Instagram Used to Recruit in LA Bank Fraud Scheme: Guilty Pleas Entered

Carlos Corona and Jose Luis Edeza Jr., two individuals from Los Angeles, admitted their involvement in a bank fraud operation that caused significant financial damage, estimated at millions of dollars. Their scheme, which ran from October 2020 to August 2023, leveraged social media to facilitate their criminal activities.

Both defendants pleaded guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft. These charges relate to their actions involving the theft and fraudulent use of checks taken from U.S. mail and deposited into third-party bank accounts.

Background on the Defendants and Charges

Carlos Corona and Jose Luis Edeza Jr. played central roles in this elaborate fraud scheme. Corona, aged 36, from South Los Angeles, and Edeza, aged 31, from Sunland, utilized Instagram to recruit individuals willing to lend their bank accounts for depositing these stolen checks. This operation not only targeted unsuspecting individuals but also compromised the integrity of financial institutions.

Legal Charges:

• Conspiracy to Commit Bank Fraud (18 U.S.C. § 1349): Carlos Corona and Jose Luis Edeza Jr. admitted to participating in a scheme designed to defraud financial institutions by depositing stolen checks into seasoned bank accounts, which facilitated quicker access and withdrawal of funds. This count reflects their intentional collaboration to manipulate financial systems for illicit gain.
• Aggravated Identity Theft (18 U.S.C. § 1028A): This charge arises from their use of stolen identity information, integral to the bank fraud strategy. The seriousness of this offense highlights the breach of personal security for the victims, extending the impact beyond the financial losses to the banks and affecting individuals’ security and privacy.

The specific tactics included altering the checks to match account holder names and quickly withdrawing the funds through various means to minimize traceability. This operation intended to cause upwards of $5.3 million in losses, with actual documented losses of at least $2.7 million to the banks and credit unions involved.

Mechanics of the Fraud Scheme

Execution of the Scheme (October 2020 – August 2023)
Carlos Corona and Jose Luis Edeza orchestrated their bank fraud scheme by first intercepting checks from the U.S. mail. These checks were often stolen directly from post office mail collection boxes across Los Angeles. By targeting mail, the duo accessed a stream of financial transactions they could manipulate for fraudulent purposes.

Recruitment Using Social Media
The conspirators employed social media platforms, particularly Instagram, to expand their operation. They posted advertisements seeking individuals willing to lend their bank accounts for the deposit of these stolen checks. These posts promised a portion of the proceeds in return, attracting people who were either unknowingly complicit or willingly participated for financial gain.

Solicitation of Bank Account Holders
Once potential accomplices responded to the Instagram ads, Corona and Edeza required them to provide their banking details, including account numbers, PINs, and online banking login credentials. The stolen checks would then be deposited into these accounts. To align with the names on the bank accounts, checks were either washed or altered, with the payees’ names changed to match those of the account holders.

The speed of execution was critical; once the checks were deposited, the funds were rapidly withdrawn or transferred out through various means, including ATM withdrawals, electronic transfers, and debit card purchases. This quick movement of funds was designed to maximize the extraction of money before the fraudulent transactions could be detected by the banks.

Operational Tactics

Targeting Older Accounts
One key tactic used by Carlos Corona and Jose Luis Edeza in their bank fraud scheme was the specific targeting of older bank accounts. Older accounts often have fewer restrictions on the immediate availability of deposited funds, allowing quicker access to cash before fraud can be detected. This tactic was crucial in ensuring that by the time the fraud was noticed, the funds were already withdrawn.

Check Processing Methods
The checks stolen from the mail were processed using a couple of methods to fit into the banking system without raising immediate suspicion. False endorsements were common; the names of the original payees on the checks were altered to match those of the accomplices’ bank account holders. Sometimes, the checks were physically ‘washed’ to remove existing information and then rewritten for deposit. These alterations were meticulously done to make the checks appear legitimate and ensure they cleared without issues.

Immediate Withdrawal of Funds
To further avoid detection, the funds from the fraudulently deposited checks were quickly extracted from the bank accounts. This was done through various methods such as ATM cash withdrawals, electronic transfers to other accounts, and purchases made with debit cards linked to these accounts. By dispersing the funds rapidly across different channels, they minimized the chances of recovery and traceability, thus maximizing the amount they could steal before any red flags were raised by the banks.

The sentencing for Corona and Edeza is scheduled for July 8, where they will face up to 30 years for the bank fraud conspiracy and a mandatory two-year sentence for the identity theft charge.