International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, July 1, 2020

British Man Sentenced To 70 Months In Prison For Fraud Scheme That Victimized Hundreds of Thousands of U.S. Consumers

Gareth David Long, 41, of Las Vegas, Nevada, was sentenced to serve 70 months in prison for running a scheme to steal millions of dollars from hundreds of thousands of consumers, the Department of Justice announced. 

Long was sentenced by Judge Andrew Gordon of the U.S. District Court for the District of Nevada as a result of his Nov. 5, 2019, guilty plea to wire fraud and aggravated identity theft charges in connection with the scheme that he operated.  As part of his guilty plea, Long admitted that he created and deposited checks drawn on the checking accounts of more than 375,000 victims without authorization during a six-month period in 2013.  Although Long had no authorization to charge the victims’ accounts, he represented to victims’ banks that the victims had authorized the debits.  When victims called to complain about the charges, Long instructed employees working for him to tell the victims that they had authorized the charges in connection with an online payday loan application.  Many of the victims were elderly.  Long used the proceeds of this scheme to purchase a ranch and 23 acres of land in Texas, three airplanes, cars, a fire truck, and construction and farm equipment, as well as to pay other personal expenses.

“The defendant exploited his access to sensitive personal and financial information to steal millions of dollars from victims throughout the United States” said Jody Hunt, Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice is committed to protecting the public from such identity theft and fraud.” 

“The U.S. Postal Inspection Service (USPIS) has been at the forefront of investigating fraud schemes for many years,” said Delany E. De Leon-Colon, Inspector in Charge for the Criminal Investigations Group at the USPIS National Headquarters.  “We remain steadfast in our pursuit to safeguard the public from those who take advantage of their trusted access for personal gains. Anyone who engages in this type of fraud scheme should know Postal Inspectors will find them and they will be held accountable for their actions.”

From 2008 through 2013, Long operated a third-party payment processing company, V Internet Corp, which also did business as Altcharge and Check Process.  As a payment processor, Long specialized in the creation and deposit of remotely-created checks (RCCs).  An RCC is a check created not by the account holder but by the third-party payee.  In place of a signature, Long’s RCCs contained a typed statement claiming that the check was authorized by the account holder.  Because of this payment processing activity, Long possessed the personal and financial information of hundreds of thousands of consumers whose accounts he debited in 2012 and before.  

In January 2013, Long stopped acting as a third-party payment processor for other merchants, and simply started using RCCs to charge the bank accounts of consumers whose personal identifying information he had acquired over the previous five years, as well as other consumers whose information Long purchased in the form of “lead lists.”  Long did not have authorization to charge any of these victims’ accounts.   

During the wire fraud and identity theft scheme from January through July of 2013, Long created and deposited more than 750,000 RCCs totaling more than $22 million.  While approximately half of the RCCs were immediately reversed by victims’ banks, Long nevertheless succeeded in stealing approximately $11 million over a six-month period.

The U.S. Postal Inspection Service seized more than $2.9 million from Long’s company bank accounts.  Postal Inspectors also seized property that Long purchased with the proceeds of his fraudulent activity, including three airplanes and the other vehicles and property described above.  As part of the sentencing hearing, the court issued a forfeiture money judgment of more than $11.2 million and Long forfeited the ranch and land he purchased in Texas.

Trial Attorneys John W. Burke and Ehren Reynolds of the Civil Division’s Consumer Protection Branch are prosecuting the case in coordination with the U.S. Attorney’s Office for the District of Nevada.  USPIS investigated the case.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.  In particular, in March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep.  The department has likewise conducted hundreds of training's and outreach sessions across the country since the passage of the Act. 

More information about the department’s efforts to help American seniors is available at its Elder Justice Initiative webpage.  For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch.  Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov.  If you or someone you know has been a victim of elder fraud, help is standing by at the National Elder Fraud Hotline:  833–FRAUD–11 or 833–372–8311, every day, 6:00 a.m.–11:00 p.m. eastern time.  The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov. 

https://lawprofessors.typepad.com/intfinlaw/2020/07/british-man-sentenced-to-70-months-in-prison-for-fraud-scheme-that-victimized-hundreds-of-thousands-of-us-consumers.html

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