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Fraud to finance a gambling addiction

Man in a suit in handcuffs

A law enforcement investigation identified a former solicitor who stole more than AUD1 million from individuals, businesses and financial institutions as part of an elaborate mortgage refinancing fraud. The offender’s financial crimes may have been motivated by his long-term gambling addiction.

In 12 months, the offender (while unemployed) attempted to sell up to 25 properties belonging to unwitting home owners and banks. 

During the commission of the crimes the offender:

  • forged victim signatures
  • falsified documents and, at various times;
  • falsely purported to be a mortgage broker, real estate agent, solicitor and conveyancer.

Upon his arrest, the offender was in the process of obtaining a further AUD2.5 million from financial lenders through false mortgage applications.  

The offender was charged with obtaining financial advantage by deception and attempting to obtain financial advantage by deception.

He was found guilty of both charges and was sentenced to almost ten years imprisonment.

The offender used established methods of structuring cash transactions to avoid reporting requirements and rapid movement of funds in and out of accounts to try and conceal his illegal activity.

Indicators

  • High-volume account activity involving domestic transfers of up to AUD500,000
  • The use of false identification and false information to obtain funds through financial lenders
  • Depositing cheques of up to AUD500,000 in personal accounts and requests for special priority clearance
  • Requests for loan settlement cheques issued under multiple false names.
  • Repeated ATM withdrawals upon cheque  clearance, until the bank account reflected a zero balance  
  • Financial transactions inconsistent with established profile
  • Operation of bank accounts in multiple Australian states
  • Large-value gaming activity with no threshold transactions recorded

Investigation outline

The offender lodged 19 fraudulent home loan applications with various banking institutions and successfully obtained money from four mortgage frauds, valued at over AUD1,000,000. 

Advertisements for re-financing, placed by the offender in the finance section of a newspaper, generated a number of calls.  During these calls the offender purported to be a mortgage broker with access to a number of lenders. This allowed him to obtain the personal details of the callers including their loan details. The offender then used these details to lodge home loan applications to purchase the callers’ property in a fictitious name. Falsified documents were used to support these applications.

Industry contribution 

Eight suspicious matter reports (SMRs) were submitted in relation to the offender. The SMRs, provided by second tier banks and casinos, identified:

  • The offender undertook high-value gaming activity, but recorded no threshold transactions (cash of AUD10,000 or more). He therefore either elected to use non-cash methods to buy in or out or, or if he did use cash, kept the amounts below the threshold amount of AUD10,000 to avoid reporting requirements.
  • There was a substantial increase in the offender’s overall gambling activity when compared to both the offender and his wife’s annual recorded losses and average bets from previous years. The offender also opened a new account for a woman visiting from overseas telling bank staff ‘special priority clearance’ on a bank cheque would be required. The woman subsequently deposited a cheque for AUD520,000 telling bank staff she would withdraw the funds to gamble at an Australian casino.
  • The offender requested several settlement cheques for various amounts from financial institutions once home loan applications were approved. These cheques were then deposited into various banks accounts opened in false names.
  • The offender deposited over AUD1 million in cheques within a short period of time. Once the cheques had cleared, the money was withdrawn at different automatic teller machines (ATMs) until the accounts had a zero balance.

AUSTRAC contribution

Transaction reports submitted by the reporting entities were analysed by AUSTRAC and referred to law enforcement for further investigation. 

Outcome

  • The offender was found guilty of financial advantage by deception (9 counts) and attempting to obtain financial advantage by deception (14 counts).
  • The offender was convicted of the aforementioned offences and sentenced to nine years and ten months imprisonment with a minimum of seven years. He was ordered to pay two banks compensation totalling nearly AUD400,000.
  • At the time of his offending in Victoria, the offender was subject to warrants for absconding while on bail in Queensland and escaping from custody in Western Australia and New South Wales for similar offences.

Case study summary

Offence

Fraud

Structuring

Customer Individual
Industry

Banking (ADIs)

Gambling services

Channel

Electronic

Physical

Report type SMR
Jurisdiction Domestic
Designated service

ADIs

Gambling services

Last modified: 15/04/2016 13:20