LEXINGTON, Ky. — Shane Ensminger began his short presentation to more than 100 people at the Catholic Action Center’s cafeteria the afternoon of Nov. 11 with a question.
Have you ever been approached by a stranger to cash a check?
More than two dozen hands shot up.
Ensminger, the vice president of security for Central Bank, wasn’t surprised.
Since January, Ensminger and law enforcement officials have given a half-dozen similar presentations at homeless shelters and feeding sites. Ensminger always starts with the same question.
“There are usually about a dozen hands that go up,” Ensminger said. “It’s not uncommon for someone to tell me they just got out of jail for it.”
Using homeless people to cash counterfeit or bogus checks has become a booming and lucrative scam. In 2016, Central Bank lost more than $100,000 to counterfeit check rings that prey on the homeless. Thanks to outreach efforts such as the one that Sunday, Central Bank’s losses from bogus or counterfeit checks are less than $4,000 so far this year. Some other local banks also have reported a steep decrease in losses to these types of scams over the past several months, Ensminger said.
Central Bank’s success in curbing the scam in Fayette County has attracted the attention of the banking industry. Ten other banks have contracted Central Bank to learn more about how its homeless outreach and prevention efforts work, Ensminger said.
“For a long time in the banking industry, they saw this as only a law-enforcement issue,” Ensminger said. “This has been going on for about 10 or 15 years throughout the country.”
Ensminger, a former Lexington police officer, and Lexington police detective Gene Haynes told the crowd at the Industry Road shelter that police don’t want to arrest homeless people. They want their help to catch the organized crime rings that operate these counterfeit check-cashing scams. Ensminger also works with the U.S. Postal Inspector, the Secret Service and Polly Ruddick, executive director of Lexington’s Homelessness Prevention and Intervention Program.
The scam works like this: Organized crime rings — typically from bigger cities — come to Lexington and steal checks from a business’s mail boxes. They use those checks to make counterfeit checks. They find a homeless person. They offer them $50 to $200 to go into a bank and cash the check.
The homeless person uses his or her own identification card.
The check is cashed, the homeless person turns over the amount of the cashed check — typically between $1,000 and $6,000 — to the scammer, who is typically from out of state and driving an out-of-state rental car. The bank has the homeless person’s identification, and the bank’s cameras have the homeless person on tape cashing the check.
The homeless person gets arrested and goes to jail, sometimes for months. It gets worse. The homeless person sometimes is ordered by the courts to repay the amount of the counterfeit check.
Meanwhile, the check-cashing rings get all the cash and remain free, police said.
Ensminger and Haynes told the group that Central Bank or Lexington Police will pay homeless people if they report anyone who approaches them to cash a check. Get the car’s license plate number or any other details, and call police or Ensminger, Haynes said. If they have a phone with a camera, take a picture of the vehicle and text to police, he said.
“We will pay you more than they will pay you,” Ensminger said.
If the tips result in a successful federal prosecution of a counterfeiter and it involves stealing mail, the U.S. Postal Service can pay as much as $50,000, Haynes said.
One man gave Haynes a counterfeit check that someone had recently asked him to cash. The man said he knew that the $3,000 check was counterfeit so he didn’t cash it. He had been approached at a Walmart.
Another woman said she went to jail after cashing a counterfeit check. The counterfeiters paid her $200, she said.
These rings are sophisticated and often use varying tactics or pitches, Ensminger said.
“They may lie to you and say, ‘We work for a consulting firm, and we test banks and see if they are cashing checks correctly. We’ll give you some checks, you go cash them and bring us back the money,'” Ensminger said.
Don’t believe them. There are no “secret shoppers” for banks, Ensminger said.
Haynes said that in one recent case, the counterfeit check rings took a Lexington homeless woman to Ohio to cash checks.
“We’ve had these people come in and cash as much as $100,000 in five days,” Haynes said. “We’re getting close to cold weather. They may come up and offer you a night in a hotel or some new clothes. We had one recently where they were buying people drugs and keeping them high the whole time.”
The Central Library on Main Street and outside the Marathon station at Martin Luther King Boulevard at East Third Street are two areas where the rings have tried to recruit people, Haynes said.
“What we need you to do is to tell all of your friends,” he said.
Ensminger said homeless people are frequent targets for organized crime rings. In 2008, when Ensminger was with the police department, the police became aware of organized crime groups that were paying homeless people with good credit to go into cellphone stores and sign up for the maximum number of phones. The criminals would then take the phones and ship them overseas — mostly to China — where each phone was worth thousands of dollars on the black market.
The phone companies got wise. They tightened up rules on credit, making the scam harder to execute. But several people at the Catholic Action Center told Haynes that they were approached recently to buy phones.
Don’t do it, Haynes warned.
“When you have 10 phones, the phone companies look at it as a scam, and they file police reports and they want you to go to jail,” Haynes said. “So call us for that as well.”
Information from: Lexington Herald-Leader, http://www.kentucky.com