On November 29, 2010, United States District Judge Frank C. Damrell Jr. sentenced Donald Taylor, 39, of Sacramento, to five years in prison for conspiracy to commit bank fraud. Taylor pleaded guilty on August 31, 2009. Thirty-seven financial institutions in ten different states lost as much as $2 million in cash advances from prepaid debit cards in 2007 and 2008.

In a multi-jurisdictional collaboration between the FBI, U.S. Secret Service, and various police and sheriff’s departments, seven co-conspirators have now been brought to justice. The case was prosecuted by Assistant United States Attorney Matthew D. Segal.

According to court documents, the organizers had base operations in California and sent runners to Alabama, Arizona, California, Illinois, Indiana, Montana, New Mexico, Ohio, Oklahoma, and Texas to use the fraudulent cards to get cash advances at numerous lending institutions. The runners would instruct bank tellers to call a toll-free number on the card when the card balances showed only small amounts of money available. A co-schemer on the other end of the call would pose as card service representatives stating the cards had available balances of thousands of dollars and then instruct the teller on what buttons to press on the card terminal in order to make the transaction go through. After receiving the funds, the runner typically kept half and remitted the other half to organizers in the Sacramento area.

After the multi-jurisdictional task executed search warrants in mid 2008, evidence was obtained indicating Taylor as an “inactive” gang member working as middle management in the conspiracy. Taylor recruited and instructed the runners on how to conduct the fraud and send the ill-gotten money back to Sacramento. The portion of the operation overseen by Taylor carried out or attempted around $450,000 in fraudulent advances.

This case clearly shows the intricacies and lengths that criminals will go to in committing fraud. More often than not, these scammers inflict damage on the general public via merchants or service providers. Their boldness apparently shows no bounds as this conspiracy apparently operated within the bounds of financial institutions with defense systems set up to deter this type of activity.

Click here to view the Department of Justice release from United States Attorney Benjamin B. Wagner for Docket #: 2:08-CR-263 FCD; 2:09-CR-325 FCD.