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Funny Money A New Bank Scam: Checks Are Coated To Self-destruct March 29, 1988 By Andrew Cassel, Inquirer Staff Writer "Follow the paper trail" is the conventional way for police to track white-collar crooks. But Chicago police probing the latest bank scam here are finding themselves up against a new problem: a paper trail that self- destructs. Checks coated with a paper-eating chemical that causes them to disintegrate a day or two after being deposited have cost banks here and in Tennessee about $80,000 in the last two months, say investigators. These checks don't bounce, they crumble, according to the Chicago Police Department's Financial Crimes unit, an elite team of cops with accounting degrees who specialize in white-collar crime. That's worse for the banks, because a disappeared check is assumed to have cleared. Investigators say the crooks put the coated checks in new accounts, waited eight days, by which time banks here must clear the checks, then withdrew cash in amounts of under $5,000. The checks were drawn on bogus or empty accounts in San Diego banks. But by the time the California banks received the checks, they were either unreadable or had crumbled into tiny bits. Chicago's Northern Trust Bank, one of the first to be hit by the scam, ''got an envelope full of confetti back," according to Thomas Tucker, vice president of the Chicago Clearing House Association, which clears checks for 142 area banks. "Banks can't tell their customer the check bounced, because there's no check." The clearing house warned its members in a memo March 9 to be on the alert for the funny checks, which have a distinctive appearance. At Chicago's Lakeside Bank for Savings, for example, tellers recalled later that the checks "were damp and smelled funny," according to bank investigator Kermit Thompson. Others noticed that they were printed on orange paper. Thompson said he had traced the depositor who passed the dissolving checks to an address on the South Side and said the man was apparently receiving mailings under several names. He also said Lakeside had recovered one check that failed to dissolve and was planning to pass that along to local police. Investigators say at least seven Chicago-area banks and a local supermarket chain have fallen victim to the scheme, and say that similar checks have turned up in Memphis, Tenn. As of yesterday, police said they had no firm leads. The FBI has been notified but is not taking an active role in the case. One law enforcement official said the thieves shouldn't be too hard to track down, though, calling the scam "a basic check fraud." "You dont need a chemistry degree to make a chemical that would destroy a check," he said. "When I was a kid they had an ink that disappeared. This is only a half-step beyond that." Thompson said he believed the crooks were practiced Chicago-area bank thieves who knew local banking laws and were familiar with the city's dozens of community-based banks, which grew up in the years when Illinois banking law severely limited branch banking. The situation is quite different than in Philadelphia, where a few large institutions dominate the financial services market. Illinois law still limits the amount of time that banks have to clear checks before allowing depositors to withdraw their money. For amounts under $5,000, the banks are supposed to release funds after eight days at the latest, according to Peter Soraparu, spokesman for First National Bank of Chicago. New federal laws scheduled to take effect this fall will apply similar limits nationwide. Soraparu said publicity about them has probably ended the stream of dissolving checks here. "It certainly raised our vigilance level," he said.
Checks That Self-Destruct AP Published: March 25, 1988 Checks treated with a chemical that causes them to disintegrate into confetti shortly after being deposited have shown up in at least two states, costing banks nearly $70,000 since the beginning of the year, police said today. A check clearinghouse said it had warned 142 banks to be on the lookout for the dissolving checks, which may have an unusual odor and feel oily. The checks have turned up at five or six banks in the Chicago area and at one in Tennessee, said Capt. James Zurawski of the Chicago Police Department's financial crimes division. The authorities are also checking a report of a possible dissolving check in Indiana, Captain Zurawski said. The checks, said to have been drawn on personal accounts at banks in California and Tennessee, have been reported in about 12 incidents in recent weeks, costing banks about $70,000, he said. In most of the cases, someone would open a new account at a bank with a small amount of money and later make a larger deposit with a dissolving check. Later, the money would be withdrawn from the account before the bank could learn that the second check was bogus. The check's decomposition would leave little evidence. |