Telemarketers and Five Banks Are in Cahoots, Class Claims
Barbara Leonard reports:
Five national banks helped “unscrupulous telemarketers” launder millions of dollars they swiped from consumers, a class action claims in Philadelphia Federal Court. The class sued three processing companies – NetDeposit, MP Technologies dba Modern Payments and Teledraft – and five banks: Zions First National Bank of Utah, Wells Fargo, Wachovia, National Penn Bank and Harleysville National Bank.
Named plaintiff Reynaldo Reyes says a telemarketer tricked him into revealing his bank account information and then withdrew almost $400 from his account.
Payment processors assist “fraudulent telemarketers” by opening bank accounts and transferring money from unsuspecting victims into the account, after deducting a fee for their services, according to the complaint.
Banks follow directions from their telemarketer clients, transferring funds to offshore accounts in the Caribbean, Canada and India, according to the complaint.
Reyes says that NHS Systems, one of 20 allegedly fraudulent telemarketers mentioned in the lawsuit but not named as a defendant, told him in November 2007 that he was eligible for a government grant that could be deposited directly to his bank account.
Reyes says Modern Payments took $29.95 out of his account and deposited the money in an NHS account at Zions Bank, then a week later the agency transferred $299.95 to the Zions account.
“Neither of the transactions was authorized by Mr. Reyes, nor did Mr. Reyes receive a government grant or any other consideration from NHS,” according to the complaint.
Reyes says he had to pay penalties after the debits created an account overdraft.
Defendants Zions Bank and MP, aware that telemarketers, including the Telemarketers identified below, and individuals associated with them, were engaged in telemarketing schemes to defraud consumers, conducted an enterprise through a pattern of racketeering activity, and conspired to do so, by processing and initiating ACH transactions, opening accounts and clearing millions of dollars in ACH transactions for the benefit of the telemarketers, including the Telemarketers and individuals identified below, and by facilitating the transfer of those fraudulently obtained funds to offshore accounts in the Caribbean, Canada and India. Defendants Zions Bank and MP knew that the ACH transactions violated NACHA rules by which defendant Zions Bank was bound, and that a significant number of the ACH transactions were initiated based upon banking information fraudulently procured by telemarketers, including the Telemarketers identified below; that such ACH transactions were frequently used to advance fraudulent telemarketing schemes; and that defendant Zions Banks’ own retail customers had been victims of such schemes. Defendant Zions Bank also knew, or under “Know Your Customer” requirements should have known, that some of the telemarketers had migrated from other fraudulent payment processors, including Payment Processing Center, LLC (“PPC”) and its predecessor Netchex, after that company was shut down by the United States Department of Justice for facilitating telemarketing fraud in an action in the United States District Court for the Eastern District of Pennsylvania, and Amerinet after that company, in an action brought by five state Attorneys General, was compelled to make refunds to victims of telemarketing fraud. Moreover, defendants MP and Zions Bank continued to provide such payment processing and banking services to fraudulent telemarketers, including the Telemarketers identified below, even after Wachovia Bank, N.A., another national bank, was sued in a class action in the Eastern District of Pennsylvania, for engaging in the same conduct, an action that received national publicity.