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Spokane, Washington  Est. May 19, 1883

Kids And Banks Target Of Scam Out-Of-Town Teens Recruit Local Teens To Launder Stolen Checks

The scam is as devious as it is simple.

Teenagers posing as desperate out-of-towners promise high school students hundreds of quick dollars in exchange for cashing cashier’s checks.

By the time the checks bounce, the scam artists have skipped town. The students - and their parents - are duped into being accomplices.

Five Seattle youths - ages 15 to 17 - pleaded guilty to first degree theft charges earlier this week in Spokane County juvenile court. Police say they snookered seven Shadle Park teens into bouncing more than $75,000 in bad cashier’s checks.

The Spokane youths are not alone in being conned. Using high school students as money launderers is the latest and hottest practice in bank fraud, a scheme that has emerged in the past two years.

Federal prosecutors in Portland and Seattle filed bank fraud charges earlier this month. Vancouver, B.C., and Chicago police are investigating similar reports.

The scam has also hit Los Angeles, Las Vegas and New Mexico, according to bank managers.

“We are seeing more and more of this,” said FBI spokesman Ray Lauer. “It’s a quick hit and easy money.”

But police say they are just catching the lowest stoolies in a sophisticated and very lucrative scheme.

Fagan-like masterminds with keen understanding of federal banking laws are recruiting youths to do the dirty work, say police, who grudgingly admit admiration for the scheme.

“These guys weren’t pros,” said Spokane police Sgt. Larry Evans of the five Seattle youths. “But the guy ahead of them was.”

The FBI is looking for the masterminds in Seattle-based Asian gangs, among other places. The FBI declined to talk about the Spokane case, citing an ongoing investigation.

Police say the lowest level of the scam - recruiters who hang out in malls promising teens quick cash over hamburgers - are themselves recruited.

The five Seattle teens were high school students who had little or no criminal history.

“The kids are almost targets of opportunity,” said King County Sgt. Steve Davis, a fraud expert familiar with the scam. “They are almost victims.”

The methods of the five caught in Spokane mirrored those in other cities. In mid- and early May, after coming from Vancouver, British Columbia, they prowled NorthTown Mall, scouting for youths with active bank accounts.

They found seven Shadle Park High School students ranging in age from 15 to 17.

Over hamburgers bought by the suspected gang members, the Spokane teenagers were convinced to cash about $9,000 each in cashier’s checks in exchange for a cut. The youths were promised 30 percent in exchange for the favor.

The Seattle youths were full of excuses why they couldn’t cash the checks: immigration officials hadn’t provided them Social Security numbers. They were trying to avoid paying taxes on the money.

“My son asked them all kinds of questions,” said Jeri, the mother of one of the teenagers, who asked that her last name not be used. “They had answers for everything.”

One Spokane youth received more than $2,000 from the Seattle teens for cashing the checks. He will likely have to repay the bank, police said. It is unclear how many others will have to do the same.

The Spokane youths won’t be charged as accomplices, Evans said.

On May 16, the local teens deposited more than $75,000 in bogus cashier’s checks into their active bank accounts through night deposit boxes at several area banks.

The counterfeit checks were stolen from the now-defunct Georgia Federal Bank.

The unique part of the fraud, according to Evans, is the manipulation of federal banking laws. Banks must immediately honor cashier’s checks in amounts under $5,000. The bogus checks were issued for $4,500 each.

It usually takes more than five days to clear the checks. By then, the scammers intended to be in a new city, Evans said. Documents found in their west Spokane hotel showed Boise as their next destination.

“They are using these kids to launder the money through valid accounts,” said Evans. “That’s why it works so well.”

But on May 17, a teller at downtown Global Federal Credit Union noticed a 15-year-old boy trying to withdraw $9,300 from an account with a $11 balance that had been dormant for a year.

The Global teller called the boy’s father, who contacted police. When a gang member called the next day to collect, the father used a telephone company feature, pound 69, to trace the call to a Sunset Boulevard hotel.

Police arrested the gang members May 18 and searched the two rooms they rented at the Hampton Inn. They found documents showing the same scam had been run in Vancouver. A total from that scam was unavailable.

The downtown Washington Mutual branch was also hit for an undisclosed amount.

Fraud experts say there is a moral to the story: “If it sounds too good to be true, it is too good to be true,” said John Brummett, head of corporate security for Seafirst.

, DataTimes