The Federal Bureau of Investigation (FBI) and the United States Attorney for the Southern District of New York have lifted the lid on a fraud scheme involving classic cars that has scammed buyers out of $4.5 million.
A group of 25 men were charged with ‘conspiracy to commit wire fraud and conspiracy to commit concealment money laundering’. Their scheme involved setting up fake Internet adverts for classic car sales, then creating multiple false businesses to send victims’ money, to so the cash would be easier to get out of the US.
Their scheme ran from November 2016 to July of this year. The charges of wire fraud and money laundering could put each of the members in a US jail for up to 50 years – although, as per the US legal system, the accused fraudsters are all considered innocent until proven guilty. Below is a description of how the scheme worked, adapted from the District Court of Southern New York’s indictment notice.
How the fraudsters did it
First, co-conspirators impersonated automotive dealers and collectors, and claimed to be selling classic cars on various well known Internet auction and trading websites. Victims responding to the ads were in fact corresponding with a fraud-scheme participant. After arriving at a sale price, victims were next directed to purported automotive-transportation companies and were told that these firms would accept payment and transport the cars.
These companies were, in fact, shell corporations [the false businesses as described above] established by the fraudsters. Their corporate bank accounts were established and controlled by the defendants, and were ready to receive wired funds from the fraud’s victims.
After victims had wired payment, the fraudsters went to the banks to drain the funds, often starting the same day that payment had been transmitted. The fraudsters would take money from different bank branches in numerous withdrawals on the same day, in denominations that were varied and often kept to an amount they believed would prevent the financial institutions from recording and reporting the fraud.
The co-conspirators then sent the fraud proceeds outside the United States to Eastern European countries, from where many of the conspirators originated. Victims never received the goods they believed they had purchased, and many were unable to recover their money or were left paying loans for cars that were never truly for sale.
The moral of the story? Stay on your guard; not everyone in the classic car world is as honest and friendly as you are!
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