Over the past two years, scores of personal and business checks entrusted to the U.S. Post Office in Galveston have vanished. At least 140 of those were stolen, altered and cashed for amounts ranging from thousands to tens of thousands of dollars and totaling more than $950,000, according to police records obtained by The Daily News.
And the numbers both of victims and dollars still are growing.
From Jan. 1, 2020, to Aug. 14, 2022, the Galveston Police Department took reports of 140 cases of checks stolen after being mailed, altered through a process called washing, and cashed for amounts averaging about $7,000 but reaching as much as $34,221, according to documents The Daily News obtained through the Texas Public Information Act.
Those cases represent only a fraction of the checks gone missing in the U.S. Mail. Other cases were reported to the U.S. Postal Inspection Service, which has declined to comment about specifics and has not provided documents sought under the Federal Freedom of Information Act. Still other cases probably were never reported.
Although check theft and fraud have always been problems, the crime began to get noticeably worse in late 2020 and has gotten far worse still this year, executives at one local bank told The Daily News.
“We started to see more checks coming in altered and it appears that they are being stolen from the United States Postal Service,” said Melissa Burow, senior vice president at Moody National Companies.
Between December 2020 to December 2021, Moody Bank in Galveston saw 15 cases of washed checks that earned scammers almost $80,000, CEO Vic Pierson said.
“It’s even worse in 2022,” Pierson said in August. “So far this year, we’ve had 27 cases totaling $233,168.”
Stolen checks are a hot commodity for crime syndicates who broker them on the darknet, a professor who leads a cybersecurity research group monitoring check fraud told The Daily News.
The darknet is a part of the internet hosted over an encrypted network and accessible only through specialized tools that provide users with anonymity, according to The Associated Press.
Although it’s a global crime likely involving shadowy criminal figures operating in distant places, it victimizes both local institutions and local people of every age — as young as 25 years and as old 91, The Daily News found.
Moody Bank has reimbursed all its victimized customers and sought reimbursement from banks that accepted the fraudulent checks, Pierson said.
The bank had been mostly successful recovering the stolen money, but each case costs it time and money, he said.
And some local victims told The Daily News their bank accounts had been cleaned out and they hadn’t been able to recover the money.
Two common threads run through all cases The Daily News reviewed:
• The vast majority of the stolen checks were mailed at the Bob Lyons Post Office, 5826 Broadway in Galveston, or at Postal Service drop boxes serviced by that office.
In one case, a Moody Bank customer who’d heard of problems with checks disappearing from the mail walked her check into the lobby of the Bob Lyons Post Office to avoid the dropbox, Pierson said.
“It was originally made for less than $100, but it was stolen and altered to $6,000,” Pierson said. “It was made payable to a person with a Houston address.”
• Federal officials charged with ensuring the security of the U.S. Mail have declined to acknowledge a problem in Galveston, to discuss the possibility there might be a problem in Galveston, to discuss how they might respond if there were a problem in Galveston or be interviewed about such problems just in general.
That experience seems to be universal.
Moody Bank, for example, has filed more than 40 reports with the U.S. Postal Inspection Service and has yet to hear back about any of them, Pierson said.
“We send an email every single time there’s a case or customer is involved with these thefts,” Pierson said. “We never get responses from them.”
David Maimon, an associate professor of criminal justice and criminology at Georgia State University, said the U.S. Postal Service is notorious for not responding to these types of thefts.
And although the Postal Service tends to argue checks, when they’re stolen, typically are stolen from residential mail boxes, rather than while in its custody, that’s not the case, he said.
Thieves also target the blue U.S. Postal Service boxes with keys stolen from mail carriers or somehow copied, Maimon, who leads the Evidence-Based Cybersecurity Research Group at Georgia State University in Atlanta, said.
“The perpetrators were actually robbing the mail carriers and then they offered those keys for sale,” Maimon said.
The research group found stolen or copied U.S. Postal Service keys for sale on the darknet for as much as $3,000, he said.
The cybersecurity research group in an assessment of 60 localities this year found an average of 1,300 stolen checks for sale on the darknet, he said.
Thieves in these cases are stealing checks and “washing” them, which involves changing the payee names and often the dollar amounts and fraudulently negotiating the checks, according to the U.S. Postal Inspection Service.
The darknet price for personal checks is about $175 and about $250 for business checks, with better deals for buying checks in bulk, Maimon said.
The darknet transactions are done through cryptocurrencies, which provide a higher level of anonymity than traditional banks, he said.
“Most often these checks are stolen in one heist,” Maimon said. “Let’s say you’re writing to an electric company, a mortgage company or your son’s school, once the contents of the mailbox have been stolen, the thieves are now in possession of your identity and money.”
Maimon theorizes a crime syndicate is behind the thefts and what we’re seeing is just the start.
“In addition to cashing checks and forging checks, these guys are also stealing identities,” Maimon said. “We know they have moles working with them in credit bureaus.”
The thieves also can open new bank accounts and credit lines on behalf of the victims whose identities they have appropriated, Maimon said.
Thieves don’t have to go on the darknet to access anyone’s identity, Maimon said.
“Once you collect information with a check, you can call somebody who’s collaborating with the thieves and say ‘can I get some information,’ and then you have their information,” Maimon said.
Checks stolen from Moody Bank customers typically were cashed at larger banks.
“The majority of banks where these checks are being deposited fit into two categories, either large banks or big credit unions,” Pierson said.
The institution where the money is handed to thieves is responsible for paying the money back, he said.
“It’s a real problem just in the amount of work us and our staff have to take on,” Pierson said. “We also deal with the stress of the customers. Our customers feel violated.”