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MoneyGram International reaches settlement for fraud

The US Department of Justice (DOJ) [official website] announced [press release] Friday that MoneyGram International, Inc. [corporate website; Bloomberg backgrounder] entered into a deferred prosecution agreement with the DOJ. According to the DOJ, MoneyGram admitted "to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program." From 2004 to 2009, MoneyGram processed thousands of transactions obtained by MoneyGram agents through fraudulent means:

The scams—which generally targeted the elderly and other vulnerable groups—included posing as victim's relatives in urgent need of money and falsely promising victims large cash prizes, various high-ticket items for sale over the Internet at deeply discounted prices or employment opportunities as "secret shoppers." In each case, the perpetrators required the victims to send them funds through MoneyGram's money transfer system. Despite thousands of complaints by customers who were victims of fraud, MoneyGram failed to terminate agents that it knew were involved in scams.
As part of the agreement, MoneyGram forfeited $100 million dollars that will go towards the Victim Asset Recovery Program (VRAP) [official website]. MoneyGram also agreed to enforce US anti-fraud and anti-money laundering standards and maintain greater oversight of their agents' activity.

Friday's announcement was the latest development in the federal prosecution of fraudulent practices. Last week Wells Fargo [corporate website] claimed [JURIST report] that a lawsuit filed by the US government to recover money from defective mortgages was barred by a previous settlement. In September a federal judge approved [JURIST report] a settlement agreement between the DOJ and certain e-book publishers in a price-fixing suit. In late July a federal court granted [JURIST report] an emergency order freezing the assets of foreign brokers accused of insider trading. Earlier that month, the DOJ and pharmaceutical giant GlaxoSmithKline [corporate website] announced [JURIST report] a $3 billion dollar settlement in a series of criminal and civil healthcare fraud cases against the drug company.

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About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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