Banking & Finance

20 Charged in $16M Money Laundering Scheme

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BOARDMAN, Ohio – All but three of the 20 indicted on federal charges of conspiracy to commit wire fraud and bank fraud and conspiracy to commit money laundering had been arrested by mid-afternoon Wednesday. The 20 are accused of fraudulently diverting and depositing $16 million in banks here, elsewhere in the United States, Canada and Africa.

They preyed on law firms, escrow and title companies, people on dating sites and debt collectors, among others.

They hacked into the computers of people who maintain their finances online and succeeded in diverting funds from where they were supposed to go because the accounts they set up so closely resembled the real accounts.

The arrests of the conspirators, most with a connection to Youngstown, began at 7 a.m. Wednesday, Todd Werth, supervisory senior agent in charge of the FBI’s Boardman office, told reporters at a press conference yesterday afternoon. WATCH VIDEO

At least 10 reside in or near Youngstown, which is where FBI agents arrested them. One was arrested in Pittsburgh, two in Atlanta.

Those arrested here were taken to a jail in Akron.

The ringleader, Zack Howell of Youngstown, was not indicted. That’s because he was murdered last February over a matter unrelated to the sophisticated money laundering operation, U.S. assistant attorney Paul Flannery told reporters.

All knew Howell but not necessarily each other, he said. In the indictment, Howell, identified by his initials – ZH, as a “mid-level operative in a criminal organization.” Neither the FBI nor the U.S. attorney’s office for the eastern division of the Northern Ohio District gave him a name and declined to identify him when asked.

The indictment says Howell “primarily operated in and around Youngstown, Ohio, Columbus, Ohio, and Atlanta, Ga. [He] took direction and received information from conspirators operating from Canada, Africa and other parts of the United States. [Howell] was responsible for recruiting and managing a network of lower-level conspirators that at [his] direction established shell companies and business bank accounts used to receive and launder proceeds of fraud schemes.”

Among the banks where these lower-level conspirators established accounts and fraudulently diverted or transferred funds, the indictment says, are Huntington Bank (the most-often cited), PNC Bank, Citizens Bank, Talmer Bank & Trust (since acquired by Chemical Bank), Cortland Bank, KeyBank, Chase Bank, Fifth Third Bank, First National Bank of Pennsylvania, Bank of America, Regions Bank, Wells Fargo Bank and Cooper Bank.

“The conspirators [Howell] recruited to open bank accounts typically had no knowledge of, or connection to, the shell companies,” the indictment says.

Those charged – the U.S. attorney’s office provided only their names and ages – are:

  • Julius Smith Williams, 46.
  • Jamal Perry, 37.
  • Joseph Joe III, 40.
  • William Howell, 47.
  • Terry Marlowe, 53.
  • Emmett Connor, 44.
  • Sterling Green, 47.
  • Keisha Johnson, 32.
  • Kayla Neeley, 29.
  • Isiah Patterson, 29.
  • Donald Washington Jr., 43.
  • Terrence Phillips, 41.
  • Steve Croom Jr., 40.
  • Crystal Jefferson, 39.
  • Dulcinea Purdue, 32.
  • Terrence Howard, 43.
  • Cobie Phillips Jr., 41.
  • Ray Wynn, 43.
  • Jermaine Donlow, 45.
  • Semira Stone, 29.

None of the 20 conned the victims that included law firms, escrow and title companies, businesses and individuals, Flannery said. They simply opened the accounts, then deposited, transferred and withdrew funds.

The accused provided Howell with the account information and bank-issued debit cards so that he and those in the conspiracy “in Canada and elsewhere … could access and monitor the balances in these accounts.”

He in turn directed the conspirators to transfer amounts in the accounts “via multiple smaller transactions designed to conceal and disguise the source of the proceeds and hinder efforts to recover them.”

The 20 conspirators profited by taking a cut of the funds they withdrew from the shell company accounts, Flannery and Werth said.

To date, none of the funds recovered has been returned and Werth declined comment on how much might be or when. Funds transferred abroad are likely gone for good.

Beyond the 20 whose indictments were announced yesterday, “Ten other people have already pleaded guilty to criminal information for their roles,” the accompanying press release said.

Howell and those he recruited engaged in seven schemes to defraud, the indictment says:

  • The Real Estate Attorney Scheme. Here they posed online as the lawyers’ clients and fraudulently diverted the real clients’ money. “Shortly before the closing date of a real estate transaction, a conspirator created a “spoofed” email account nearly identical to a real client’s. The fraudster told the attorney he had changed the bank where proceeds of the sale should go. And the lawyer transferred the funds to the new account.
  • Debt Collection Scheme.
  • Real Estate and Large Equipment Escrow Scheme.
  • Romance Scheme where the conspirators targeted internet dating and social networking sites. They posed as individuals interested in a dating relationship and asked the victims for money “to further advance and culminate these relationships,” the indictment says.
  • Web-based Financial Account Takeover Scheme. The conspirators stole the web credentials to the victims’ online financial accounts and drained their funds.
  • Personal Email Account Takeover Scheme.
  • Fraudulent Business Email Scheme. “By hacking or spoofing business email accounts, the conspirators sent bogus emails” where they claimed to be a high-ranking executive responsible for finances inside the company directing that company funds be wired to a designated bank account to pay for a large purchase. The payment was urgent to get a lower price.

Published by The Business Journal, Youngstown, Ohio.