April 18, 2012

Knox account used for attempted fraud

On March 2, the Campus Safety Log reported that Knox account numbers were used for an attempted fraud. Director of Campus Safey John Schlaf has stated that an employee of Wells Fargo, the bank in which the college holds its funds, contacted the Business Office to alert them of unusual activity on one of their holding accounts.

A holding account is for the temporary keeping of funds, as opposed to a checking account, through which the college may perform actual monetary transactions. Schlaf said that Knox, the Galesburg Police Department and other parties involved responded quickly and effectively to the potential threat and that this type of fraud case poses no threat of victimizing the college or its students or of unauthorized third-parties gaining access to student and college information.

According to Schlaf, fraud cases of this kind have involved Knox account numbers for a number of years, the second-most recent case having been filed on Nov. 1, 2010. Fraudsters were running an online accounting scam in which they would find valid holding account numbers belonging to businesses and organizations throughout the United States and craft bogus checks from those accounts.

They would then contact independent online vendors through venues such as Craigslist, offer to buy relatively expensive products and then mail bogus checks with stated values several times the asking price.

The fraudsters would then proceed to contact the vendors again to convince them that the incorrect values on the checks were harmless mistakes and ask them to return the excess money — minus a few hundred dollars for themselves each — via checks from their own accounts. In many cases, only after the fraud victims had already paid significant sums of their own funds to the fraudsters, would they realize that the checks they had received were invalid.

Only one fraud victim from the 2010 scheme has so far been confirmed, but the Federal Bureau of Investigation and the United States Secret Service commented to Schlaf that this type of fraud is extremely common and that it is almost never the case that the perpetrators are identified or that the stolen money is returned.

It is unclear how long the 2010 scheme had been going on, who all had been involved or how many people had been victimized, and it might have easily continued were it not for one FedEx employee in Florida who noticed a large volume of ingoing and outgoing shipments, linked to a small set of FedEx accounts, in which the return addresses were inconsistent.

After reporting this to management, FedEx found that all of those FedEx accounts were stolen. Further investigation led them shortly thereafter to the arrest of suspect Plenord St. Fort in Ft. Lauderdale, Fla.

While Knox is not a victim in this variety of fraud, Schlaf states that employees of the business office may be asked to testify in St. Fort’s pending trial. No suspects or victims have been identified regarding the aforementioned most recent case noted on March 2.

“Almost all fraudulent activity is based on another individual’s desire to receive something for nothing,” Schlaf said. “Everyone is tempted by that. A good fraudulent scheme is based on human nature.”

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