Western Union, the world’s largest money transfer company, agreed last year to forfeit $586 million after admitting to federal authorities that it turned a blind eye as criminals used its service to defraud hundreds of thousands of consumers worldwide.
The complex criminal and civil investigations, led by Margaret (Molly) Moeser of the Justice Department and Karen Dodge of the Federal Trade Commission, resulted in the largest forfeiture ever by a money services business. As part of the settlement, Western Union agreed to implement a comprehensive anti-fraud program to identify and stop illegal transactions, and to make the forfeited money available to reimburse fraud victims.
Over a period of several years, Moeser and Dodge coordinated parallel nationwide investigations that included interviews with hundreds of victims and Western Union employees as well as the review of thousands of documents. The criminal investigation included U.S. attorneys in Pennsylvania, California and Florida, the U.S. Postal Service, the FBI, the IRS, the Department of Homeland Security, the Federal Reserve Office of Inspector General and the Consumer Financial Protection Bureau, plus state and local law enforcement agencies.
As part of the settlement, Western Union admitted “to aiding and abetting wire fraud” by allowing scammers to process hundreds of thousands of financial transactions, even when the company realized that many of its agents were helping the con artists from the United States and various corners of the world avoid detection.
The investigations showed that Western Union had received more than 550,000 fraud complaints, with 80 percent coming from the United States where the company has some 50,000 locations. The authorities calculated that the average consumer complaint totaled $1,148.
For most victims, the fraud started with a phone call or email. Some were told a family member was injured and needed money for emergency medical care. Others were persuaded to pay money to qualify for a prize from a bogus lottery or for a service or product they had not purchased. Other swindles promised jobs or romantic opportunities. All the victims were instructed to send funds through a Western Union wire transfer, but no one received the prizes, products or services they were promised.
Building the case against Western Union involved many moving parts, with Moeser and Dodge keeping their investigations on target, honing in on the most consequential evidence and facilitating communication between law enforcement personnel and attorneys from multiple agencies in many geographic areas. Moeser and Dodge shared information when possible and coordinated their efforts, bringing the separate inquires to a conclusion at the same time.
Deborah Connor, acting chief of the Justice Department’s Money Laundering and Asset Recovery Section, said Moeser was the “hub” for the criminal investigation. “Working with our partner U.S. attorneys and investigative agencies, Molly coordinated evidence developed across the country.”
“She looked across all streams of information to create a department-wide strategy for approaching the investigation,” Connor said. “Molly led regular team meetings with all these components to discuss the priorities and what trends we were seeing. She balanced all the interests and kept everyone moving forward and focused.”
Todd Kossow, director of the FTC’s Midwest Region, described Dodge as “the driving force” for the agency’s civil case, who was “relentless in uncovering the evidence” to solidify the charges against Western Union and get redress for the victims.
“Karen developed a lot of evidence from people who used to work at Western Union, people with firsthand knowledge, who knew about the fraud running through the system,” Kossow said. “Karen was passionate that something had to be done, and she was not going to stop until she got the evidence she needed to do something about it.”
As part of the court-authorized agreements, Western Union admitted to willfully failing to maintain an effective anti-money laundering program, and aiding and abetting wire fraud. The money forfeited by the company now is being made available to reimburse the victims defrauded between January 2004 and January 2017. Western Union pledged to make significant changes to detect and prevent fraudulent transfers, and promised to block money transfers to anyone who is the subject of a fraud report.
Moeser said the case is important because it has “a direct impact on victims. Real people, vulnerable people, lost money as a result of this conduct, and these people now have an opportunity to get their money back.”
Dodge agreed. “It makes you feel really good about your job when you know you can help so many people,” she said. “This will make a difference to consumers and help protect them in the future.”