Twelve people have been charged in a $10 million bank fraud conspiracy that authorities say depended on identity theft by employees in some of America’s largest banks, according to a federal indictment unsealed Wednesday.
The indictment accused the defendants of buying and selling identifications and using them to create phony bank and credit card accounts, apply for loans and get cash. Authorities say the network operated in many states, and bank employees in Minnesota and elsewhere were recruited to obtain customer information and conduct phony transactions.
One defendant, the manager of a Wells Fargo branch, had bank account information for several people in her car and at her home when she was arrested Wednesday, authorities said. At a hearing for seven of the 12, Assistant U.S. Attorney Ann Anaya argued that the woman should remain in custody.
“There’s a severe risk to the community regarding the buying and selling of people’s personal information,” Anaya said.
Lyonel Norris, an assistant federal defender, argued against keeping any of the defendants in custody. He declined comment after Wednesday’s hearing in St. Paul.
U.S. Magistrate Judge Janie Mayeron eventually ordered that woman and two others to remain in custody pending a detention hearing. Four more defendants were released Wednesday with conditions.
Of the remaining five people listed in the indictment, two are in custody, two are at large and one is in a halfway house.
The indictment says the defendants live in Minnesota, California and New York, and the scheme was carried out in those states and others, including Massachusetts, Arizona and Texas.
All were charged with at least one count of bank fraud conspiracy, and the indictment says they “conspired to obtain and attempted to obtain well in excess of $10 million.”
The indictment alleges the fraud took place from 2006 through March 2011. Prosecutors say so far they have identified about 5,000 individuals as victims of the scheme.
The indictment named 11 banks or financial institutions: American Express, Associated Bank, Bank of America, Capital One, Guaranty Bank, JP Morgan Chase Bank, TCF Bank, U.S. Bank, Wachovia Bank, Washington Mutual and Wells Fargo Bank.
Authorities said previous arrests have been made in California in connection with the scheme. They dubbed the sweep “Operation Starburst” and said it was a continuing operation.
“Those who may be tempted to engage in identity theft and financial fraud, particularly when it involves our banking system here in Minnesota and elsewhere, should know that we are paying attention,” B. Todd Jones, the U.S. Attorney for Minnesota, said in a statement announcing the indictment.
by The Associated Press