BUFFALO, New York (Reuters) - Dozens of people were charged in what federal authorities on Tuesday called a highly sophisticated loan fraud scheme that robbed $2.7 million from at least 2,000 victims with poor credit histories in Canada and the United States.
Would-be borrowers were lured to websites of 67 fictitious businesses with names similar to well-known lenders such as “Countrywide Funding,” which sounds similar to the legitimate Countrywide Financial Corp., and “Admiral Financial Services,” which mirrors Admiral Financial Corp., authorities said.
They were approved for loans in exchange for security deposits ranging from a few hundred dollars to several thousand dollars - to be sent in advance of the flow of borrowed cash that never arrived.
“This was a highly sophisticated effort to appeal to Americans who were most vulnerable,” U.S. Immigration and Customs Enforcement Director John Morton said at a news conference.
“It was a big, fat fraud that duped not hundreds but thousands,” Morton said.
The six-year-long scheme targeted loan seekers with poor credit, luring them by classified ads to the phony financial services web sites, said U.S. Attorney William Hochul at the news conference. The fraudulent websites included bogus testimonials from imaginary borrowers.
“It began in most instances with an Internet search,” Hochul said.
A tip from a Buffalo grocery store clerk who grew suspicious over the hucksters’ repeat money transactions triggered an investigation in 2008 that eventually uncovered the multi-million dollar international crime scheme.
In some cases, Morton said, the scammers used the poor economy to bilk victims twice, convincing them that their original deposit was lost when loan underwriters went out of business and getting them to send in a second deposit.
They were among 2,000 victims living in Canada and all 50 U.S. states, authorities said.
Criminally charged were 10 people in the United States and 23 in Canada, whom Morton said his office will attempt to extradite to the States.
They are charged with conspiracy to commit wire fraud, punishable by up to 20 years in prison and a $250,000 fine, and conspiracy to commit money laundering, with a maximum penalty of 20 years in prison and a fine of up to $500,000 or two times the value of the stolen funds.
One defendant has pleaded guilty to wire fraud in federal court in Buffalo and will be sentenced in August.
He said Canadian police in Toronto and the Canada Border Services Agency aided in the investigation, though the Canadian officials have not filed any charges in the case. None of the stolen assets have yet been recovered, Hochul said.
Editing by Barbara Goldberg and Philip Barbara