About Richard St.Ofle Expertise I work for one of the world`s largest banks (I won`t say which one), and have years of experience. I can respond to inquiries about banking fees, explain policies, banking laws, and the details of how things work, and how to avoid fees/bounced checks ect.
Experience I work for the bank as an expert in my field. I respond to questions like this for a living.
Question I'm writing a novel in which one of my secondary characters - a loan officer at a Memphis, TN bank - is engaged in several criminal acts, including embezzlement, insider-trading, and fraudulent loans. It's about the last item - the loan fraud - that I have questions about. Here's the scenario I've developed so far: the loan officer writes several fraudulent loans to fictitious entities (i.e., nonexistent persons and/or dummy corporations - all created by her), and then, using a number of aliases to allow her to pose as either said nonexistent persons, or as an officer of one of her bogus corporations, she receives the loan checks, then deposits same in various bank accounts she has likewise opened under a number of fake names. Of course, she has matching fake IDs to back up her bogus names. (Naturally, these accounts are NOT at the bank where she works!) After committing this fraud one or more times, she's finally busted by federal investigators. (She's also busted for the embezzlement and insider-trading, of course.) Note: I have her penciled in for committing this sort of loan fraud at least once, but am strongly leaning towards having it happen more than once. My questions are as follows:
1) Is such a scenario as I've just described plausible?
2) Are there safeguards in place to prevent a bank officer from issuing himself/herself bogus loans?
3) If the answer to Question #2 is "YES", are there any loopholes around such safeguards?
NOTE: If the answer to Question #1 is "NO", you may disregard Questions 4, 5, 7, & 8.
4) Is this a scam that can be repeated safely w/o being caught, or is this pretty much a one-shot deal?
5) How senior does a loan officer need to be to be in a position to pull off this scam?
6) What are the federal penalties for such a scam?
7) What sort of dangers would a loan officer issuing bogus loans face (i.e., in ways could she be caught?), and how could she avoid them?
8) About how much money could plausibly be stolen this way? (Note: my character has been embezzling her employer for two years. You can assume that if she's issued more than one bogus loan to herself, that she's been doing so for no more than two years, either.)
Any assistance in this matter would be greatly appreciated. I am a stickler for quality-control in my work, and would like to get my facts as accurate as possible. Which leads me to one last question:
If you can help me answer these questions, would you like your name included in my list of acknowledgements? If so, be sure to tell me how you want it written.
Thank you very, very much!
Sincerely,
Rodney Lewis
Answer Hello Rodney,
You book sounds great! To start with your responses; 1) Is such a scenario as I've just described plausible? ABSOLUTLY! in fact, it's more common that one might think.
One problem though, would be that a loan, requires a credit check, so she would need to provide SS#'s or Tax ID numbers (for buisnesses) which could be real, or fake. 2) Are there safeguards in place to prevent a bank officer from issuing himself/herself bogus loans? Yes, although there's only so much a bank can do to stop it, especially if the major part of the activity is not being done at the bank of your charachter's employment. Another employee would litterally have to catch her in the act. 3) If the answer to Question #2 is "YES", are there any loopholes around such safeguards? The safeguards are basically this; the bank gives employees "special" accounts that get free checks, more interest, etc. but the employee accounts are tracked on a computer database for strange activity, so she would need to have an account with another bank so as to not draw attention to herself. 4) Is this a scam that can be repeated safely w/o being caught, or is this pretty much a one-shot deal? Yes it's in fact a pretty safe scam, and could be repeated often, especially if she's in a busy bank. Most banks have quotas to meet, and if she has 200 loans for the month, while her fellow employees have 30, there's a problem! If she were smart, there would be either several small loans (if it's a bust bank) or a few big loans (if it's not a busy bank) although I think the latter would still raise suspission amongst coworkers. 5) How senior does a loan officer need to be to be in a position to pull off this scam? Depending on the bank, she may need a connection in the "underwriting" department. In other words, she may need to have someone approve all of these loans. (it also depends on the era that your novel takes place, because banks just started this in the 1990's, prior, the application and approval were done by the same person) Of course fictitious social secutiy numbers or Tax ID numbers don't have good credit, so would need help being approved for a loan. So if this takes place, say, after 1995-ish she may need to be a level above a "personal banker" position. 6) What are the federal penalties for such a scam? To be quite honest; I have no idea, although I do know that's it's a federal crime, and that most banks prosecute in these types of situations. 7) What sort of dangers would a loan officer issuing bogus loans face (i.e., in ways could she be caught?), and how could she avoid them? well, I've already mentioned the fact that other employees would be suspicious, especially if it's boosting her sales numbers, and she's recieving praise for it. To avoid this, she could have "visitors" come in and "apply for loans" so that her fellow employees aren't suspicious. If one of her "fake" social security numbers turns out to be a real social security number (or if the person's social sec.# that she's using finds out) there could be trouble, although no direct confrontation, and this type of a dispute usually ends with the bank just closing the loan and taking the loss. If your charachter has to go through the "underwriting" process (question #5) and has no connections, there may be an internal investigation, and it's very easy to get caught, especially when using fake SS#'s. There's pretty much no way to avoid this one. 8) About how much money could plausibly be stolen this way? (Note: my character has been embezzling her employer for two years. You can assume that if she's issued more than one bogus loan to herself, that she's been doing so for no more than two years, either.) Well, she would have to keep it fairly small, and far between. I would say in two years, a low ammount might be $72,000 (that's about one $3,000 loan per month for two years) If she's willing to take a lot of risks, and the conditions are right, I would say it could go up to $720,000 (that's about 2 $15,000 loans every month) but this is a MAJOR risk, and she'd have to be pretty sly.
If you can help me answer these questions, would you like your name included in my list of acknowledgements? If so, be sure to tell me how you want it written. PLEASE, it would be an honor! I'd like it to be written as; Richard St.Ofle
I hope I helped!
PLEASE write back with any follow-up, or additional questions!!
-Richard
