July 7, 2017
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Payment Processing Company CEO Gets 15 Months for Unauthorized Withdrawals
“Payment processors who knowingly facilitate consumer fraud commit a federal offense,” says Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We are committed to protecting consumers from unknown withdrawals from their bank accounts, and we will prosecute any individual who knowingly assist these fraud schemes.”
In an email message quoted in the charging documents, Neil Godfrey advised a fraudulent merchant that “the lesson we have learned is that we must trick the [bank] folk. It means you need to set up some type of website front. 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.”
Godfrey used a Santa Ana processing company named Check Site Inc. to assist at least two fraudulent merchants. The merchants operated or worked with websites that purportedly offered subscriptions, clubs, sweepstakes or payday loans. But in many cases, the websites were a ruse to harvest consumers’ bank account information. Instead of providing consumers with payday loans or other services advertised, the merchants operating the websites used the bank information provided by the consumers to withdraw money from the consumers’ bank accounts. Using Check Site, Godfrey knowingly processed the merchants’ fraudulent withdrawals and provided the merchants with access to the banking system.
Godfrey, 79, was sentenced to serve 15 months in prison, followed by one year of supervised release. He was ordered to pay a $50,000 fine forfeit $100,000.