A brazen group of thieves enlisted crooked bank tellers to run a shockingly widespread check-fraud scheme that was brought down only when they forged checks on an NYPD account, The Post has learned.
The Manhattan District Attorney’s Office is expected to announce today the indictments of 18 people — including four alleged ringleaders — although as many as 40 suspects have already been arrested.
They include numerous bank employees, law-enforcement sources said yesterday.
It is one of the largest frauds of its kind, in terms of scope, that the DA’s office has ever handled, the sources said.
The NYPD’s Special Fraud Squad became aware of the scheme in May 2008 when the department’s Property Clerk’s Office found several checks on its account that couldn’t be account for.
After months of forensic accounting, it was determined that the ring had written hundreds of bogus checks for millions of dollars drawn on accounts of about 20 large companies and city agencies, the sources said.
Bank tellers would provide the scammers with legitimate canceled checks, which they would use to make forgeries, according to the sources.
The ringleaders would then hire hundreds of people to go into branches with forged checks for several thousand dollars and deposit them into new accounts.
They would immediately withdraw as much of the newly deposited money as the bank would allow — and give it to the ringleaders.
Investigators believe that as many as 20 tellers were involved.
The major targets were branches of JPMorganChase, although some branches of Washington Mutual — which Chase recently acquired — were also hit.
The master forger was identified as James Malloy, 25, of The Bronx, who has already pleaded guilty to a similar scam in federal court, but who allegedly continued running the bank scheme while he awaited sentencing.
“He was waiting to go in and running amok,” a source said.
He was arrested in February and authorities believe he may have stolen as much as $2 million.
In the criminal complaint against him, he was charged with counterfeiting 81 checks for $99,000 from the Center for Employment Opportunities, a job-placement firm.
He also allegedly stole $79,000 using 66 checks from SCAN New York, a children’s advocacy group, and $20,000 using city Housing Authority checks.
When he was arrested, cops found in his apartment 200 counterfeit corporate and personal checks, stolen bank-customer profiles, forged debit cards and magnetic paper for making checks, police said.
Investigators think the men used most of the proceeds to finance a high-flying lifestyle of club-going, Cristal champagne and expensive meals.