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Q&A With John Kelleghan
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January 2007
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 John Kelleghan is the Special Agent in Charge of the Philadelphia
Office of U.S. Immigration and Customs Enforcement (ICE), part
of the Department of Homeland Security.
What kind of fraud cases does your office handle?
We look at fraud under the guise of traditional customs fraud,
such as undervaluation or misclassifying of goods that are imported
to avoid paying higher duties. We also investigate violations
of intellectual property rights to include copyright and trademark
infringements. These can impact public safety such as counterfeit
pharmaceuticals or electronic components that do not meet or
qualify for the Underwriters Laboratories seal. And, of course,
there's financial fraud - money laundering - people/businesses
who utilize financial institutions and other methods to launder
their ill-gotten gains.
Who are typically the victims of the fraud that ICE investigates?
It depends on the actual fraud. It could be anybody. It could
be legitimate businesses that follow the laws and
regulations; it could be consumers, as they are most affected
because they’re the ones who are paying the higher dollar
for the product because of the fraud. Technically, we’re
all victims.
What are the key differences between the types of fraud you
look at as an ICE official, and the types that go on in businesses
in the United States?
The most important distinction is that ICE investigates fraud
involving things that are imported into or exported from the
United States. If it crosses the border, going in or out of
the country, it’s within our jurisdiction.
As for what
we see, a fraud is a fraud. The criminal elements are in the
business to make money, then to hide it from authorities. The
types of fraud you see on the local level — street fraud
schemes — you also see on the international level. Money
laundering is a big part of our investigative priorities; every
crime we investigate has a financial component. That’s
what criminals are in business for.
How can you help businesses in a proactive way?
Immigration and Customs Enforcement (ICE) has a program called
Cornerstone, a comprehensive initiative that focuses on financial
and trade fraud investigations. Cornerstone seeks to identify
and eliminate vulnerabilities within the U.S. financial, trade
and transportation sectors that terrorists and other criminal
organizations might be tempted to exploit. We’d be happy
to schedule a presentation on Cornerstone for your business
or organization.
How does cooperation with businesses and banks pay off for
ICE?
Here’s one example. We had a case a while ago where an
individual had $10 in his bank account, and all of a sudden
there were a few wire transfers that hit the account for something
like $3 million. The bank teller got suspicious, and notified
the bank manager, who called the Secret Service, who called
us, and it led to an international money laundering case. Some
folks had stolen some money from a corporation in South America
and through some contacts they proceeded to clean out the corporation’s
accounts and send the money into the United States. Through
the cooperation of the bank, we were able to seize the money,
and will eventually return it to the victim. Based on the financial
institution’s cooperation, we are now working a criminal
investigation against several individuals who attempted to exploit
the financial institution for personal gain.
You get involved where problems have already occurred, not
at the preventative stage. Based on your experience, what are
the key things you'd suggest to business owners to watch out
for?
Knowing your customer is the most important. If you know the
customer, you know the environment they operate in, and, what
types of transactions you should see. This gives you a baseline
to monitor unusual activity should it occur.
The majority of the time, when businesses get paid for their
services, they're happy, but sometimes they're unknowingly part
of a fraudulent scheme. Knowing your customers' business cycles
is critical to knowing your customers. In a global economy money
comes from every direction, but you need to know when it's coming
from the wrong direction.
You also need to understand the relationships that exist
between your personnel and your clients. We all know who our
best employees are and we don't question when a rainmaker
produces. Internally, look for unusual relationships. For
example, if you have an average employee hitting home runs
with one or two specific clients that are out of the norm,
that might be something you want to take a look at.
What about stolen checks? How do they get used fraudulently?
I'll give you example based on a case we have conducted. Sometimes
you see people stealing company checks for quite a bit of
money. Say it's an ABC Corporation check for $500,000. You
may see the criminal element incorporate themselves not as
ABC Corporation but as ABCD Corporation, or something like
that, to enable themselves to open a bank account and take
the stolen check and deposit into their account. Sometimes
banks don't pay attention to the subtle differences in the
company's name. Next thing you know, the check clears and
the money is wired out of the country, and it's gone. Now
the original corporation is out the money, and the bank has
culpability because it cashed a check it shouldn't have cashed.
Those sorts of things happen all the time. In those instances,
we would like the financial institutions to advise law enforcement.
Shouldn't the banks spot these things?
Sometimes they do. There are some very sharp tellers that
we get some very good information from, and there are others
who don't know that they're getting scammed.
Criminals often try to develop a relationship with bank tellers,
and then they exploit them. Sometimes the fraud is internal.
Several years ago there was a case in the northeast that involved
a corrupt midlevel manager of a bank. She was directing her
customers to a particular teller, with requests to wire money
to countries in South America. She did more business wiring
money to South America than the rest of the bank combined. If
the bank had looked carefully, it would have realized that the
problem was the manager, not the teller. That just shows that
a lot of times we focus on the external elements when we should
also be looking within to see how we could get exploited.
Does ICE serve as a deterrent force? Is it reducing the occurrence
of fraudulent transactions?
We are a deterrent, especially when we partner with the private
sector to ensure that together we protect the financial integrity
of our economy.
However, the criminal element has and will continue to take
risks to exploit our countries physical or virtual border.
Still I think we have the mechanisms in place and we are doing
a great job to curtail those folks who are trying to circumvent
the process. ICE cannot do it alone. We need the financial
institutions and others to work together in a partnership
to ensure our country is safe.
It seems that you've got better methods of detection, yet
the threats seem to be greater than ever.
As long as the demand is there, the criminal elements are
willing to try to circumvent the law. We do the best we can
with the tools we have.
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