By MATT THACKER
Matt.Thacker@newsandtribune.com
>>SOUTHERN INDIANA — An investigation that began in 2007 has led to the indictments of 109 people allegedly connected to a complex fraud ring that has victimized banks and businesses in Southern Indiana.
United States Secret Service Special Agent in Charge Paul Johnson said it all began with one suspicious $300 check that was reported to them by BB and T Bank in Louisville in March of 2007.
“It was a very complex check kiting scheme and they were doing not only check kiting but a number of other offenses,” Johnson said.
He said it is “one of the bigger” crime rings he has seen and shows the growing problem of fraud.
Detectives say the massive scheme was organized by five Louisville men, primarily 36-year-old Anthony D. Potter. They have been indicted on federal charges, while another 104 people recruited to work for them have been indicted on charges through the Commonwealth of Kentucky.
The money gained through the fraud would be used primarily to purchase drugs.
“Mr. Potter and all co-conspirators were involved in illegal narcotics,” Johnson said.
Investigators said the suspects are responsible for more than $500,000 in fraud loss. The victims include 23 banks and 62 businesses, which includes non-profits, and 52 individuals who had their identities stolen.
The complex organization included counterfeit ID manufacturers, buyers of stolen construction materials, check cashers and recruiters.
Investigators say the suspects would steal people’s identities, oftentimes by stealing mail or driver’s licenses, and then use that information to open fraudulent bank accounts and file fake income tax returns.
The organizers would recruit others by offering to pay them to pass counterfeit checks or bring them information that could be used to steal someone’s identity.
The leaders also directed some of the defendants to use counterfeit or stolen checks at local businesses to purchase home improvement materials that were sold to other suspects at about half the cost. The merchandise would then be sold to other customers at full price. About $40,000 in stolen merchandise was recently recovered from one of the suspects.
The arrests were announced Thursday after the final 27 people believed to be involved in the scheme were indicted on Wednesday.
Investigators say fraud is the fastest growing crime in America.
“Over 50 percent of crimes have to do with theft/fraud,” LMPD Chief Robert White said. “Thefts and frauds are very preventable through education.”
More indictments are possible as police continue to investigate.
“The interesting thing about this is it had tentacles. They had partnerships with other rings,” Johnson said. Investigators believe the ring has been going since at least 2005 and probably in some form before then.
Detective Steve Glauber, with the Louisville Metro Police Department’s Financial Crimes Unit, said that numerous Southern Indiana banks and businesses have been victimized. Suspects in all those crimes have been indicted in Kentucky since the crimes all crossed state lines, he said. For instance, a person might open a fraudulent account at an Indiana bank and then use checks from that bank in Louisville.
The state charges include engaging in organized crime, theft of identity, theft by deception and possession of stolen materials. The federal charges include counterfeit securities fraud, aggravated identity theft and wire fraud.
Most of the offenses are punishable by five to 10 years in prison.
