When Does the FBI Investigate Fraud?

How trusting are you? Would you fall for a scam? And if you did, would the FBI investigate and help you get your money back?

I spent most of my FBI career on an Economic Crime Squad working fraud investigations—advance fee scams, Ponzi schemes, embezzlement, and business-to-business telemarketing frauds.

To be defrauded is when someone, such as a business partner, salesperson, or con man, uses a lie or deception to gain something of value from another person.

Desperate people call the complaint phone lines of FBI offices across the country to report that they’ve been defrauded and to request assistance from the FBI. But whether, after hearing their story, an agent will open a fraud investigation is complicated. 

In my opinion, frauds and scams are some of the most complex investigations worked by the FBI.

Unlike other crimes such as bank robbery and drug trafficking, in many situations, before an agent investigating fraud can prove the capability of the perpetrator of a crime, they must first establish that the transaction that took place was indeed a crime. Here are a few examples to help explain what I mean.

1. A woman claims that she paid a loan broker to connect her with an investor to help her keep her under-capitalized clothing boutique afloat. But the contract she signed only promises he will perform his best efforts.
2. A small business owner says his company is a victim of an over-billing scam, but his procurement officer signed and approved each invoice.
3. During an audit, a local municipal official discovers water and waste services funds are insufficient. However, he has no clue if it’s a miscalculation of annual revenue, a bookkeeping error or embezzlement.
4. The daughter of an elderly man learns he has willingly given his life savings to a charismatic religious leader. Her father claims the funds are in an investment that will return huge profits.
5. A middle-age man has been sending money online to his overseas girlfriend. He sent her a large sum so she could ship her belongings and buy a plane ticket to come over to the U.S. and marry him, but hasn’t been able to contact her recently.

Of the above situations, none is clear cut. And once it’s been determined that a crime has occurred, there is another factor that must be considered before the FBI can open a case.

Does the monetary loss meet the dollar threshold set by the local United States Attorney’s Office to merit prosecution?

It’s a practical matter of manpower and resource allotment. How much are talking about? It depends on the jurisdiction. But the dollar amount is usually in the hundreds of thousands, if not millions. The FBI will not investigate a case a federal prosecutor won’t agree to take to trial.

Does that mean that if your loss is under $100,000, you should forget about contacting the FBI or other law enforcement agencies? No. There are many factors, including the location where the fraud occurred, the egregiousness of the crime (elderly victims, adoption fraud), and if there are more victims with significant losses. Please notify law enforcement and allow them to review and decide if they are able to investigate your incident.

The FBI encourages everyone to file a complaint. It’s possible that there are other victims and multiple complaints in other jurisdictions that can be aggregated so that opening of a federal investigation is possible. Larger local police departments also have active fraud bureaus. Filing a lawsuit is often recommended, even when a criminal case is pursued.

I also encourage victims should also file a complaint with the Internet Crime Complaint Center where similar scams and patterns of deception may identify a larger scheme. If appropriate, they refer complaints to federal, state, local or international law enforcement or regulatory agencies for possible investigation.

Unfortunately, the return or refund of monies lost during the scheme is not the investigator’s main goal or focus.

The agent’s job is to bring the person who committed the crime, the con man, embezzler, fraudster, or scammer, to justice. Any money found can be seized and a forfeiture count added to charges. If convicted, the court system may order restitution, but let’s be honest, usually there’s not much money left to return to victims.

Listen to these FBI Retired Case File Review episodes featuring fraud schemes and scams.

I hope you’ll also read my Philadelphia FBI Corruption Squad crime novel series featuring flawed female FBI agent Kari Wheeler, available as audiobooks, e-books, and paperbacks – wherever books are sold!

Here’s what you should watch out for if presented with an opportunity that doesn’t smell right, that seems too good to be true:

1. Even if all the cool kids are doing it, don’t base your decisions solely on recommendations from friends. Check things out yourself.
2. If the offer seems too good to pass up, of course it does. Remember, that’s part of the seduction.
3. Resist responding to a false sense of urgency. Don’t let anyone pressure you into making a decision. There are very few “once in a lifetime” opportunities.
4. Often victims say they had suspicions, but ignored them. Pay attention to red flags.
5. Evaluate your own weaknesses. Are you vulnerable because you’re seeking a certain lifestyle or status and willing to cut corners to get it?

Just for fun, here’s a free word search puzzle featuring economic crime. Enjoy!