Hello FraudFighters and Scam Stoppers,

FrankonFraud here with the top stories and fraud trends of the week.

This one has me most concerned 👉 With $1.5 trillion in commercial mortgages coming due in the next 18 months, the next big fraud crisis that impacts our economy is closing in quickly. And it’s eerily similar to the last great mortgage crisis of 2008.

Here are the top stories this week.

• Pig Butchered CEO caused bank to fail

• A Professional Refunder is nabbed by FBI.

• Chase Bank bans crypto as scams surge

• Chinese Government benefited from PPP fraud

• Covid Fraud lead to discovery of Ghost Guns

• Commercial Property Fraud Crisis Looming

Let’s get to the top stories of the week now!

Heartland CEO Was Scammed By Pig Butchering, And Then Bank Failed

The truth has finally been revealed about what caused the collapse of Heartland Tri State bank.

And it’s quite a shocking story.

According to Bloomberg, CEO Shan Hanes, fell for a Pig Butchering investment scam and wire transferred millions in bank funds to scammers in Hong Kong.

On July 5th, a desperate Hanes called in one of the banks wealthy clients and asked to borrower an additional $12 million so he could get his money out of a cryptocurrency investment. He promised he’d pay him back 10 days later, offering $1 million in interest to make it worth his while.

The client of the bank later went to a member of Heartland’s board. He told the director about his meeting with Hanes and asked if the bank might have exposure.

A bank representative then went to regulators. On July 28, the Kansas Office of the State Bank Commissioner declared Heartland insolvent and shut it.

Click This Link Or Image Below To Read What Happened

A special thanks to Mary Ann Miller for giving me a heads up to this interesting story.

Professional Refunder Defrauded Merchants Of $4 Million

Professional Refunders have operated with impunity for years, stealing hundreds of millions from retailers by acting as fraud hitman for hire.

But last week, a dose of justice was served for one - Sajed Al-Maarej. He operated a professional refund business on Telegram called “Simple Refunds”.

For a fee of 15 to 25% of the purchase price of an item ordered online, he would contact the merchant on behalf of the buyer and claim the item had not been delivered; was damaged; or would have the purchaser mail a box of garbage or junk back to the company.

His channel boasted over 1,000 members and he even ran a “mentorship” program to teach his craft to fraud newbies. Now he could face 20 year for his crimes which totaled close to $4 million.

Chase Bank Just Banned Crypto Amid 41% Surge In Scams

“If we think you are making a payment related to crypto, we are going to decline it.”

That’s how Chase notified their 1.6 million UK banking clients. And its for their own good

And Chase is not alone, NatWest, Santander and Starling Bank have taking hard lines against crypto with some banning the buying and selling on their networks altogether.

Report - China’s TenCent Profited Off PPP Fraud Loans

The fallout from PPP fraud just keeps getting more interesting and outrageous as time passes.

I was tipped to a recent report by a FrankonFraud friend, that Chinese company Tencent, profited off fraudulent PPP Loans.

TenCent owns TikTok, the company that is facing many bans here in the US due to national security concerns.

This is how it happened 👉 Tencent co-owned one of the main investors (Rakuten) that backed the infamous Womply who raked in $2 billion in fees by expediting PPP loans.

Remember Womply? The government said their fraud program was held together by duct tape and gum and at the height of the pandemic fraudsters on Telegram lit up about how easy it was to commit fraud against them.

TenCent is partially owned by the Chinese government which makes the fraud even more infuriating 🤯.

“Congress approved Paycheck Protection Program loans to prevent a recession from huge wave of layoffs—not to send taxpayer dollars to China,"

Click on This Link Or Image Below To Read The Report

What Does The Intel Chip And Synthetic Identity Have In Common?

Ever hear of Steve Morse? He’s an electrical engineer, and the inventor of the Intel 8086 Chip way back in 1978. It revolutionized the industry.

In 2001, Morse brought his talents, including web programming skills, to improving genealogical website searches and he created a portal for automating many of the time intensive task of building your family tree.

So he created a website called SteveMorse.Org

As part of the site people needed access to search by Social security numbers (SSN’s) so he created a simple calculator which decoded SSN’s online and he published it on his website - Decoding Social Security Numbers in One Step. 👇

So what in the heck does this have to do with Synthetic Identity? Well to this very day, Credit Repair companies recommend using the site as the basis for choosing Credit Privacy Numbers (CPN’s) that will closely match the age and birth location of the consumer.

The site is a major destination for Synthetic Identity perpetrators! While Morse had the best intentions in the world, scammers eventually figured out how to exploit it.

Ghost Guns Linked To Covid Fraud

Maryland is taking a novel approach to getting violent criminals off the streets. They are using any means necessary - including prosecuting them for fraud - to tackle the problem.

Check out this news video of how they linked Ghost Guns to Covid Fraud.

She Went To Jail For Fudging Income On A Loan Application

Statistically, about 1 in 5 people lie about their income on loan applications. It’s considered a harmless lie. But it might be the most common form of fraud in the world.

But did you know it can land you in hot water? I recently found a case of one unlucky woman that learned that the hard way.

Nancy J. Lavallee, a bank teller, thought she was telling an innocent lie when she added a second income to her loan application. She used the loans to buy her house, pay for home improvements, pay for her wedding and buy a boat and a 4×4 truck.

She then defaulted on the loans. And that’s when all her problems started..

Are First Party Fraudsters Being Coached By Debt Settlement Companies?

An interesting development in the first pay defaults.

Some banks are reporting a new type of first party fraud they see emerging. While not much is known about the fraud, what fraud analyst suspect is that consumers are being coached on how to get free money.

It works like this. 👇

1. Borrowers are approached on social media or other channels on how they can get their debts settled.

2. They are coached to take out a loan before the debt settlement that can be used to fund a settlement with all of their accounts.

3. The borrower takes the loan out and funds the debt settlement account

4. They are instructed to not pay a penny.

While this is a mysterious wrinkle in the world of first party fraud, this would not surprise me.

Commercial Property Fraud - The Jenga Tower Is Going To Collapse

Commercial property fraud is all over the news this week. In fact it’s unavoidable as the media is covering the story 24/7.

But this fraud is nothing unique , rather it is a storm that has been brewing since 2008 across the entire industry and wall street.

I wrote about the systematic commercial property inflation in 2020, and then again in 2021.

If you lived through the mortgage crisis of 2008, this is the exact same thing but instead of homes, its commercial properties.

Banks were giving commercial property owners massive mortgage loans far more than the commercial properties are actually worth. When those loans are packaged into CBMS (Commercial Backed Mortgage Securities) the risk is magnified.

It’s like the game of Jenga where each removed block will cause the whole structure to collapse. With office downsizing due to remote work, interest rates rising and now high profile cases being exposed, this Jenga Structure could soon tumble.

The Great Zelle Pool Scam of 2023

Insider Devin Friedman only wanted to build a pool in his backyard so he called Royal Palace Pools and Spas to build him one.

What followed was a multi-year journey which eventually lead him to be scammed out of $31,000 on Zelle.

How it all happened is a fascinating read and a grim reminder that getting scammed on Zelle can happen to anyone at anytime.

Click on This Link Or Image Below To Read The Article

He Was A Drug Smuggler. Then He Invented Two Fraud Fighting Tools We All Use

Do you know Hank Asher?

If you are a fraud fighter, you might not know his name but you definitely use his tools everyday. He is the inventor of two of the most ubiquitous search tools we use everyday - Lexis Nexis and TLO.

There is an amazing history that appeared in New York Times this last week about his unusual history and his genius mind.

Click On This Link Or Image Below To Read The Article

LOL of The Week. They Asked Him For Proof of Income And He Sent This 😂

Car Dealership Guy got a screenprint from a car dealer that received a pretty unusual verification of income.

They asked the customer for proof of income (thinking that he would send in paystubs) but what they got was this! 👇

I mean, how could you a deny a loan to a buyer like this?

Thanks for catching up on the weekly fraud trends, fraud tips and stories from the fascinating world of fraud.

Have an amazing week fraud fighters!

FrankonFraud