Seven people were charged Wednesday in a $70-million embezzlement scheme uncovered after workers at this city’s largest bank allegedly used secret computer codes in a thwarted attempt to shift funds to dummy accounts in Austria.
Four of those charged, including two low-level employees of the First National Bank of Chicago, were arraigned before a federal magistrate here. The FBI was still hunting for three other suspects, including one known to investigators only as “Rev,” in what is believed to be one of the largest attempts to embezzle corporate funds in U.S. history.
The seven were accused of trying to defraud First National, the nation’s 10th-largest bank, by engineering the electronic transfer of funds from corporate accounts held by United Airlines, the Merrill Lynch & Co. brokerage house and Brown-Forman Corp., a Kentucky liquor distiller.
$19 Million in Escrow
Bank officials said the firms would not lose any money and had already gotten most of it back. However, $19 million is reportedly still being held in an escrow account in New York.
FBI agent Jim Hight described an elaborate scheme in which $69.7 million was transferred illegally from those accounts on Friday into New York-based Citibank and Chase Manhattan. From there, the money was to be shifted into new accounts opened at Focobank and Creditanstalt, two Vienna banks, Hight said.
The money never reached its final destination, however. Not long after they got to work Monday, workers at First National and its three corporate customers all concluded that something was wrong.
A financial officer at United, for example, was startled to find an inexplicable overdraft in the firm’s main cash account when he was reviewing a computerized bank statement that the company gets each morning, according to airline spokesman Joe Hopkins. About $25 million was missing, and by 8:15 a.m., Hopkins said, the firm had already notified the bank.
Aside from one suspect whose identity is unknown, all of those indicted were from either Detroit or Chicago. Only two of the men were bank employees--Otis Wilson, 30, and Gabriel Taylor, 27, both clerks. U.S. Atty. Anton Valukas identified the ringleader of the group as Armand Moore, 30, of Detroit.
On May 13, Valukas alleged, Taylor gave out the confidential codes used to authorize transfers from the United, Merrill Lynch and Brown-Forman accounts. Valukas did not say how Taylor allegedly got access to those codes. Two days later, persons posing as workers for those three companies called employees in the bank’s wire room who were not involved in the scheme and used the codes to direct money transfers, Valukas said.
Hight said the money was to have been transferred into three accounts in Austria.
Most banks have erected elaborate security systems to protect against being cheated in electronic transfers. Even though First National funds got as far as New York, Tony Zhender, a spokesman for the financial giant, said the bank’s safeguards proved flawless.
“Our system and controls worked extremely well,” Zhender said. “That’s what allowed us to thwart them.”