An Ethical Dilemma

I’m a retired Detective Chief Superintendent from the Metropolitan Police and one of my two blogging partners is an ex Head of Action Fraud. The other is an accomplished, although now reformed, fraudster. After leaving the Met, we had worked in ‘banking intelligence’ for a few years and had been amazed at the lack of any real appetite by the banks to prevent fraud. Their focus appeared to be on compliance with various banking rules and regulations designed to satisfy the regulator rather than protect their customer’s life savings. Something had to be done if things were to change.

After much soul-searching we concluded that our own knowledge was good, but had some huge gaps. We knew how police investigated fraud, but that was very one-dimensional. What we really needed to complete the picture was someone who had not only been a fraudster, but someone who was good at it. We didn’t decide to work with ‘the enemy’ lightly and we realised that such a decision would upset some people. The guy we approached had never been arrested let alone charged or convicted. He was known to us as someone who had attracted a great deal of suspicion but, despite the efforts of several officers over many years, nothing had come of it.

Persuading him was not easy and I’m sure he found our first conversations as awkward as we did. We assured him that we would never divulge his true identity but we also made it clear that if we ever thought he had returned to being a fraudster we would do everything we could to convict him. We now find ourselves sitting down with him in coffee shops and chatting about our common interest – fraud. To the casual observer, we could easily pass for 3 friends discussing football. We smile, we laugh and we all take turns in buying hideously overpriced coffees, and as alien as it may seem to many of you – we find ourselves liking him. Traditional means of preventing fraud have largely failed. Perhaps this slightly weird approach stands a chance!

Our initial research made it abundantly clear that not everyone agrees with the idea of two retired cops working with an accomplished, albeit reformed, criminal. In order to provide some context for this radical decision to collaborate with an ex fraudster, I though it might be useful to rehearse how we have got to where we are now and the environment in which we are currently operating.

I am a retired Detective Chief Superintendent from the Metropolitan Police. For those looking for some additional corroboration, this is my Linkedin profile;

I’ve also worked for ten years in what might be referred to as ‘Banking Intelligence’. After retirement from the Police, the last skills I thought I might ever have to draw upon again were those of informant handling and hostage negotiation! More on that later.

During my spell working in banking, along with my colleague Steve Proffitt (another retired cop and a former Head of Action Fraud) we found that the focus for those working in financial crime roles tended to be on compliance with banking rules and regulations rather than what most people would consider to be fraud.

Chatting to serving officers also confirmed our view that fraud was still being massively underreported. But even with these artificially low levels, Police were never going to have the resources to arrest their way out of the problem. It seemed obvious that helping to prevent people becoming victims of fraud in the first place must form the central plank of any sustainable strategy. In fact, in 1829 the first commissioner of the Metropolitan Police in London, Sir Richard Mayne, said The primary object of an efficient police is the prevention of crime: so what we are suggesting is hardly anything new.

We were also aware that there is a huge knowledge gap in the general public’s understanding of how fraudsters actually operate; how they target potential victims, the mechanics of particular scams and how they stay a couple of steps ahead of law enforcement. Worryingly, we believe that this very same knowledge gap applies to many working in financial services.

So how could we leverage our own skills and experience to improve things? We decided that the most effective way of raising an awareness of how the bad guys operate was to write a blog. Like most people, we had read a few blogs, but those we had looked at were either too legalistic or technical and were aimed at an audience who were already engaged and employed within specific areas of compliance. This was not where we wanted to be. We are not aiming at those people – we are aiming to reach their wives, mums, dads and children.

A blog by a couple of ex-cops risked skewing things towards police procedure – there is enough on television already. We needed something significantly different. It was at this point I drew upon an old adage used in hostage negotiation: ’think the unthinkable’. In this case, we decided (after a great deal of soul-searching) to talk to someone who had been suspected of being involved in and orchestrating various types of fraud, but who had never even been arrested.

When we first suggested the idea, the guy in question literally laughed in our faces. He found it bizarre that someone who had previously tried to prove his involvement in a large-scale fraud should later approach him and ask for his help. The power dynamic had clearly shifted. In truth, if he had immediately agreed to our proposal, we would have been amazed and also a little bit worried at the motivation behind his willingness.

We were, however, encouraged by the fact that he then went on to ask several questions regarding our own motivation, the risk of him being identified by his former ‘colleagues’ and what guarantees he would have that we would not disclose his true identity. It seemed that he actually wanted us to persuade him. This is where the negotiator skills came in. It’s not about forcing someone to do something they don’t want to do; it’s more about influencing someone to at least think about an alternative course of action.

We met him several times before we actually obtained his agreement to assist. During each meeting we learned a little more about him. We always met somewhere very public and, to his credit, he was always on time. Whilst we have now developed a degree of trust, it was not always that way. Just like handling high-risk informants, we watched him complete anti-surveillance drills on his route to the meeting. He has asked us to prove we were not recording the conversation by searching us and turning our mobiles off.

We’ve also checked him out via other sources to make sure he really has reformed. Experience of working with intelligent informants is that you need to be completely sure of who is in charge and who is running who!

He is in his mid-40s and has a degree from a good university. He is from a ‘nice’ family and they clearly have no idea about his past. He wears a subtle Rolex, drives a newish car, and lives in a nice flat in a gentrified part of London. Understandably there are certain areas of his life that he won’t go into. As much as it pains me to say this – we enjoy his company. He is clever, articulate and well-read and if you didn’t know he had been an accomplished fraudster you would quite happily introduce him to your friends.

Whilst he struggled with the idea of working with ‘the enemy’ – so did we. If there was a seminal moment during those initial conversations that persuaded him to work with us to help reduce the number of potential victims of fraud, it was when he described how his own parents were scammed.

The feedback we have received challenging the ethics/morality of working with ‘someone like him’ came as no great surprise. We’ve chatted to a number of those people, and of note (1) none were ex cops and (2) none had been the victim of a fraud. Whilst I accept their opinions are valid I’m not convinced they understand the trauma caused by being a victim of this type of crime or the Police’s lack of ability to respond to such a prolific offence.

We believe the reality of the situation is that, despite any protestations to the contrary – fraud is not a priority for Police. They are aware that because of the embarrassment caused by admitting to being ‘duped’ – especially in romance scams, fraud is massively underreported. As a result the scale and complexity of the problems is not understood, and without truly understanding the problem it is impossible to come up with workable solutions.

There are simply too many fraudsters, too many offences, and too few cops. Lower-level fraud is, in many cases, is not investigated by detectives, but rather is left to the uniformed response officers. These are the officers who run towards explosions, crazed gunmen or terrorists whilst everyone else is running away. Their individual workload is such that they do not have the capacity or indeed the skill-set to investigate these crimes properly. As a result, you will not be surprised to learn that very few result in any meaningful investigation or an arrest, let alone a prosecution. However, as far as victims are concerned, it is clear that fraud ruins people’s lives. I’m aware of some who have found the trauma so great that they have killed themselves.

It is against this backdrop that we decided that, on balance, dealing with our reformed fraudster to provide education and insight into the tradecraft and methodology of fraudsters was a good thing. We made it clear from the outset that if we discovered he was not genuinely reformed and had gone back to his old ways – we will inform Police immediately. In return for him providing us with the detail behind how scams are carried out, we have agreed never to identify him. We have had a number of requests from the mainstream media to interview us all to explore this strange relationship, but irrespective of any assurances made to protect his identity, he has steadfastly refused to participate and we have respected that.

In an ideal world, reporting and intelligence systems would be set up to encourage and accurately record all allegations of fraud. Police would be adequately resourced to investigate offences and analyse trends and as a result, fraudsters would believe there was a significant risk of being caught. We are a million miles away from there.

We could have easily decided that this was ‘not our problem’. We could have decided to do something else aimed at earning an income rather than publishing a blog that provides nothing whatsoever. We could have decided that we would not soil our hands dealing with ex-criminals – notwithstanding their ability to provide the much needed insight that only they can provide. Only time will tell if we are right or wrong, but so far it feels right and 99% of the feedback seems to support that belief.

A Little Bit About Me

Writing a blog about fraud is as much a surprise to me as reading it is to you. Yes I was a fraudster – and a successful one at that. I don’t think that I’m a monster. In fact If you met me socially without knowing about my past, you would probably like me and find me quite entertaining. You might even think about introducing me to your unmarried sister. Being likeable is a key skill for fraudsters.

I’m no longer a bad guy – but I hesitate to say that I’m now a good guy. My Damascene conversion took place when my own parents were scammed and the trauma I had caused for others came back to bite me badly. Had this not happened, would I still be scamming people? Yes I would. The money was too good, the lifestyle too rich and the ease at which banks and individuals could be defrauded was easy beyond belief.

So having given up being a fraudster – why go the extra step in helping two ex-cops write a blog on the subject? I’m sure a psychologist would say that some of it is undoubtedly vanity; I want to boast about my previous success. I wouldn’t argue with that. I think there is also a big part of me that is ashamed of what I did and the hurt that I caused. This is the only way I can think of to try and give something back.

As fraudsters, we used to joke about how gullible victims were and how disinterested the banks were in stopping us. My two ex-cops and blogging partners have also made it perfectly clear that fraud is not, and never has been, a priority for the police. There are too many fraudsters and too few cops. Even if the number of cops tripled overnight, they could still not arrest their way out of this type of crime pandemic. This blog might go some way in preventing people (like my own parents) from becoming victims and give a clue to the banks of the holes they have to fill in their own processes and procedures. Only time will tell.

Already, the feedback from readers of the blog has been incredible. I never thought in a million years I would be on the ‘other side of the fence’ advising people how fraudsters operate and, as a result, how to avoid becoming one of their victims. Neither did I think that I would look forward to drinking copious cups of coffee with two ex-cops to download my insider knowledge into a blog.

Judging by the questions being asked via the website, It’s probably worth me spending a few minutes ‘setting the scene’ to allow you to understand a bit about me, and why I did what I did. Obviously, I’m not going to tell you anything particularly personal from which you could identify me. Neither am I going to incriminate myself. You may think that in some of the posts that follow, I’m really talking about myself – no comment!

I’m going to describe situations which were very similar to the one that resulted in my sitting across an interview table from the officer who persuaded me to write this. Why have I stopped doing what I did? At this point I’m just about to make those of you who believe in karma very happy. My own elderly parents were scammed.

While I had always tried to persuade myself that I was only defrauding faceless banks and businesses, the reality of what I did only kicked in when I saw the enormous emotional impact first-hand. Neither of them slept for weeks. They both became terribly depressed, and my Dad blamed himself for being so gullible. In some way I hope writing this will put right some of the damage I have caused, by warning others about how fraudsters think and operate.

I have given up my old ‘job’ and now work part-time in a legitimate job earning a pittance in comparison. I use the term ‘job’ because that is exactly what it was to me. I worked five days a week.  My various ‘colleagues’ and I joined forces to achieve our common goals. We held meetings (usually in coffee shops) but never took minutes, and we all benefited from the profits if things went well. We ‘networked’ with others who had the same interests, and shared ‘good practice’ if we found that something worked particularly well.

I’m in my mid 40s and I have a degree from a reasonable university in a subject that was never going to deliver a huge salary. I’m from a ‘nice’ family and they have no  clue about my real past. They think I was some sort of consultant who was employed on short-term but lucrative contracts, which if I’m generous is reasonably close to the truth. I still enjoy the nice things in life such as a Rolex, and a new car, and I live in a nice apartment in a good part of London. I don’t smoke but I enjoy wine, and I feel guilty about not exercising more than I do. I have lots of ‘acquaintances’ but comparatively few friends, and they are limited to those who have ‘jobs’ similar, or associated  with the one I used to have.

My biggest failing is that I’m essentially lazy. Other than me, my entire family has a strong work ethic – they would be horrified if they knew how I had funded my lifestyle. If I’m honest, I was also selfish, and arrogant. I found it difficult to feel pity for people who I took advantage of because they really should have known better. I earned more in a day than most of my acquaintances earned in a month.

Of course I took risks – but they were calculated risks. I knew that (a) as long as I didn’t get too greedy, the chances of being caught were slim, and (b) even if what I did was reported to the police, there was little chance of my being caught. The police are too busy dealing with other  ‘more important’ stuff. While the papers are full of sexy cyber-crime-stopping initiatives, the simple stuff in high street banks is as easy as ever, and barely noticed – or even cared much about.

Oh, and for the avoidance of any doubt – I’m not being paid to do this.

Banks Assist Fraudsters to Open Bank Accounts and Launder the Proceeds of Crime.

This is hardly the headline anyone wants to see – especially the banks. Unfortunately, given the ease at which fraudsters are able to open bank accounts using forged or fraudulently obtained documents, this could be argued to be a very accurate description.

In the new world of Open Banking and the emergence of many ‘challenger’ banks, many of which operate entirely online without any high street presence, competition for business is fierce. There is a saying that the first casualty of war is the truth, and perhaps the biggest challenge is effective due diligence.

In the race to onboard customers, and despite protestations to the contrary, identity checks are often perfunctory and are nothing more than a ‘tick-box’ exercise so as to avoid any delays or ‘friction’ as they like to call it. Fraudsters are aware of this and (understandably from my point of view) decide to make hay while the sun shines.

Allow me to assist by describing a situation involving a former ‘work colleague.’ ‘Vasile’ is Romanian and has been in the UK for about five years. He speaks almost perfect English – unless he chooses not to (usually when he is stopped by the Old Bill) and is incredibly well organised. He is methodical and scrupulously tidy – think Hannibal Lecter but without the table manners. He is best described as the CEO of a small business created to launder cash from drugs or human trafficking through mainstream bank accounts. His team opens the bank accounts for him using either forged or genuine documents in someone else’s name. The police call these documents FOGs (Fraudulently Obtained Genuine documents).

Vasile runs a small team led by ‘Denis’ who is in charge of flying groups of guys in from Romania and Bulgaria on a budget airline. They usually arrive in groups of 12, live in a rented house (paid for in cash through a friendly lettings agent), and eat nothing but takeaways. They get paid a basic amount and a small bonus for every account they successfully open. They can speak passable English but often have a ‘minder’ close by, in case they need a translator. There is usually a woman in the group for those occasions when the presence of a woman adds authenticity to the application. It’s amazing how a (staged) loud domestic argument can distract even the most focused bank employee from paying too much attention. Vasile’s girlfriend ‘Maria’ often fills in if there is no other female in the group. She is attractive (further distraction is always a plus) but always looks as if she put her lipstick on during an earth tremor.

In the house, one room is put aside to run the operation. The room contains a whiteboard which says who is doing what – normally in some form of code in the event of a police raid – and a collection of zip-lock bags, containing the identity documents they will use to open accounts. Each bag contains all you need to open a bank account (or take out a tenancy agreement or mobile phone contract or do anything else requiring identity verification). A good forged passport can be bought quite easily for about £500. Some of the good forgeries can only be detected under a microscope so how the banks expect a spotty school-leaver to spot a forgery is laughable!

As a good businessman, Vasile is keen to offset operational costs so he uses this passport as frequently as possible. In the trade we call it ‘spanking’. Similarly, he uses FOGs as much as possible so the team can relax; safe in the knowledge that they are using genuine documents that will pass the strictest scrutiny. Forged utility bills (you decide on the utility provider and the address) can be bought for £25 after a quick search on the Internet. The providers offer a discount for bulk orders and Vasile is a regular customer.

Typically the team goes to a large town in a minibus or in people carriers, and moves en-masse to a cafe where, to the annoyance of the owner, they nurse a latte for three hours or so. The minder takes out two or three people at a time, and they hit the high street banks. They know the banks’ processes and procedures and they know that bank staff pay scant attention (if any at all) to the identity documents produced to open accounts. (I shall expand in a future post on the ease with which people obtain forged documents or FOGs – without going anywhere near the scary ‘dark web’)

For a comparatively modest investment to open each account, by the time the team returns home in a few days, Vasile has control of about 50 newly-opened accounts. The banks post cards and PINs to the addresses separately as a ‘security measure’ – talk about shutting the door after the horse has bolted!

Vasile normally uses these accounts to assist others in laundering money or if he needs quick cash, he simply sells them on as a job-lot.

In a week he has paid out:

● Return flights to Romania/Bulgaria 12 x £70      £840 

● House rental                                £400 

● 4 x Forged/FOG identity documents              £2000 

● Team ‘wages’                                £2400

● Food/petrol/bills                              £300 

Total                                                        £5940

Vasile has the choice of selling each ‘virgin’ account (including cards and PINs) to other ‘businessmen’ for £1,000 each (x 50 = £50,000) which represents a net profit of £44,000 a week. Alternatively, he can use the accounts to launder cash as described elsewhere – where his longer-term profits from drug and people smuggling are considerably larger.

None of this is rocket science. As described above, opening a bank account using FOGs or forged documents is easy – far too easy. Effective due diligence and fast onboarding are not mutually exclusive, and If banks talked to each other (or even communicated properly between branches) it would make life so much more difficult for fraudsters. But they don’t, and for that Vasile, and the hundreds like him, are eternally grateful.