Bank Fraud Suspects Net $1M in Citibank Casino Scheme

Type threatpost
Reporter Chris Brook
Modified 2013-04-17T16:31:18


CitibankFourteen individuals were charged late last week after the Federal Bureau of Investigation, along with the Los Angeles Police Department and the Glendale, Calif. Police Department found they were behind a scheme that extracted more than $1 million from Citibank cash-advance kiosks in Southern California and Nevada between 2009 and 2010.

A press release from the Southern District of California’s U.S. Attorney’s Office claims the defendants were able to exploit a flaw in Citibank kiosks present in casinos across California and in Las Vegas, Nev.

To start, the group’s mastermind Ara Keshishyan allegedly gave co-conspirators “seed money,” roughly $9,000-$10,000 each to deposit in their Citibank accounts. Keshishyan then ordered the individuals to withdraw cash advances, sometimes several times the amount initially deposited, from kiosks at casinos such as the Tropicana and Wynn in Las Vegas and the Morongo in Cabazon, Calif., according to an indictment unsealed last week.

Due to a loophole in the bank’s electronic transaction security protocols, the withdrawals from these kiosks had to be in equal denominations and always within 60 seconds of each other. Since the scheme had to be pulled off in 60 seconds, the F.B.I.’s San Diego division has likened the operation to something akin to “Gone in 60 Seconds.”

“While advancements in technology have created a world of accessibility to users and a convenience for consumers, they have also left room for criminals to exploit even the smallest of loopholes,” the F.B.I. Special Agent in charge of the case, Daphne Hearn, said in the release.

Keshishyan gave contributors their cut and kept the rest yet instructed the group to never withdraw more than $10,000 in order to throw off the government. Federal transaction reporting requirements described in the Bank Secrecy Act of 1970 mandate banks must report cash transactions in excess of $10,000 during the same business day.

All but one of the group were arrested last week and are being charged with conspiracy to commit bank fraud and conspiracy to illegally structure financial transactions to avoid reporting requirements, while one, Levon Karamyan, remains at large. According to a report from the Glendale News-Press yesterday, five of those conspirators pled not guilty to the scam in court on Monday while a sixth pled not guilty on Friday.

The report also notes the kiosks used by Citibank in the casinos cited were assembled by Las Vegas-based Global Cash Access yet it seems the flaw, which stems from a loophole in Citibank’s kiosks, has reportedly been fixed.

In a public statement being circulated by the company, the bank claims “through our own security measures and the diligence of our people we identified the fraudulent account activity and immediately notified the authorities,” adding that “no customer accounts were affected by the fraudulent activity.”