We’ve also had a couple of construction-related cases. One involved the son of a neighbor of a client. She was lonely, and I’m sure he’d come over and have cookies and coffee. He convinces her to do sewer work. The house is worth $130,000, and over the course of the years, $300,000 of work was done on the house.
In that case, there were a lot of red flags. One day she wrote him $11,000 in checks, but they were two $5,500 checks, so they fall under the bank cash-reporting requirements for $10,000 or more. He goes to two banks, 30 miles apart from each other, and cashes them. He never runs a check through his own bank account.
We went to the Department of Labor, and they said that if the client was writing a check out to the neighbor’s son, that creates a contract with him to do the work. Under state law, he would have to be bonded and insured, and he wasn’t. So we reported it, and the police got involved, and I don’t know that there was a lot they could do, because she wasn’t willing to prosecute. We provided the information to the Department of Labor and Industry, and they prosecuted the case against the contractor, the son, for violation of state law. The Department of Health and Human Services intervened in the client situation, in an attempt to engage the family to assist. Due to privacy laws, the bank wasn’t informed of the outcome related to the client.
What’s the most egregious case you’ve ever seen?
We had one elderly client request a wire of $120,000. Call him Robert. That amount was unusually large for him, so his adviser was concerned and kept pressing Robert to tell him the reason for the withdrawal. The client didn’t want to tell him.
When we have a client who is reluctant and the adviser has a good relationship with them, we ask the adviser to continue pressing them. Eventually, Robert said he was helping one of his daughters—call her Susan—with short-term financial issues and that he would be paid back.
We did a little research on our own, and it didn’t appear that Susan had financial issues. He had another daughter—call her Mary—who was a co-owner on a bank account with him, but it wasn’t our bank.
The adviser just didn’t think his client was acting normally. Usually, I try not to insert myself as someone from compliance, but in this case the adviser asked me to call the client. Robert reiterated the story about helping Susan. I asked point-blank if he was sending this money to someone he didn’t know. He said no. I said, you’re not sending it out of the country? He said no.
He wired the money and was using different banks to try and wire more money. In all the shuffling of money, he wound up bouncing a check written to another bank from his account with us. Mary, whose name was on that other bank account, called and said, “What’s up with Dad’s account?” The adviser said privacy rules meant he couldn’t tell her, but that he’d really encourage her to bring her father into the office and they could all talk about it.
It turns out the father had gotten a call in the middle of the night from a “Mr. Clark,” who said he was an attorney in Dallas, which is where Robert’s grandson lived. The grandson was not close with the family. The attorney said the grandson had been in a car accident and was charged with driving under the influence and needed bail money. Robert sent the money. The scammer called again and said, “I need more money to represent him.” Robert wired more money and never called the boy’s parents to find out if he was really in jail.
Then the scammer called back and said he’d entered Robert into a drawing for a prize, and he had won, but he’d have to pay tax on it. Robert sent money for the tax. The scammer called again and said, “We have an even bigger drawing if you want to be entered into that.” He sent money for that, too.