How One Known Fraudster Opened Up 17 Bank Accounts

FROM FRAUD MAGAZINE

Martin Kenney
Managing Partner, Martin Kenney &Co., Solicitors

If you haven't read the story of Daniel Fernandes Rojo Filho before now, I recommend you do so. It's a salutary and shocking tale … and a striking warning for those in charge of due diligence at banks.

Rojo Filho, a 48-year-old Brazilian national and self-proclaimed billionaire living in Florida, managed to open at least 17 bank accounts (signed in his own name) in mid-2014 at banks such as Citigroup Inc., JP Morgan Chase and Wells Fargo, though he was a known fraudster. (See the Bloomberg Business article, Ponzi Suspect's 17 Accounts Raise Questions, by Neil Weinberg, Oct. 8.)

In doing so he made a mockery of these banks' "Know Your Customer" (KYC) systems — systems that were supposedly tightened after the financial crash of 2008.

How did an individual whom the U.S. authorities investigated in 2009 about an alleged conspiracy (involving drug trafficking, money laundering and a Ponzi scheme), manage to so brazenly continue with his businesses? A simple web search by any banking compliance manager would have yielded plenty of clues to his identity.

According to court documents, as a consequence of his 2009 criminal actions, Rojo Filho and others were ordered to forfeit assets, including tens of millions of dollars in Lamborghinis, gold bars and other valuables. Ultimately, he agreed to further sanctions in 2013 when he forfeited another $25 million in accounts held by his children and businesses.

So when banks conducted their due diligence and KYC checks, one would assume that his name would raise a few red flags. But that didn't happen. Incredibly, the banks somehow missed the historical data and public records and allowed Rojo Filho to gain access to the financial systems once again. He didn't even need to use a fake name to secure the accounts — he applied in his own name and signed off using his own signature! He set up 17 of the accounts in his company's name, DFRF Enterprises, which is derived from his initials.

Not surprisingly, Rojo Filho is now facing several new charges, including an indictment in August that he allegedly used these new accounts to set up a sham investment scheme, based upon high-yield returns from non-existent gold mining operations. Other lawsuits are potentially heading his way, with the Securities and Exchange Commission (SEC) adding its weight to the process.

Read more about Rojo Filho and how the KYC process could be improved on Fraud-Magazine.com.