A Florida man has been convicted of laundering more than $3 million for overseas cyber criminals who victimized four U.S. companies — and the City of Ottawa.
Elvin Lewis Jr., 52, of Hollywood, Florida, was convicted of 11 counts of conspiracy to commit money laundering and money laundering after a five-day trial in Southern Florida’s U.S. District Court. He’s to be sentenced in January.
Documents filed in the court case suggest the City of Ottawa was victimized by a sophisticated ring of fraudsters based in China who used Lewis to collect, launder and transfer their ill-gotten proceeds overseas. Lewis had maintained he was an unwitting “money mule” for those who orchestrated the fraud.
Prosecutors, however, told court that Lewis knowingly used his Florida real estate business, NuFinancial Consortium, to set up eight accounts at different branches in order to launder millions for cyber criminals.
The U.S. Attorney’s Office says the proceeds came from a series of business email compromise (BEC) scams, one of which targeted Ottawa city treasurer Marian Simulik in July 2018. In response to an email that she thought came from the city manager, Simulik sent $128,603 by wire transfer to a U.S. bank account to pay a new supplier.
Simulik had been listed as one of 27 people expected to testify for the prosecution, but she did not appear on the witness stand.
Court documents, filed as part of that case, offer new details about how the foreign-based cyber criminals managed to dupe their victims.
Those documents describe a patient, sophisticated operation in which fraudsters hacked corporate email systems to monitor the conversations of senior executives, and to misdirect payments being discussed. They used Outlook’s automatic forwarding rules for email to redirect messages to their own inbox — a system that allowed them to send timely, informed emails.
“In this case,” prosecutors wrote in a court filing, “the fraudsters used various forms of hacking and intrusion techniques, as well as email forwarding rules, to gain access to victims’ protected computers, and to monitor email traffic until discussions of anticipated payments arose.
“Then, the fraudsters sent emails impersonating the party to whom payment was owed, which were used to trick the victims into changing the means of payment to their trusted business partners.
“Having been deceived by the fraudulent email correspondence containing new wire instructions, the victims then sent payments to accounts controlled by the laundering network.”
The fraudsters targeted a U.S. fleet services company, Clarke Power Services, and redirected US$2.2 million worth of payments that were supposed to go to a business partner, Fitzgerald Trucking. They also targeted a U.S. trailer parts maker, Dexter Axle Co.
The City of Ottawa appears to have been victimized by a simpler, more common scam. According to an investigation by the city’s auditor general, Simulik wired US$97,797.20 within hours of receiving an unusual request from the city manager asking her to take care of a matter “personally” — to wire money to a new international vendor to complete a soon-to-be announced deal that he had negotiated in private.
The message came from a “spoofed” email address — one that appeared legitimate but was, in fact, from outside the city’s internal email system. (All city emails now feature a yellow-highlighted caution that warns recipients when an email originates from an external sender.)
According to a court brief filed by Assistant U.S. Attorney Lisa Miller, Lewis set up a series of bank accounts to receive the fraud proceeds, moved that money between accounts, and blended it with other funds in an attempt to conceal its source.
He also recruited a woman, Vanna Clay, to set up more accounts; she was given immunity from prosecution in return for her testimony.
Clay told prosecutors that the money laundering operation was similar to the one portrayed on Ozark, a Netflix crime drama in which a financial planner launders money for a Mexican drug cartel.
According to prosecutors, Lewis wired most of the money to a contact in China whom he knew only as “Wancai” or “Mr. Chong” in return for a five- to 10-per-cent commission. He made more than $160,000 for his role in the operation, according to evidence presented at trial.
“It was easy money for little work: a yearly salary in a matter of weeks,” Lisa Miller said.
Money launderers play a key role in the success of BEC scams, she noted, because they ensure proceeds move in and out of bank accounts quickly. “If money is not wired on quickly enough,” Miller said, “victims realize that their funds were misdirected and ask for them to be recalled, resulting in transaction reversals, account freezes or calls to law enforcement.”
For his part, Lewis contends that he did not know the source of the money that he transferred overseas. “I was a money mule,” he told the Citizen in a telephone interview earlier this year. “Me, I’m like, OK, I’m following orders. I’m just doing what I’m told.”
Lewis said he met his overseas client through a Craigslist advertisement for his real estate and mortgage firm. He never asked clients about the source of their funds, he insisted.
But federal prosecutors introduced a raft of WhatsApp messages between Lewis and the unindicted co-conspirator, Chong, to refute that claim. The messages were seized from Lewis’s phones pursuant to search warrants executed at his office on July 26, 2018.
From the start of their online relationship in November 2017, prosecutors said, Lewis and Chong exchanged “nearly daily messages and phones calls.”
“Critically,” Miller said, “this evidence explains how the defendant and his boss got to know and trust one another.”
Chong taught Lewis how to launder money by “layering” — moving money between accounts using bank drafts and money orders — and by ensuring that deposits were not sent overseas in bulk immediately after being received. Chong liked to use accounts with a history of overseas transactions so as not to raise red flags.
The WhatsApp messages entered in the case also reveal the relationship between the two men was sometimes fractious.
In May 2018, for instance, Lewis complained that he had moved more than $1 million for Chong but was still receiving only five per cent “on wires that are said to be fraud … so it’s straight profit.”
Later that month, Chong demanded that more money be sent to China but Lewis was slow to respond. “Don’t f — k with us, we will f — king f — k you up,” Chong warned him in one WhatsApp message.
Lewis, however, continued to drag his feet on the money transfer and proposed that they space out their outbound wires to avoid scrutiny.
“Did I tell you am sending hitman?” Chong replied. Lewis sent more than $60,000 overseas the next week.
Taken together, prosecutors say, the conversations make it clear that Lewis knew that the money he was moving came from fraudulent activity.
The City of Ottawa’s Simulik was victimized only weeks before Lewis’s arrest. PNC Bank officials launched an investigation of Lewis’s account activity in early July 2018 after receiving a complaint from another bank. The case was quickly referred to federal agents.
Lewis’s jury trial began Oct. 2 before U.S. District Court Judge Roy K. Altman.
Late last week, defence lawyer Tonia Troutwine filed an acquittal motion, arguing that the government had failed to establish that Lewis committed any crime. Lewis, she said, at all times believed he was dealing with a wealthy and legitimate private investor.
The WhatsApp messages relied upon by the government, she said, revealed that Chong “was repetitively swearing to God the business was ‘REAL’ and he was to be trusted.” Whenever Lewis did raise concerns about banking matters, Troutwine said, he was met with “berating, belittling and violent threats of death to himself or loved ones.” The defence motion was denied, and Lewis was convicted on all counts.
Prosecutors have served notice that they will be seeking a US$3.1 million criminal forfeiture order. Federal law enforcement officials have already seized $715,000 from one of Lewis’s bank accounts and his car, a new Porsche.
BEC scams now a $1-billion-a-year business: FBI
Cyber scammers who infiltrate corporate emails to monitor and divert supplier payments, payroll deposits and other cash transfers now cost U.S. firms more than $1 billion a year, according to the U.S. Federal Bureau of Investigation.
The FBI’s Internet Crime Complaint Center received 20,373 complaints about business email compromise (BEC) scams in 2018, accounting for losses of $1.2 billion, according to the agency’s annual report.
In a public service announcement last month, the FBI said the internet-enabled fraud scheme continues to grow.
“The BEC scam continues to grow and evolve, targeting small, medium, and large business and personal transactions,” the FBI warned. “Between May 2018 and July 2019, there was a 100 percent increase in identified global exposed losses.”
A BEC scam artist, based in China, last year stole $128,603 from the City of Ottawa by impersonating the city manager.
Fraud artists often invade a corporate email system by collecting usernames and passwords through “phishing” attacks that invite key employees to enter sensitive data on a website that appears official. Once inside a system, the fraudsters can monitor email conversations and redirect payments under discussion, or ask that an individual’s payroll deposit information be changed.
Fraudsters have also been known to “spoof” the emails of chief executives and other senior executives and send messages seeking to convince lesser officials that a new wire transfer has been approved.
China and Hong Kong are the primary destinations for fraudulently obtained funds, according to the FBI, although the agency has also seen an increase in such transfers to the U.K., Mexico and Turkey.
BEC fraudsters typically recruit money launderers online to open shell accounts through which they can move their ill-gotten funds, and get them out of the country before victims realize they’ve been duped.
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