Forgery Ring Nets at Least $350,000 From Fake Checks

The full impact of a sophisticated counterfeit-check ring in Van Nuys that targeted three major California banks is not known, despite the recent arrests of its accused leaders, police say.

Ten people are suspected of using confidential information from documents thrown out by bank branches across Los Angeles--but principally those of Security Pacific, Wells Fargo and First Interstate in the San Fernando Valley--to manufacture phony checks used to defraud account holders of at least $350,000, police say.

Bank customers who discover money has been drawn from their accounts with a counterfeited or forged check are reimbursed by banks but generally must sign affidavits swearing that they are telling the truth, said Los Angeles Police Detective Richard Mulligan of the fraud division in Van Nuys.

“Ultimately, the banks are the victims,” he said.

The full extent of the losses has not been tabulated, Mulligan said. Victims often do not immediately notice irregularities in their accounts, he said.

200 Phony Checks Found

“There could be thousands more checks out there,” Mulligan said. He said the ring had been operating since last year, and nearly 200 phony checks from about 100 checking accounts citywide have been discovered. He said some phony checks surfaced as early as February, 1987.

The counterfeiters also created phony driver’s licenses from information on documents discarded by the banks and used the “licenses” to cash many of the checks at teller windows for amounts of less than $500, Mulligan said.

“Basically, this ring is broken, but the number of victims keeps getting bigger,” he said, waving a thick computer printout of crime reports received from banks. “It may be just the tip of the iceberg.”

On June 25, Mulligan and Detective Larry Kamin, also of Van Nuys forgery division, arrested the alleged leaders of the counterfeit ring in a Simi Valley hotel after receiving information nine days earlier in connection with a hit-and-run accident in Huntington Beach.

Peter Cockshutte Jr., 26, of Van Nuys; James M. Manocheo, 23, of Santa Monica, and Robert L. Lukas, 38, of Simi Valley were charged with multiple counts of forgery, counterfeiting of state documents and a variety of lesser charges, Mulligan said.

The arrests brought to six the number of people charged in connection with the ring.

On July 8, 29-year-old Susan Tefft of Van Nuys became the first member of the ring to be sentenced. After pleading guilty to five counts of forgery, she received a four-year prison term.

Sheri Moreaux, 28, and Daryl Gates, 31, both of Van Nuys, also have been arrested on forgery charges and are awaiting trial, Mulligan said. Gates is no relation to Los Angeles Police Chief Daryl F. Gates.

Four more suspects are still being sought.

Members of the ring fished such documents as loan applications, signature cards, personal checks and deposit slips from the trash at banks, police said. They then used the information to fashion facsimiles of payroll and personal checks, as well as California driver’s licenses, police said.

“These guys were very sophisticated, in a way,” Kamin said.

Accurate Account Codes

Ring members used check paper and portable photocopying machines capable of reproducing color documents, both of which are easily purchased on the open market, to manufacture the checks, Kamin said. The checks would have accurate account codes, and the driver’s licenses would contain a ring-member’s photograph, authorities said.

“They made a living at it,” said Mulligan, who described the ring’s activities as striking at the “Achilles’ heel” of bank branches. Ring members tended to avoid a victim’s home branch, he said.

In addition to personal accounts, the accounts of a number of churches, organizations and businesses--such as the RAND Corp. and Shakey’s Pizza--were victimized, authorities said.

Representatives of Security Pacific, Wells Fargo and First Interstate refused to comment on the counterfeit ring, beyond acknowledging that they are aware of it.

Nor would bank representatives discuss how sensitive documents got into the wrong hands and how tellers were duped into accepting bogus checks.

Bulletin Circulated

“I can say we have circulated a bulletin emphasizing a standing policy of ours that all confidential and sensitive documents be separated and destroyed,” said John Popovich, First Interstate Bank’s director of public affairs.

Security Pacific and Wells Fargo representatives said their security systems are often reviewed and upgraded, and countermeasures are taken if a breach occurs.

Mulligan, who works directly with bank security officials, said banks can foil attempts to cash bad checks by requiring at least two forms of identification and by requiring customers to remove driver’s licenses from wallets for close examination.

“Our experience with banks is that many branches are understaffed,” and tellers are under a lot of pressure to serve customers quickly, Mulligan said.

No Written Security Measures

There are no written standards that dictate security measures that banks must follow, according to the Bank Administration Assn., a national organization of banking professionals based in Rolling Meadows, Ill.

“It is common practice to shred or destroy sensitive material,” said Kathy Wedeking, an association spokeswoman.

Mulligan said banks sometimes prefer not to report losses from bad checks because they are concerned about adverse publicity. But in the case of the counterfeiting ring, it was bank cooperation that led detectives to the initial arrests.

In November, Security Pacific Bank security officials supplied forgery investigators with false driver’s licenses bearing names and addresses of bank customers but pictures of other people.

The licenses were left in Security Pacific branches that suspected ring members fled when they believed that their schemes were going awry, authorities said. The detectives said they used the photographs on the licenses to identify Tefft, Moreaux and Gates.

Equipment Found at Crash Site

However, the accused ring leaders were not apprehended until they left a vehicle containing counterfeiting equipment and false and stolen bank documents, authorities said.

On June 16, a 1979 Chevrolet camper truck collided with a car at a Huntington Beach intersection. Police said the driver of the car told them that two men from the camper fled shortly after one identified himself with a driver’s license later determined to be bogus.

Mulligan said the vehicle was traced to Cockshutte, whom police had suspected of being part of the ring. Mulligan said a tip led him and Kamin to the Travelodge in Simi Valley, where Cockshutte, Manocheo and Lukas were found manufacturing checks.

“They had been running us ragged for months,” Kamin said. “So when they answered the door and we saw about 100 driver’s licenses spread out on the bed, it was a welcome sight.”