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WaMu Gave Grandma's Money to Crooks

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New York Times Reporting on ICT

The article appeared on May 21, 2007.

click here for more info

the short version

a huge security flaw in WaMu checking accounts?

for casual browsers or the short-attention-span crowd


My grandmother was defrauded of nearly $700 by a phone scam. The real scumbags are the "merchants" who scammed grandma and the individuals who work with them. The underlying problem, however, is Washington Mutual's practice of accepting -- unverified -- phone-authorized checks printed up by the merchants themselves in victims', like my grandmother's, name. My grandmother never signed (or even saw) the check they cashed!


I am pressing Washington Mutual (WaMu) to reimburse my grandmother because of their irresponsibility in processing the scammers' check and their laziness in investigating her fraud claim. By doing this, I hope to persuade WaMu and other banks to crack down on criminal scammers, unscrupulous merchants, and insecure business practices. Stop such practices and you'll strangle this breed of scammer. Sure I'd like to get grandma's $700 back, but that doesn't seem likely and it would be reward enough for her if it helped put this scum out of business.


My grandma is 80 years-old, well-read, still attends extension classes at her local university, and is nobody's fool. She is not poor but lives in subsidized housing on a fixed income. Her one failing: she was too polite to hang up on a phone solicitor and too trusting to recognize a scam in the making. I am her grandson, a web designer and writer based in Southern California. (And a Washington Mutual account holder myself.)

for the long version, click here
Thursday, September 25, 2008
Grandma Vindicated! Washington Mutual Dead!
Well, not really. I'm just glad the headline's not reversed.

It does give us both a certain amount of satisfaction to see Washington Mutual seized, frisked, and disgraced. I still have an account with a couple thousand dollars in it with them that I use for some monthly electronic payments but it doesn't sound like that's in any jeopardy.

Good riddance. This blog is over.

New York Times story
Wednesday, February 06, 2008
Wachovia: Worse Than Wamu
Charles Duhigg, author of last year's New York Times article on telemarketing scams, writes today about Wachovia's -- I want to say "egregious", but "gutter scum" is probably more accurate -- support of fraudulent telemarketers like the type I've written about here. From the article:

The lawsuit alleges that Wachovia accepted fraudulent, unsigned checks that withdrew funds from the accounts of victims, often elderly. Wachovia forwarded those checks to other banks that were unaware of the frauds, which in turn sent money to the swindlers.

Stay classy, Wachovia.

Full article: Papers Show Wachovia Knew of Thefts


Tuesday, November 20, 2007
Karma's a Bitch
Wamu's stock price since the beginning of this blog (click for larger view):

That's what you get when you help rip off grandmas. Well, that, and give a home loan to every lying schmuck who walks through the door.


Monday, May 21, 2007
New York Times Article on Telemarketer Scammers
Never heard back from Charles Duhigg but saw that his article appeared today:

Bilking the Elderly, With a Corporate Assist

I'd say that I was happy to see it, but it is anything but happy reading. A great article and I was interested to see that it is the number 2 most popular article on the Times' site today.

The case of Richard Guthrie is just the kind of case I imagined when my grandmother was scammed. I'm very sorry to hear what happened to him and what I can imagine are thousands and thousands like him. I can only express relief that my grandmother didn't end up this far in.

I noticed that the article also reinforces a central thesis of this blog -- American banks and their damned unsigned checks are a big part of the problem:

State regulators have tried to protect victims like Mr. Guthrie. In 2005, attorneys general of 35 states urged the Federal Reserve to end the unsigned check system.

“Such drafts should be eliminated in favor of electronic funds transfers that can serve the same payment function” but are less susceptible to manipulation, they wrote.

But the Federal Reserve disagreed. It changed its rules to place greater responsibility on banks that first accept unsigned checks, but has permitted their continued use.

More details in the article:

In the case of Mr. Guthrie, criminals turned to Wachovia.

Between 2003 and 2005, scam artists submitted at least seven unsigned checks to Wachovia that withdrew funds from Mr. Guthrie’s account, according to banking records. Wachovia accepted those checks and forwarded them to Mr. Guthrie’s bank in Iowa, which in turn sent back $1,603 for distribution to the checks’ creators that submitted them.

Within days, however, Mr. Guthrie’s bank, a branch of Wells Fargo, became concerned and told Wachovia that the checks had not been authorized. At Wells Fargo’s request, Wachovia returned the funds. But it failed to investigate whether Wachovia’s accounts were being used by criminals, according to prosecutors who studied the transactions.

In all, Wachovia accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records.

First time I've heard this mentioned. Rekindles my rage with Washington Mutual, Faye Chapman, Andrew Samuels, and all the banking industry's lackeys. Put the Federal Reserve now at the top of that list.

Still can't figure out why in the hell this antiquated and grossly insecure method of payment is allowed to continue. Other than an ingrained reverence for the status quo.


Monday, April 23, 2007
Calling All (Former) Employees of ICT, Netchex, Payment Processing Center, Client Care Relations, Etc.
Charles Duhigg of the New York Times would like to speak to you.

Specifically, he would like to speak to Fred of Integrated Check Technologies, who left a comment here, or anyone involved with ICT (or with companies named Netchex or Payment Processing Center), or who has worked with Thomas Cimicato.

You may reach Charles through the New York Times website or at the number he left here. If you need his email address, email me and I'll be happy to provide it.

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Wednesday, April 18, 2007
Haven't touched this blog in a while, but got an interesting comment today (if legit, which I think it is.) The comment by Fred is also worth a look. I concede Fred's point that Wamu was just following the rules. But my larger point is : if these are the rules, then they should be changed. Especially in this age of easy identity theft.

As far as my grandma's case:

The bad news is : she never recovered her money and as far as I know. No one was ever brought to justice. Wamu never got back to me. And the banking industry has not changed their practices, meaning some unknown number of people are still getting ripped off by these creeps.

The good news : Grandma hasn't been ripped off since this happened. And I've moved most my money out of my Wamu account into a credit union. (And the New York Times may now be looking into this.)


Wednesday, June 07, 2006
Check Processor Really Put Out of Business?
The state investigator I've been corresponding with every now and then wrote me today to note that the story I was fed by CCR (see last post) may really be true. She included the following link:

Petro Slams Columbus Firm For Helping Telemarketing Fraud

My question to her: why would they stop the company that was processing the refunds?

Well, in fact, as the Ohio AG's Office press release indicates, this was the company that was taking in the money. I'm sure they were taking in a lot more money than they were giving back -- if they were giving back any at all.

The release notes:

The company often made paper-check withdrawals of hundreds of dollars at a time without consumers authorizing or even knowing about them, an illegal practice known as “slamming,” Petro said. He added that ICT withdrawals that may have been authorized by consumers were nevertheless illegal if they were based on deceptive telemarketing sales pitches by its client firms.

This would explain why my grandma's checks were being cashed in Cleveland. (Ohio is quite the hotbed of corruption.)

Good news -- but then again, I'm sure the crooks behind this are already up and running under a different name. If not, someone's sure to have jumped in their place.

Ultimately, I'm curious to see what kind of sentence, if any, these guys get (if convicted.)

I'm adding them to the watch file:

Thomas Cimicato
Integrated Check Technologies (ITP) of Columbus
Check Free Recovery, Inc. of Columbus
Collect-A-Check of Columbus
Ohio Attorney General, Jim Petro

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Friday, June 02, 2006
update on ITP refund
Called CCR back today for the first time in weeks just to check in on the status of my grandma's refund. I was informed that the company that processes the refund for ITP (the company that ripped off my grandma) is no longer in business. ITP is still in business. CCR is still in business. But the processing -- whose name she didn't even know -- was out of business, so the refund can't be processed.

She told me I should have my grandma's bank file an affidavit. When I asked her with whom the bank should file the affidavit, her attitude, which wasn't great to start, soured even further. When I pressed her to explain how this would help, she finally hung up.

If you need to contact CCR, their number is 866-898-7489.

I contacted Wamu to inquire about filing an affidavit, but Andrew Samuel was once more unavailable to take my call. I left him a voicemail asking him to call me back today.

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Monday, May 15, 2006
I haven't updated in a while, mainly because there hasn't been much good news. To wit:

» no refunds for Grandma yet despite the protestations of CCR and Andrew Samuel

» no response from Andrew Samuel to my follow-up email

» no help from the Office of the Comptroller of the Currency (which oversees banks) or the Office of Thrift Supervision (which oversees Washington Mutual)

I haven't given up, but unfortunately I've been too busy lately to pursue this with any vigor.

A couple other notes:

In response to my post of the email I sent Andrew Samuel at Washington Mutual, someone commented:

Give Andrew a chance to rectify the problem. I recently had an issue with WAMU and was likewise referred to Andrew Samuel. It took a while but he came through, and during the entire process was communicative, polite and resourceful. In fact, he took an advocacy stance on my behalf when dealing with the department in question. He truly is one of WAMU's most outstanding staff members and I'm quite happy that I was referred to him.

He's had plenty of chances. I suspect this is a Wamu troll -- check out complaints on ripoffreport.com and there will usually be someone from Wamu commenting in their defense.

I was reading just now an interesting article in the OC Register on charity scams. Regarding the scam artist's psychology, it notes:

University of Tennessee sociologist Neal Shover has studied fraudulent telemarketers for years. He thinks they're interested in one thing: "life as party."

Shover and Glenn S. Coffey of the University of Northern Florida interviewed 45 telemarketers convicted of federal crimes.

They found people who earned $100,000 to $250,000 a year while working just 20 to 30 hours a week. That left plenty of time for "life as party."

"One subject said that they 'would go out to the casinos and blow two, three, four, five thousand dollars a night,'" Shover and Coffey wrote. "Asked how he spent the money he made in telemarketing, one subject replied, 'houses, girls, just going out to nightclubs and lots of blow [cocaine]... lots and lots of blow, enormous amounts.'"

Work itself could be life as party. On the job, many solicitors dressed casually, used drugs and alcohol and got a thrill as potent as any drug from a successful call.

Glad to know my grandma, with the support of Washington Mutual, could help.
Wednesday, May 03, 2006
another insider's account of Client Care Relations
If you're wondering where all the manufacturing jobs in America are going or have gone, read on.
I suspect the ground floor of the financial industry -- home mortgages, especially -- serves a role here in America comparable to that of telemarketing in Quebec and elsewhere. I guess the industry is immune to outsourcing so long as the owners can scale their profit to the labor and enjoy whatever benefits the government offers small business owners. (Here in America, they are quite generous.) Also, being raised within the culture (i.e. having no discernible foreign accent) is probably an important qualification for the labor.

The part about not being able to do business in Ohio is interesting. I guess Ohio has already gone after this company.

As with other posts, this is published anonymously with the permission of the person who emailed me:

I referred the person who wrote me to some state investigators.

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