International Financial Law Prof Blog

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

Tuesday, September 29, 2020

Department of Justice Begins Second Distribution of Funds Recovered Through Asset Forfeiture to Compensate Victims of Western Union Fraud Scheme, Bringing Total to Over $300 Million

The Department of Justice announced today that the Western Union Remission Fund began its second distribution of approximately $148 million in funds forfeited to the U.S. government from the Western Union Company (Western Union) to approximately 33,000 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.

This is the second in a series of payment distributions to occur in the Western Union remission.  The first distribution paid approximately $153 million to over 109,000 victims in March of this year.  The Department of Justice anticipates authorizing compensation for many more victims in the coming months.  The department is accepting petitions on an ongoing basis and will be providing potential victims who have not applied for remission the opportunity to apply.

“Through the tireless work of the Department of Justice, today 33,000 more individuals, including many elderly victims of the criminals who exploited Western Union’s deficient anti-money laundering controls, are being made whole through this distribution of an additional $148 million,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Together with the first distribution, the department has now remitted more than $300 million to over 142,000 victims of this fraud.  These results reinforce the department’s commitment to compensating victims whenever possible.”

“After the first distribution of funds to victims of these nefarious scammers, I said that it was a good start,” said U.S. Attorney David J. Freed. “Today’s announcement marks another important event in this lengthy and complicated case.  While ensuring fair business practices and anti-fraud programs is certainly a worthy goal, our aim is always to compensate our victims. We credit the innovative and industrious efforts of our investigative partners and thank them for their sustained efforts to make the victims whole.”

“We are very pleased to deliver $148 million to provide financial justice for these thousands of victims,” said Damon E Wood, Inspector in Charge of the U.S. Postal Inspection Service’s (USPIS) Philadelphia Division.  “This brings the total returned to victims to over $300 million.  Especially in these difficult times, the monies will hopefully provide relief for those who were scammed.  The Postal Inspection Service will continue to be at the forefront of protecting Americans from the scams that harm our most vulnerable citizens and delivering justice for all.”

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 scheme, fraudsters targeted consumers, including seniors, through multiple scams.  Three specific scams directed towards seniors include the grandparent scam, where the fraudster would pose as the victim’s relative in need of immediate money to avoid personal harm, lottery or sweepstakes scams, where the fraudster would tell the victim that they had won a large cash prize but had to pay fees such as taxes to claim the prize, and romance scams, where the fraudster would pose as an online love interest and request funds for a visit or for another purpose.  In each of these scams the fraudsters convinced their victims to send money through Western Union.

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 fulfilled its obligations under the DPA and the court granted the motion to dismiss the information this year.

https://lawprofessors.typepad.com/intfinlaw/2020/09/department-of-justice-begins-second-distribution-of-funds-recovered-through-asset-forfeiture-to-compensate-victims-of-western.html

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