Ach Fraud Prosecutions
What is ACH Fraud?
ACH (Automated Clearing House) is a nationwide electronic network for financial transactions, used to transfer funds between bank accounts.
ACH fraud involves unauthorized or fraudulent use of the ACH network to steal money, commit identity theft, or launder money.
Common ACH frauds include unauthorized withdrawals, phishing schemes to obtain login credentials, social engineering to trick businesses, and account takeover fraud.
Legal Framework
ACH fraud is typically prosecuted under various federal statutes, including:
18 U.S.C. § 1343 (Wire Fraud)
18 U.S.C. § 1029 (Access Device Fraud)
18 U.S.C. § 1956 (Money Laundering)
18 U.S.C. § 2314 (Interstate Transportation of Stolen Property)
Computer Fraud and Abuse Act (CFAA)
Penalties include imprisonment, fines, restitution, and forfeiture.
⚖️ Key Cases in ACH Fraud Prosecutions
1. United States v. Michael Edward Barrett, 2012
Facts:
Barrett orchestrated a scheme involving phishing emails to obtain business banking login credentials.
He then initiated unauthorized ACH transfers totaling over $3 million from victim companies’ accounts to accounts he controlled.
Legal Issues:
Charged with wire fraud and bank fraud.
Demonstrated how phishing leads to ACH fraud.
Outcome:
Barrett pleaded guilty.
Sentenced to 7 years in prison and ordered to pay restitution.
Significance:
Highlights use of social engineering for ACH theft and serious federal consequences.
2. United States v. Wally Adeyemo, 2016
Facts:
Adeyemo hacked into a company’s payroll system.
Initiated ACH transactions diverting employee paychecks to fraudulent accounts.
Legal Issues:
Charged with wire fraud, unauthorized access under CFAA, and bank fraud.
Outcome:
Convicted after trial.
Sentenced to 5 years imprisonment.
Significance:
Illustrates ACH fraud via internal system compromise and employee payroll theft.
3. United States v. Roxanne Anderson, 2018
Facts:
Anderson used stolen ACH credentials to divert mortgage payments from customers to her accounts.
Exploited vulnerabilities in mortgage servicing companies’ ACH processing.
Legal Issues:
Charged with wire fraud and identity theft.
Prosecution relied on showing unauthorized ACH debit transfers.
Outcome:
Pleaded guilty.
Sentenced to 4 years imprisonment plus restitution.
Significance:
Case shows ACH fraud in the mortgage and real estate sector.
4. United States v. Gregory Rodriguez, 2019
Facts:
Rodriguez used malware to infect small business computers.
Harvested banking credentials and performed ACH fraud to steal funds.
Legal Issues:
Charges included wire fraud, bank fraud, and computer intrusion under CFAA.
Outcome:
Convicted and sentenced to 8 years in federal prison.
Significance:
Demonstrates the link between cyber intrusions and ACH fraud.
5. United States v. Sunil Patel, 2021
Facts:
Patel ran an elaborate business email compromise (BEC) scam targeting companies.
Used fraudulent emails to authorize ACH payments to accounts he controlled.
Legal Issues:
Charged with wire fraud and conspiracy to commit bank fraud.
Outcome:
Pleaded guilty.
Sentenced to 10 years imprisonment.
Significance:
Shows how BEC scams facilitate ACH fraud on large commercial scale.
6. United States v. Henry Jackson, 2023
Facts:
Jackson accessed online banking portals of multiple victims using stolen credentials.
Initiated unauthorized ACH transactions to move millions offshore.
Legal Issues:
Charged with wire fraud, bank fraud, and money laundering.
Outcome:
Convicted at trial.
Sentenced to 12 years in federal prison.
Significance:
A recent high-profile case emphasizing international money laundering via ACH fraud.
Key Legal Takeaways
| Issue | Legal Response |
|---|---|
| Use of phishing & malware | Wire fraud, CFAA violations |
| Unauthorized ACH transfers | Bank fraud, wire fraud |
| Money laundering of stolen funds | Money laundering statutes |
| Business Email Compromise (BEC) | Conspiracy and fraud charges |
| Restitution & forfeiture | Courts often order repayment to victims |
Summary
ACH fraud prosecutions have become a critical focus for federal prosecutors as the ACH network grows in importance. Cases consistently show that fraudulent access to ACH systems—whether by phishing, hacking, or social engineering—is met with severe criminal penalties. The law treats unauthorized ACH transfers as wire fraud or bank fraud, reflecting the serious financial harm caused to victims.
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