A worldwide money transfer agency with offices in several Luzerne County communities has agreed to pay $100 million to reimburse consumers who were defrauded by corrupt agents who assisted others in perpetrating several consumer scams, the U.S. Department of Justice announced Friday.
MoneyGram International Inc. will make the payment as part of deal which will allow the firm to escape criminal prosecution for its role in the schemes, as long as it meets certain conditions set by the government, according to a DOJ news release.
Federal authorities on Friday filed a deferred prosecution agreement that alleges MoneyGram officials allowed agents it suspected were engaging in fraudulent activity to continue operating in order to boost the firm's profits.
The fraud, which occurred from 2004 to 2009, cost victims, including residents of several local communities such as Wilkes-Barre, Tunkhannock, Moosic and Sugarloaf Township, more than $128 million, according to the federal authorities.
MoneyGram provides services that allow clients to transfer money between accounts worldwide. According to the company's website, it has locations in 13 Luzerne County communities: Dallas, Edwardsville, Exeter, Hanover Township, Hazleton, Kingston, Larksville, Nanticoke, Pittston, Plymouth, Shickshinny, West Hazleton and Wilkes-Barre.
According to the complaint, MoneyGram agents, who are independent contractors, transferred money from the accounts of consumers, knowing the transfers were benefiting others who were defrauding the victims through various consumer scams.
Those scams, which targeted the elderly and other vulnerable people, included falsely telling victims they had won a large lottery prize, promising employment opportunities as secret shoppers or offering expensive items for sale over the Internet at deeply discounted prices.
The scammers told victims that in order to receive the thing of value, they had to send money in advance. For instance, for the lottery prize, the scammers said they needed money up front to pay taxes. In reality there was no prize, and the victims lost their money.
Authorities say the MoneyGram agents aided the scammers by entering false addresses and other information into the service's computers, concealing the identity of the perpetrators. The agents benefited from the fees they earned on the monetary transfer.
Executives with MoneyGram were aware of thousands of consumer complaints filed against individual agents, but warnings issued by the company's fraud unit were ignored based on objections from officials in the sales unit, the complaint says.
Those decisions were indicative of a broken corporate culture that led the company to privilege profits over everything else, Assistant Attorney General Lanny Breuer said in a press release.
MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims, Breuer said.
Pamela Patsley, chief executive officer of MoneyGram, said the company has cooperated with authorities and has instituted new policies and programs to ensure future abuses do not occur.
The agreement says the government agreed to the settlement because MoneyGram has accepted responsibility for its action and taken remedial action.
While MoneyGram may avoid prosecution, the individual agents who perpetrated the fraud have not. Twenty-seven people from Canada, New Jersey, New York, Texas and Illinois have been convicted or are awaiting trial on charges related to the scams, according to the government.
Consumers who believe they may have been victimized by MoneyGram agents can obtain information about how to request compensation from the Department of Justice's website at: http://www.justice/gov/criminal/vns/caseup/