Bank-Fraud Scheme Used Homeless People To Cash Checks

Bank-Fraud Scheme Used Homeless People To Cash Checks

By Mark Morris, The Kansas City Star

KANSAS CITY, Mo. –– Some Atlanta gang members had no clue in October 2011 that their future freedom rested on a routine chore performed by an convenience store employee in Olathe, Kan.
Cleaning up his trash bins about 6 a.m., the QuikTrip manager noticed that someone had dumped a large amount of what appeared to be stolen mail.

The resulting investigation into mail thefts at 20 Johnson County businesses pushed Kansas City area investigators and federal prosecutors into the forefront of a national bank-fraud investigation that has touched nearly all of the 48 continental United States.

About half of the 60 people prosecuted nationwide for hiring homeless people to pass electronically “cloned” — or counterfeit — business checks have been charged in Kansas City and Springfield, Mo.

“This is a huge problem for our service,” said postal inspector Steve Ryan.

The scheme has cost Kansas City area banks about $1 million in recent years, Assistant U.S. Attorney John Cowles said. He calculated the loss nationwide at more than $10 million.

That amount is even more significant when you realize it’s all headed to a fairly small place. Almost everybody prosecuted for this crime has ties to, or is a member of, a Bloods street gang that works two neighborhoods in one Atlanta ZIP code, 30317, Cowles said.

“They’re all from Atlanta, and they’re all doing the scheme the same way,” Cowles said. “Some of them are related to each other. Some live in the same neighborhood.”

Details of the scam came to light last week at the federal trial of Marion Norwood, a 46-year-old check printer from Atlanta who led crews into Kansas City in late 2012 and early 2013.
The jury took less than an hour of deliberations Wednesday to convict Norwood.

The tools of this bank fraud are relatively high tech: computers, printers, scanners, magnetic printer ink, and authentic paper stock used to print checks.

But none of it happens without a crowbar.

With it, criminals peel off the backs of those big shared mailboxes common outside business and industrial parks. They rifle through the letters looking for payroll checks or payments to vendors.

With checks in hand, printers like Norwood go to work on the computers, exactly duplicating the checks, down to signatures and the critical bank routing numbers.

Two other crew members, designated as the driver and the recruiter, then cruise homeless shelters, looking for someone interested in acquiring more money than they may have seen in the past six months, Ryan said.

Often, the driver and recruiter take the homeless people to a motel for a shower, a shave, and a change of clothes, because, as Ryan told jurors last week, “they look like homeless people.”

Gary Merritt, who has pleaded guilty in a related case and testified against Norwood, described the job this way:

“You pick up homeless people, dress them up, and take them to cash checks.”

First, however, the printer must put the homeless person’s name on the check as the payee. So the driver and the recruiter text the names of the homeless people to the printer.

Once the checks are cashed, the homeless person generally receives 10 percent of the face value, or $200 for a $2,000 payroll check.

Cuts for the drivers and recruiters are more substantial. Markus Bryant, who also testified against Norwood, said he and a recruiter once split $10,000 for two days of work in Kansas City.

Another associate recalled how Bryant described his time in Kansas City.

“He told me, ‘We’re eating good,’ ” testified DeMario Mormon, who is serving time for his role in an Alabama check scheme. “He said every time they went, it was good.”

Nobody at the trial last week could say how much the check printers made from a successful three or four days in Kansas City.

Ryan, the postal inspector, acknowledged that bank fraud might seem an odd career choice for gang members and street toughs. But the upside is that stealing with a computer carries less risk than running drugs and guns, he said.

Still, that doesn’t mean the participants like being associated with such a crime. Bryant testified that he once was questioned by Georgia authorities when a check scheme there went bust. Here’s how he remembered denying his role:

“Passing checks is for girls,” he said. “I’m a drug dealer.”

After waves of bogus business checks swept through the area in the last three years, local banks have taken steps to make it easier for firms to approve who cashes their large checks, Cowles said.

That’s been a welcome, if hard-learned, lesson for businesses, too.

Roger Manning, who owns an Independence promotional products company, saw his firm’s bank account cleaned out by Norwood’s scheme. Fortunately, the account had a relatively small amount of money in it, and the bank covered the loss once the checks were determined to be counterfeit.

Now Manning’s checks are loaded with more security features, and he’s using more Internet banking.

“It forced us to change with the times,” Manning said. “It’s a little scary. You’ve been doing this for 20 years, and then you see something else. It’s a shame.”

Photo: Ervins Strauhmanis via Flickr

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