MoneyGram Agrees to $100 Million Settlement in Fraud, Money-Laundering Case
By Elizabeth Murphy | November 9, 2012 2:25 pm

MoneyGram International Inc. has agreed to forfeit $100 million to settle allegations it turned a blind eye to an international fraud scheme that targeted tens of thousands of elderly and other vulnerable customers , the Justice Department announced Friday.

The Dallas-based money services company, through a deferred prosecution agreement, admitted to criminally aiding and abetting wire fraud, in addition to failing to maintain an effective anti-money laundering program. From 2004 to 2009, the company processed transactions for MoneyGram agents who were known to be defrauding thousands of Americans, which, in turn, benefited the company as they collected fees and other revenue through the illegal transactions, the department said.

“MoneyGram’s broken corporate culture led the company to privilege profits over everything else,” said Lanny Breuer, Assistant Attorney General for the Criminal Division.

The scams included agents posing as relatives in urgent need of money, offering high-priced items for sale online at a very discounted price and job opportunities as “secret shoppers,” the court documents state. In all of the schemes, victims were asked to send money through MoneyGram’s transfer system. The DOJ noted that, despite receiving thousands of complaints from victims of such schemes, the company did not take any recourse against the perpetrators.

The company committed 1,575 instances of fraud in the United States and Canada in 2004. In 2008, that number reached 19,614.

Twenty-eight individual MoneyGram agents have been charged with perpetrating such fraud schemes since 2007.

As part of MoneyGram’s DPA, it must create an independent compliance and ethics committee, adopt a new standard for anti-fraud and anti-money laundering and retain an independent corporate monitor, among other things. The criminal charges will be dismissed in five years if the company abides by all of the terms of the DPA.

The case was prosecuted under the Bank Secrecy Act, an anti-money laundering statute, that covers banks and a wide range of money-processing institutions. The department has put an emphasis on such cases of late with the help of the Money Laundering and Bank Integrity Unit, which was created in 2010.

The MoneyGram case was prosecuted by unit attorney Craig Timm and Kim Douglas Daniel, an Assistant U.S. Attorney in the Middle District of Pennsylvania.

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