14 DAY TRIAL // Neil Godfrey, the owner of payment processing company Check Site, is accused of enabling fraudulent merchants to steal money from consumers’ bank accounts.
Aged 76, Godfrey is charged with one count of wire fraud for activity conducted between 2006 and 2010, when at least two websites claiming to provide payday loans collected banking information of applicants and used Check Point to withdraw money from bank accounts.
Fake payday loan websites collect financial details
It is alleged that the owner of the payment processing company knowingly handled the illegal transactions and offered fraudsters access to the banking system.
“The defendant in this case exploited his knowledge of the banking system and exposed hundreds of consumers to fraud,” said Zane David Memeger, US Attorney for the Eastern District of Pennsylvania.
“Those who circumvent our banking laws in order to enrich themselves by preying on unsuspecting consumers need to be investigated and vigorously prosecuted,” he added in a statement on Thursday.
According to prosecutors, the fraudulent merchants obtained the financial data from loan applicants and created a demand draft that is known as an RCC (remotely controlled check).
RCCs do not require a signature from the owner of the account in order to be honored and were run through Check Site, which submitted them to the consumer’s bank. After the check was processed, the company retained a percentage and delivered the rest of the money to the fraudster.
Godfrey offered instructions on carrying out the fraud operation
The prosecutors say that Godfrey would exhibit uncommon talent at finding banks that would make the payment despite the suspicion nature of the transactions. Some of the banks involved are from Irvine, California, and from Philadelphia.
Furthermore, Godfrey may have maintained the fraud activity running by keeping his partners under the radar of other banks and regulators.
Among the data gathered by authorities there is an email from Godfrey to one of the fraudsters instructing them to create a website front in order to trick the employees of the banks.
“What we need to do is set up a legitimate website selling anything you can think of - that is what you get approved on. It is irrelevant if anything is ever sold there - just so it exists... In the mean time we set up false credit card approval etcetera. It is this we use to run the transactions. Yes, there will be a lot of returns, but what we do is send through transactions over the next few weeks that don’t have high returns. They stop looking and then we can run the regular stuff...[A]fter several months we junk that company and go to another company,” the email read.