How to Steal $5 Million From Bank of America Without Using a Gun
Federal prosecutors won a major court victory against Israeli organized crime last fall, when they convicted Moshe Matsri of money laundering and drug trafficking. Also known as Moshe "the Religious," Matsri ruled L.A.'s Israeli underworld through intimidation and violence.
But they did not stop there. In November, prosecutors indicted Gabby Ben, a close Matsri associate, on 13 counts of wire fraud, bank fraud and "aggravated identity theft." The case illustrates another side of organized crime. With the advance of technology, online fraud can be far more lucrative than other illicit activities — while also being safer and harder for authorities to investigate.
Ben is a 40-year-old father of three who lives in Encino. He is accused of orchestrating a "bust-out" scheme that cost Bank of America and two other banks $5 million. According to prosecutors, he exploited a flaw in BofA's computerized banking system.
Here's how it worked, based on the indictment and a search warrant affidavit. Ben had dozens of associates set up more than 400 bank accounts. Then they moved money rapidly between the accounts, often exceeding the available funds. The scheme took advantage of the system's "float time." For a while after each transfer, the funds were available even though the system had not verified that there was enough money to cover the transfer.
According to the search warrant, Ben and his associates then made cash withdrawals at ATMs, bought travel packages at agencies in Israel, and made other purchases at other businesses in the U.S. Ben would then resell the travel packages, pocketing the profit, according to the indictment. Prosecutors allege that Citibank, Chase, and Bank of America initially lost $6.5 million, though they were able to reduce the liability to $5 million.
Authorities traced the fraudulent charges to Ben and his accomplices using ATM surveillance videos and computer IP addresses, according to the warrant.
Ben was a veteran at this. He and Matsri were both charged in an earlier credit card scheme that involved the fraudulent purchase of more than 200 tickets on El Al Airlines, worth more than $600,000. When an El Al representative questioned the purchases, Ben initially claimed that he was buying tickets for a large party to attend his brother's wedding, according to a search warrant. In fact, he was reselling the tickets and pocketing the profit.
He later admitted, according to the warrant, that he had no intention of paying for the tickets and had he had gotten "too greedy."
Matsri pleaded no contest in that case in June 2013, and is still awaiting sentencing. Ben went to trial in November 2013. He agreed to plead no contest in exchange for a one-year jail sentence. He also paid $750,000 in restitution and penalties. Due to jail overcrowding, Ben's sentence was shortened to a month.
While he was serving time, investigators were pursuing him for the Bank of America case. According to the warrant, Ben made calls from jail in which he told an alleged accomplice that he should not talk to investigators and that he should leave the country as soon as possible. Detectives talked to the accomplice, but according to the warrant he was evasive and then fled to Israel. He has not been prosecuted.
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Ben hoped to return to Israel upon his release, but federal authorities held him in on their own fraud charges related to the El Al scam and other credit card purchases. Ben pleaded guilty again, and hoped he would not have to serve additional time for a similar offense.
"Mr. Ben is no special defendant nor is he anyone of any importance," his attorney, Ron Richards, argued. "He is a religious orthodox Jewish male who stupidly charged his credit card with false approval codes in a misguided effort to bring friends and family to a family event in Israel."
Ben was sentenced in April 2014 to 30 months in prison, and is scheduled to be released in March 2016. However, federal prosecutors have since indicted him in the Bank of America case. Five others were also indicted, including Ben's brother, Ami Ben. Gabby Ben has yet to enter a plea.
Lt. Stephan Margolis, who runs the LAPD's organized crime detail, argues that new technology is making it easier for less sophisticated criminals to commit fraud.
"It's changed the caliber of the players," he says. "The problem now is the volume of criminals capable of doing significant damage."