Wednesday, March 11, 2020
Department of Justice Begins First Distribution of Funds Recovered Through Asset Forfeiture to Compensate Victims of Western Union Fraud Scheme
The Department of Justice announced that the Western Union Remission Fund began its first distribution of approximately $153 million in funds forfeited to the U.S. government from the Western Union Company (Western Union) to over 109,000 victims located in the United States and abroad. These victims, many of whom were elderly victims of consumer fraud and abuse, will be recovering the full amount of their losses.
“The $153 million distribution announced today brings some measure of justice for the elderly and other victims who were financially harmed by the fraudulent schemes in this case,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The department remains resolute in its efforts to not only prevent fraud from occurring in the first place, but also to find and return ill-gotten gains.”
“Money Transfer Businesses such as Western Union are particularly susceptible to misuse by scammers,” said U.S. Attorney David J. Freed for the Middle District of Pennsylvania. “In nearly every case of this nature that we have encountered in the Middle District of Pennsylvania, money transfer businesses are used to facilitate the crimes. Working together with MLARS and the skilled and dedicated investigators of the Postal Inspection Service, we have achieved outstanding results – bringing fraudsters to justice and holding businesses such as Western Union accountable. In addition to increased fraud detection and protections, an integral part of that accountability involves Western Union making victims whole. $153 Million is a good start.”
“The losses and the number of victims in this case are staggering. This initial disbursement will provide relief to more than 100,000 individuals, who lost $153 million,” said Assistant Postal Inspector in Charge John Walker of the U.S. Postal Inspection Service’s Philadelphia Division. “Some lost their life’s savings as a result of these scammers. Postal Inspectors continue to be out front when it comes to investigating these con men and in protecting American citizens from them. Today, we are happy to play a third role — returning money to those who were scammed. Delivering justice, and in this case, delivering restitution.”
“Western Union turned a blind eye to the fraudulent payments made through its money transfer system,” said Andrew Smith, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “We’re glad to be returning money to those consumers who were ripped off by fraudsters exploiting the Western Union system, and we will not tolerate Western Union or other payments companies facilitating fraud.”
In 2017, Western Union entered into a deferred prosecution agreement (DPA) with the United States. Pursuant to the DPA, Western Union acknowledged responsibility for its criminal conduct, which included violations of the Bank Secrecy Act and aiding and abetting wire fraud, and agreed to forfeit $586 million, which has been made available to compensate victims of the international consumer fraud scheme through the remission process. Western Union simultaneously resolved a parallel civil investigation with the Federal Trade Commission.
In this case, fraudsters specifically targeted seniors through primarily three distinct scams. First, in grandparent scams, the fraudster would pose as the victim’s relative, usually a grandchild, in need of immediate money to avoid personal harm such as a payment for medical expenses or ambulatory transportation. Second, in lottery or sweepstakes scams, victims received phone calls telling them that they had won large cash prizes but had to pay fees such as taxes to claim the prize. Many of these victims were re-victimized several times, as they were told to transfer large sums of money in multiple transactions on the promise that they would receive their prizes. Third, romance scams preyed on seniors searching for love or companionship on the internet. These victims were lulled into believing that their online love interest needed funds for a visit to the United States or some other purpose.
Certain owners, operators or employees of Western Union agent locations were complicit in the schemes. Western Union aided and abetted the fraud scheme by failing to suspend or terminate complicit agents and by allowing them to continue to process fraud-induced monetary transactions. Western Union had fulfilled its obligations under the DPA and the government has filed a motion to dismiss the information, which the court granted today.
This first round of payments is one of several expected to occur in the Western Union remission. The Department of Justice sent petitions for remission to over 500,000 potential victims of the Western Union fraud and anticipates authorizing compensation for many more victims in the coming months.