Large fraud ring passed bad checks, federal indictments allege

At least 29 people face federal criminal indictments for allegedly trying to cash fraudulent checks written on accounts for Providence Sacred Heart Medical Center, Providence Health & Services, Kmart, a contracting firm and a nursing home operator.

The defendants allegedly conspired to pass dozens of fraudulent checks totaling about $25,700 at convenience stores and check-cashing businesses around town between June and October 2013. Federal prosecutors submitted evidence to a grand jury indicating the list of defendants – growing by the hour in redacted court documents – stole account information for pension and payroll funds, then tried to pass the checks written for amounts from $98 to $1,600.

Many of the named defendants have recent criminal histories, including theft, money laundering and traffic violations. Brenda Sue Lynch, who faces three counts of bank fraud and one count of conspiracy, was previously named by investigators as head of a car-theft ring that allegedly copied vehicle identification numbers and obtained phony license plates through the Department of Licensing.

Defense attorneys reached by phone Thursday said it was too early to comment on the allegations. The U.S. Attorney’s Office for Eastern Washington did not return a phone call requesting comment.

In addition to bank fraud, some of the defendants in the alleged conspiracy also face identity theft charges. Three Spokane residents and one Seattle victim are identified by their initials in court documents as having their driver’s licenses, Social Security numbers, birth dates and signatures stolen.

Federal prosecutors told a grand jury that the conspirators hired “check runners” to pass the forged checks at area 7-11 and Wal-Mart stores, and at lending businesses, then split the proceeds among the group, according to court documents. The last attempt to allegedly cash a fraudulent check occurred on Oct. 23, 2013, at a Spokane Valley Wal-Mart, according to court documents.

Sunshine Health Facilities, which operates Sunshine Gardens, Terrace and other services for elderly patients in Spokane Valley, is listed as a business targeted by the alleged fraudsters in court documents. An administrator there did not return a call requesting comment Thursday.

The defendants also allegedly targeted a pension fund set up by retailer Kmart, and the payroll account used by Performance Contracting Inc.

Eight of the defendants arrested have already posted a $5,000 bond and have been released from Spokane County Jail. Several other alleged “check runners” have been released without bond. While court records indicate there may be as many as 29 defendants in the case, only 19 had been named in public court files as of Thursday evening.