17 Indicted in International ATM Fraud SchemeExperts Say Multiple Arrests a Good Sign for Law Enforcement
Seventeen individuals are facing federal fraud or related charges for their alleged roles in an international ATM skimming scheme that netted approximately $250,000 in fraud and money laundering proceeds.
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Two defendants were arrested in Sofia, Bulgaria, and 13 defendants were arrested March 25 in the Chicago area, according to the U.S. Attorney's Office for the Northern District of Illinois. One of the defendants is a fugitive, and a warrant has been issued for his arrest. Another defendant is in state custody and will be arraigned on the federal charges on a date to be determined.
The scheme involved using ATM and debit card numbers fraudulently obtained in Europe, as well as the PINs associated with them, to withdraw money from victims' accounts using ATMs at various locations in the Chicago area, prosecutors say.
The indictment seeks forfeiture of approximately $200,000 from 15 defendants as alleged proceeds of the fraud, and it also seeks approximately $50,000 from three of the defendants as alleged proceeds of the money laundering.
"These charges are the result of the hard work of dedicated law enforcement personnel both here and abroad to address a transnational crime problem that can affect virtually everyone with a bank account and carries significant financial consequences," says Robert Holly, special agent in charge of the Chicago office of the Federal Bureau of Investigation. "Cooperation with international law enforcement agencies was crucial to the investigation, and we are grateful for the assistance that led to these arrests."
Analyzing the Scheme, Arrests
Shirley Inscoe, fraud analyst at Aite Group, says the dollar figures tied to this case are "unusually low" for such an operation. "It may be that these individuals were ancillary to another investigation, or these international cases may be given a higher priority to demonstrate that governments are serious about working together to shut down these organized criminal rings," she says.
In the past, she says, similar criminal rings operated with impunity. "It's great to see arrests."
The arrests also show the manner in which the FBI is building its relationships with international law enforcement, says Doug Johnson, vice president and senior advisor for risk management policy at the American Bankers Association. "Some of these folks were arrested overseas, some in the U.S.," Johnson says. "It shows a great degree of cooperation between our country and foreign countries in being able to accomplish this. It didn't just happen overnight."
John Buzzard, product manager at FICO Card Alert Service, says the case appears to involve a "family and friend" operation. "While multiple arrests aren't always possible for cases like this, I think the really interesting thing here is how compartmentalized this operation was into one beehive," he says. "It doesn't surprise me that the investigation netted a few people all at once."
Inscoe echoes Buzzard's insights. "The number of people arrested is not surprising at all," she says. "These are the low-level money mules, and it is typically much easier to identify and locate them than the kingpins behind the criminal activity," Inscoe says.
"The government is trying to make people think twice before getting involved in these criminal acts, but greed typically wins out when people make such poor moral decisions," Inscoe adds.
Johnson sees the number of arrests as unusual, but a welcome sign. "To the extent that we have the ability to arrest and indict a large number of individuals involved in the [criminal] chain, it's not just about the $200,000," he says. "It's about what else they can do; it's about future losses.
"This needs to be [continuous], the trend of arrests going forward, with lower amounts and more people. Obviously that would be a wonderful signaling to criminals."
The indictment alleges that three defendants - Radoslav Pavlov and Mihail Petrov of Bulgaria, along with Domeniko Evitmov of Chicago - fraudulently obtained ATM and debit card numbers and PINs from locations in Europe and elsewhere without the accountholders' knowledge. The defendants, along with others they directed, then allegedly transferred the fraudulently obtained information, often by Skype or e-mail, to one defendant, Gheorgui Martov of Schiller Park, Ill., who directed the scheme in the Chicago area, prosecutors say.
Martov then gave the information to numerous co-defendants to make the fraudulent withdrawals from area ATMs, the charges allege, and the defendants divided the money they obtained.
The defendants allegedly used counterfeit cards they manufactured with the stolen card numbers to make the fraudulent withdrawals, according to the attorney's office. The withdrawals were allegedly made shortly before and after midnight in the time zone of the issuing banks, in an attempt to circumvent daily withdrawal limits, prosecutors say. The defendants allegedly also coordinated ATM transactions to withdraw money before the issuing banks could detect the fraud and deactivate the card numbers.
One of the defendants charged in the case, Emil Gospodinov , owned and operated a business in the Chicago area that allegedly transmitted funds via MoneyGram. Gospodinov is charged with money laundering conspiracy for allegedly transmitting fraudulently obtained funds from the United States to Bulgaria and elsewhere.
Martov, who allegedly directed the scheme in Chicago, was charged with 22 counts of wire fraud and four counts of money laundering, in addition to money laundering conspiracy. Fourteen other defendants were each charged with one or more counts of wire fraud.
Gospodinov also was charged with four counts of money laundering in addition to the money laundering conspiracy.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. Money laundering conspiracy and each count of money laundering carry a maximum penalty of 20 years in prison and a $500,000 fine, or a fine totaling twice the value of the funds involved in the money laundering. The obstruction of justice count carries a maximum of 20 years in prison and a $250,000 fine.
Martov's wife, Temenuga Koleva, of Schiller Park, Ill., was charged with obstruction of justice for allegedly destroying computer files and Internet browsing histories during the course of the FBI's investigation. She is charged with being an accessory after the fact to wire fraud. The accessory count against Koleva carries a maximum sentence of 10 years in prison and a $125,000 fine.