Beware of the Electronic Mule

February 8, 2017 at 9:15 am Leave a comment

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A recent guilty plea in Federal District court in Brooklyn is the latest example of how a fool and his money are easily separated and how financial institutions are often left paying the bill.

On February 3, 2017, Vyacheslav Khaimov pled guilty for his role in orchestrating an internet cybercrime operation, which successfully stole over $1.2 million from consumer bank accounts by using malware to hack into and transfer money out of them. This case underscores just how vulnerable financial institutions are to their most gullible members.

The scheme, as outlined by the FBI’s Criminal Complaint, is as common as a presidential tweet, which makes me wonder why more can’t be done to prevent these types of crimes from happening in the first place. In this case individuals were told they had been hired for “work from home positions.” The new employee is told to open an account in which they will receive money for expenses; in fact the money they receive is money that has been illegally diverted, via wire transfer. The new hire is also told to transfer the money, yet again, to another account, most commonly one that is overseas. In one of the eight thefts highlighted in this case, for example, $ 37,000 was stolen by wire from a Brooklyn homeowners account and directed to an account opened by an unknowing mule. In the days immediately following, the mule wired all but $3,000 of the money to an account controlled by our criminal.

As early as 2009 , the FDIC issued a warning about this type of activity. As I researched the issue further, what astounds me is that there are so many people duped into participating in these types of schemes. I would be curious to learn how many credit unions victimized by this type of fraud have sent out gentle reminders to their members, not only to protect passwords when participating in online banking, but also to keep in mind that they too could be unknowing mules, particularly if they work at home.

Apparently, some people need a reminder that if something sounds too good to be true, it probably is.

Entry filed under: General.

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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