Law Enforcement Warns of Check Fraud Schemes in Wisconsin

By Detective Daniel R. Kuhnz, Beaver Dam Police Department

All around Wisconsin and the country, financial institutions have been targeted by check fraudsters who use homeless or indigent people to cash counterfeit checks. This method of operation has been dubbed “operation homeless” around the country. Essentially what happens is bad guys get a hold of valid business checks by intercepting them from unsecured mailboxes of businesses. Other methods of obtaining banking information of a victim business might be by purchasing blocks of data from sellers on the dark web. The bad guy then provides the account identifying information from the check or the check itself to a person who actually manufactures a new check with the valid account number and routing number on it but alters the dollar amount to stay under a certain limit (common amounts are $2,500 or less), alters the payee, and alters the check number.

They then proceed to recruit vulnerable people who are promised a portion of the proceeds. They will travel substantial distances to financial institutions that the checks are written from, so the account numbers can be validated and adequate funds are determined to be in the account to cover the check amount. They are told to use their real identification when cashing the checks to legitimize the transaction.

The bad guys who are driving the homeless or indigent people around will usually wait in an adjacent parking lot and monitor the building. If the teller determines the transaction to be suspicious and calls the police, the homeless or indigent individual is abandoned at the bank. In most cases, the homeless or indigent person is arrested and put in jail. However, law enforcement and prosecutors are usually more interested in “moving up the chain” to identify the intermediate individuals that were driving the homeless or indigent person around and ultimately, who manufactured the counterfeit check. This can be very difficult as the intermediate suspects usually provide false names and change their phone numbers.

This crime, contrary to popular belief, does not only occur only in the big cities. In fact, many of the cases that were recently found to be connected around Wisconsin overwhelmingly occurred in suburban and rural communities.

Law enforcement around the state would benefit from tellers and other employees at banking institutions to always be vigilant and constantly question whether something makes sense or not. We are confident that banking institutions are always on the lookout for fraudulent activity such as internet scams but this type of fraud can be more difficult to detect and act on. We simply want to remind you that you are on the front lines of this type of criminal activity and should know about current trends and fraud schemes that are occurring.