Authorities Note Surge in Online Fraud Involving Money Orders By TOM ZELLER Jr. http://www.nytimes.com/2005/04/26/business/26forgery.html?ei=5090&en=2a1967a e73e5a6fe&ex=1272168000&partner=techdirt&emc=rss&pagewanted=all&position=
Published: April 26, 2005 Fake checks have been the stock in trade of online fraud artists for years. Now authorities are noting a surge in schemes involving sophisticated counterfeiting of a different form of payment: United States postal money orders. And the fleecing of victims often begins in an e-mail in-box. In the last six months, the F.B.I. and postal inspectors say, international forgers - mostly in Nigeria, but also in Ghana and Eastern Europe - appear to have turned new attention to the United States postal money order. More than 3,700 counterfeit postal money orders were intercepted from October to December, exceeding the total for the previous 12 months, according to postal inspectors. Moreover, 160 arrests have been made in the United States since October in cases where people have been suspected of knowingly receiving fraudulent postal money orders or trying to cash them, Paul Krenn, a spokesman for the United States Postal Inspection Service, said. "The quality of what they are producing is very good," he said, adding that ordinary consumers can easily be fooled. "They are not going to know what they are looking at," he said. Despite the arrests, however, the schemes often do not involve attempts by the fraud artists to cash the postal money orders. In many cases, unwitting victims, often contacted by an e-mail message or in an online chat room, are deceived into accepting the bogus money orders as payment for items they are selling, or into cashing the orders in return for a fee. It is the latest twist in a long series of Internet schemes that use bogus financial instruments to bilk unsuspecting victims out of merchandise and cash. The United States Postal Service would not estimate the dollar value of the counterfeit postal money orders it has intercepted. But law enforcement officials estimate that the amount runs into the millions of dollars. The trend is significant, because unlike private business checks or even other money orders, the postal money order is generally regarded as one of the more difficult financial documents to counterfeit because of its watermarks, security threads and a rainbow of inked patterns and tones. The fake money orders have been received by small Internet retailers, classified advertisers or others lured into an Internet confidence scheme, from sellers of Siberian Husky puppies in Iowa to art dealers in Indiana. Some consumers, authorities say, are simply not using common sense. One victim, Kevin McCrary, a 56-year-old Manhattan business consultant, would not dispute that. After falling prey to a fake postal money order scheme, he said, "I couldn't reach around far enough to kick myself." Single and lonely, Mr. McCrary joined an international online dating site, Elitemate.com. In late January, he was contacted by someone claiming to be a young woman from Nigeria. She - or perhaps he, or even they, Mr. McCrary now concedes - went by the name of Ogisi Douglas. Their e-mail exchanges were barely a week old before the supposed Ms. Douglas asked Mr. McCrary for his help buying a laptop computer. Mr. McCrary purchased a $1,500 laptop, and after he received two United States postal money orders for $950 each, he sent the laptop to an address in Nigeria. Neither Mr. McCrary nor the teller at the J. P. Morgan Chase branch where he deposited the postal money orders knew they were bogus. It was only after he was asked to buy more computers and received several more postal money orders that he discovered, after trying to cash them at a post office, that he had been duped. He had not yet sent out any more computers. But the cost of the first laptop was a total loss: the money from the first two postal money orders was ultimately debited from his Chase account. "I felt, obviously, a bit foolish for not listening to those little voices that say: 'Something's not quite right here. You don't have all the information on this person,' " said Mr. McCrary, whose parents, Tex McCrary and Jinx Falkenburg, helped define the talk radio format in the 1940's. "But it all moved very fast." Mr. Krenn said that postal inspectors had been working with other delivery agencies to intercept packages containing bogus money orders as they entered the United States, as well as warning financial institutions to be vigilant. He said tips for identifying counterfeit postal money orders were available online, at www.usps.com/postalinspectors. The best way to identify a genuine postal money order, postal service officials say, is to look for the telltale watermark, which, when held up to the light, should reveal an image of Benjamin Franklin. Genuine postal money orders also have a security strip running alongside the watermark, just to the right. If held to the light, a microfiber strip will show the letters "USPS" along its length. The Federal Deposit Insurance Corporation issued a special alert last month, notifying bank executives of the problem, and Thomas Kelly, a spokesman for J. P. Morgan Chase, said that it had issued a security alert to all its branches regarding the counterfeit postal money orders. In a typical swindle, a seller is sent counterfeit postal money orders in excess of the cost of the item being ordered. The seller is then asked to keep the cost of the purchase and ship back the balance in cash, along with the merchandise. Dave Thompson, a bicycling enthusiast from Spokane, Wash., said he had received two $1,000 United States postal money orders for "a piece of bicycle equipment worth 50 bucks." "The postal money order is probably the safest, most recognizable noncurrency negotiable instrument," said Mr. Thompson, who, like many people who buy and sell small items online, said postal money orders were a standard part of the online swap meet. "If this is counterfeited to a wide degree, people will be less willing to accept it and the Internet business will slow down over all." Sales of postal money orders have already been declining, from 233 million money orders in 2000 to 188 million last year. Even so, that brought in about $230 million in fees - 90 cents for a money order under $500; $1.25 for those up to $1,000, the maximum amount allowed. At least eight arrests have been made in Nigeria in recent months, said Dan Larkin, a chief for the F.B.I.'s Internet Crime Complaint Center, and arrests in the United States are mounting. On March 3, Christopher R. Zeblisky was arrested in South Milwaukee, Wis., accused of trying to withdraw the proceeds of a deposit of eight counterfeit $1,000 postal money orders. A week later, in Charleston, W. Va., Manuel G. Roberts was arrested and accused of possessing of 64 counterfeit checks written for more than $670,000 and 8 counterfeit postal money orders totaling almost $8,000. And two weeks ago, postal inspectors and F.B.I. agents in Puerto Rico arrested William Arocho-Valent�1�2n shortly after they said he had cashed 19 counterfeit postal money orders, traced to West Africa, for more than $18,000. Mr. Arocho-Valent�1�2n had $35,000 worth of bogus postal money orders in his possession when he was arrested, the authorities said. Some recipients of fraudulent money orders have also come under the scrutiny of law enforcement officials. Phil Barone, who sells hand-made saxophone mouthpieces at www.philbarone.com, says he was questioned last week by police at a post office in Croton, N.Y., after he tried to cash what turned out to be three fake $1,000 postal money orders he had received by mail from a customer in Nigeria. Mr. Barone said his car was searched and that detectives visited his house before they were satisfied that he was not involved in the scheme. "That was very unpleasant," Mr. Barone said. Mr. McCrary, meanwhile, is still corresponding with his Nigerian e-mail friend, Ogisi Douglas, who apparently does not know that he has discovered the fraud. He says he is trying to keep her engaged in the scheme until he can find some way to get law enforcement, either here or in Nigeria, to arrest the people responsible. "It is often said that nobody is perfect," Ogisi Douglas wrote in a greeting card to Mr. McCrary three weeks ago. "But my love for you have made me blind to your faults and imperfections." 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