There have been cases over the years related to JP Morgan Chase which tied them to convicted fraudster Bernard Madoff.  World Bank has been called out on their own steps to prevent corruption and finances related to bribery in third world countries. UBS was involved in currency exchange fraud. Are small banks exempt?  Not hardly. It is often the smaller banks that are committing frauds that directly involve their clientele.

Elder Fraud

A majority of senior citizens prefer to conduct their banking and financial activities face to face instead of through the ATM or online.  This is one of the few areas of independence that the elderly feel they have.  It is extremely convenient for a teller or other bank employee to take advantage of an elderly customer that may not be able to comprehend what the banker is explaining to them.  Because they can easily be confused, elderly customers are often targeted by unethical bank employees.

Unfortunately, once the fraud is discovered it is often too late.  Sometimes the customer has already passed away and a relative makes the fraud discovery some time after the fraud has occurred.  This was exactly the case when we were contacted by the family of a client that was deceased nearly a year prior.  The fraud was not suspected until well after probate occurred.

In reviewing transactions made by the client we noticed a pattern between the old-fashioned hand-written check book ledger and the deposit recorded on the bank statement and deposit slip.  There was a consistent pattern of $20.00 discrepancies between numerous transactions.  We were curious about this and approached a contact we had at the banking institution.

Our contact was not familiar with the client and assisted us in looking into the issue.  In reviewing transaction records, the $20.00 discrepancy consistently came up from one particular teller that was no longer with the institution.  However, she had recently popped up at another bank in town.  We contacted that institution to see if they may be experiencing any similar issues with this employee.  Fortunately, they agreed to help and examine her transaction record.  Sure enough, the pattern re-appeared with numerous elderly clients.

Both banking institutions were able to prosecute the employee. Unfortunately, our client was not able to be reimbursed for losses from the fraud due to the time after probate.

Check Tampering/ATM Fraud

This case comes to us from an employee at a banking institution.  When a new customer comes in and sets up a checking account they are often given temporary banking checks until their permanent checks arrive from the printer.  Some banks even provide a temporary ATM/Debit Card until the permanent one arrives.

Our fraudster in this case had access to bank checks and ATM’s, along with the ability to setup new customer accounts.  What this person did was setup several false customer accounts with fraudulent initial cash deposits.  She would then use the temporary checks and ATM/Debit Card and run up purchases on accounts that did not actually have funds available.  Fortunately, this was a pretty easy case for the banking institution to track back to the employee since she was always the one that setup the account.

Banks have taken numerous measures to limit the probability of fraud from its employees.  Like many checks and balances there are holes that fraudsters may find to exploit.  Banks usually have their own internal “auditing” to catch these problems before they become public.  Because of that they do not often let customers know that they may be a victim of fraud, despite federal regulations requiring them to do so.  Each of us must conduct our own due diligence to hold our financial institutions accountable.