Federal judge okays MoneyGram fraud deal

HARRISBURG, Pa. — A judge in central Pennsylvania gave his approval Wednesday to a settlement of fraud charges against MoneyGram International Inc., including the establishment of a $100 million victim compensation fund.

U.S. Middle District Judge Christopher Conner accepted a deferred prosecution agreement between federal prosecutors and the Dallas-based payment services provider.

Prosecutors said the company turned a blind eye to scam artists and money launderers, and failed to act against agents linked to fraud schemes.

Assistant U.S. Attorney Kim Daniel said the agreement included “a clear statement and acknowledgement of responsibility” and MoneyGram has agreed to cooperate with investigators. It has already paid $65 million, with the rest due early next year.

MoneyGram lawyer David Zinn noted the company has already made changes, including the replacement of its senior management team and stronger compliance and financial intelligence efforts.

Several of Conner’s questions related to the restitution fund, which will be administered by a vendor chosen by the U.S. Postal Service. Daniel said oversight would ultimately be in the hands of the Justice Department.

If the company fulfills its obligations under the deal, after five years federal prosecutors will seek dismissal of the charges of aiding and abetting wire fraud, and failure to maintain an effective money laundering prevention program.

MoneyGram has agreed to structural changes, and to retain for five years a corporate monitor who will report to the Justice Department.

MoneyGram, based in Dallas, has about 275,000 locations in 190 countries, with independent outlets owned by agents who split fees with the company.

Federal prosecutors said company officials were aware that some agents were engaged in fraud but decided not to sever their relationship, and ended up profiting from the illegal acts.

The fraud included promising people large prizes, offering expensive items at very low prices, holding out false jobs as “secret shoppers” and making fake distress phone calls posing as family members in desperate for financial help.

Between 2004 and 2009, MoneyGram customers filed about 64,000 consumer fraud reports in the U.S. and Canada, with losses worth a combined $128 million.

Daniel said the investigation began with postal inspectors responding to complaints. At least 25 agents have been charged with related offenses in the Middle District of Pennsylvania, and

At the request of federal prosecutors, in 2009 the company closed 400 outlets thought to be involved in consumer fraud.

Information about the victim compensation fund will be posted on a Justice Department website. Victims can call 877-282-2610 in the United States or 317-324-0390 in other countries.

More in Herald Business Journal

Delta’s farewell tour for the Boeing 747 stops in Everett

It is the last domestic airline to retire the iconic plane. Boeing and Delta employees autographed it.

Sign of the future: Snohomish business aims to reshape industry

Manifest Signs owner thinks that smart signs is an unexplored and untapped part of his industry.

Boeing says Bombardier dumping puts 737 planes in jeopardy

“If you don’t level the playing field now, it will be too late.”

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

A decade after the recession, pain and fear linger

No matter how good things are now, it’s impossible to forget how the collapse affected people.

Panel: Motorcycle industry in deep trouble and needs help

They have failed to increase sales by making new riders out of women, minorities and millennials.

Costco rises as results display big-box retailer’s resiliency

Their model has worked in the face of heightened competition from online, brick-and-mortar peers.

For half of Americans, the stock market’s highs don’t help

Fewer than 14percent of American households directly own stock in any company.

Tax reform needs the public’s input on spending priorities

The GOP tax plan is a good idea, but the next step should give us a voice on how taxes are spent.

Most Read