FAYETTEVILLE — Federal law enforcement officials are seeking the forfeiture of almost $4 million they say were proceeds from scams targeting more than 2,000 elderly people in several states who were instructed to pay the grifters with Walmart gift cards, according to documents filed in U.S District Court on Friday.
The total loss in the scams between April 5, 2016, and Nov. 6, 2018, was $4,403,750, and the total recovered amount seized by the government was $3,958,061.
The scams were first noticed by Walmart investigators looking for fraudulent financial transactions. Walmart officials froze the suspicious accounts and notified the U.S. Secret Service in December 2018, according to court documents. Walmart put the money in a bank account for safekeeping last November.
The Secret Service has been working with Walmart to identify victims so their money can be returned.
In the fall of 2015, Walmart’s Global Investigations team noticed a pattern of regular inquiries from local police departments regarding reports filed by victims of unspecified scams who, as part of the scam, had been directed to purchase Walmart gift cards with values typically in the sum of $500 and $1,000, according to court documents.
Walmart used video surveillance of gift card purchases in their stores, which typically occurred at Walmart cash registers, and determined a disproportionate number of the victims were senior citizens, according to court documents.
The video surveillance typically showed the victims using their cellphones to convey the Walmart gift card numbers to unknown individuals with whom they were communicating. The calls lasted just long enough to enable the victim to complete the gift card transaction.
Further research confirmed the timing of the telephone calls correlated with someone checking the balance of the Walmart gift card, either during the time the victim was on the phone call with the scammer or shortly thereafter.
Walmart reviewed its gift card system and detected patterns where a large number of gift cards valued at $500 and $1,000 were purchased in stores across the United States and had an immediate check of the card’s value from overseas. Walmart determined the gift card numbers were then used to make purchases in a state different from the state where the gift card was bought, with the purchases occurring within minutes or hours of the gift card being loaded with money.
In February 2016, Walmart began to track the overseas balance checks and developed a system to identify and recognize what it believed were fraudulent patterns, according to court documents.
Walmart compiled a list and identified approximately 10,639 suspicious transactions with a value of $4.4 million, which occurred in all 50 states, as well as Washington, D.C., and Puerto Rico, and included both cash and credit card purchases of gift cards.
In July 2017, Walmart froze the Walmart gift card funds that were determined to be connected to the suspected fraud and placed the frozen funds in a bank account, according to court documents. The scammers have not tried to claim the money.
The Secret Service has contacted a number of the victims, or their family members, according to an affidavit filed in the case. One told them he was contacted by a man with a Middle Eastern accent who said he was a bill collector for an apartment complex in Michigan and that the man owed $1,000 in back rent but could settle the debt with two $500 Walmart gift cards. A week later the scammer tried the same thing again.
Another 70-year-old was told he would be hacked and was offered protection. The person reported he had been the target of various scams to the tune of $37,000 over a 21-month period. One victim described one scammer as having an Indian accent who identified himself as an undercover FBI agent in Sri Lanka. The victim also allowed the scammer to access his personal computer.
A short time later, another man tried the same scam, which apparently upset the original scammer, according to court documents. The original scammer told the victim he had caught and “locked up” the second scammer.
An Alabama man suffering from dementia was told he owed the IRS back taxes and could pay them by buying $1,500 in gift cards and providing the numbers to the caller.
A Fayetteville man was also told he owed the IRS $3,000 in back taxes and would be arrested if he did not buy gift cards and provide the numbers.
A 92-year-old responded to a pop-up message on his computer in 2018 that said his computer was infected with a virus and he needed to download an app to fix the problem. The man’s family told investigators he complied with the pop-up’s request and it allowed a third-party to take control of his computer.
The man was contacted by someone with an Indian accent and convinced to purchase Walmart gift cards to prevent his computer from being locked. The unknown individual said he had access to the man’s financial accounts and that he would steal all of the man’s money if he did not pay $5,000 in Walmart gift cards. The unknown individual then convinced the victim to purchase another $10,000 worth of gift cards, for a total of $15,000 over the course of four days.
Forfeiture in rem
A civil judicial forfeiture is an in rem (against the property) action brought in court against the property or money. The property or money itself is the defendant, and no criminal charge against the owner is necessary. An owner of or interest holder in the property may file a claim against the property and ask for a hearing to decide the validity of the owner’s or interest holder’s claimed interest in the property.
Source: U.S. Treasury Department