Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Monday, June 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

Banks & Telemarketers in Cahoots, Class Says

(CN) - Five national banks, including Wells Fargo and Wachovia, helped "unscrupulous telemarketers" launder millions of dollars they swiped from consumers, a class action claims in Philadelphia Federal Court.

The class sued three processing companies - NetDeposit, MP Technologies dba Modern Payments and Teledraft - and five banks: Zions First National Bank of Utah, Wells Fargo, Wachovia, National Penn Bank and Harleysville National Bank.

Named plaintiff Reynaldo Reyes says a telemarketer tricked him into revealing his bank account information and then withdrew almost $400 from his account.

Payment processors assist "fraudulent telemarketers" by opening bank accounts and transferring money from unsuspecting victims into the account, after deducting a fee for their services, according to the complaint.

Banks follow directions from their telemarketer clients, transferring funds to offshore accounts in the Caribbean, Canada and India, according to the complaint.

Reyes says that NHS Systems, one of 20 allegedly fraudulent telemarketers mentioned in the lawsuit but not named as a defendant, told him in November 2007 that he was eligible for a government grant that could be deposited directly to his bank account.

Reyes says Modern Payments took $29.95 out of his account and deposited the money in an NHS account at Zions Bank, then a week later the agency transferred $299.95 to the Zions account.

"Neither of the transactions was authorized by Mr. Reyes, nor did Mr. Reyes receive a government grant or any other consideration from NHS," according to the complaint.

Reyes says he had to pay penalties after the debits created an account overdraft.

Modern Technologies and Teledraft have more than 36,000 consumer accounts that are connected to NHS, according to the complaint.

Telemarketers often prey on senior citizens, according to the complaint: "AARP, the National Association of Attorneys General and the Federal Trade Commission have estimated that 85 percent of the victims of fraudulent telemarketing are age 65 or older."

The class claims that telemarketers and payment processors illegally transfer victims' money through an Automated Clearing House (ACH) debit or a remotely created check (RCC), but banks know to look out for a high rate of suspicious transfers as "red flags" for money laundering.

"RCCs are well known to be used by unscrupulous telemarketers to perpetrate consumer fraud," according to the complaint.

The class claims that by processing fraudulent transactions, the defendants are "clearing millions of dollars in ACH transactions for the benefit of telemarketers."

Zions "deliberately closed its eyes" to the fact that its clients were fraudulent telemarketers and it facilitated their "unlawful conduct," according to the complaint.

The class seeks treble damages for RICO violations. It is represented by Judah Labovitz with Langer, Grogan & Diver.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.