MyPayrollHR CEO Arrested, Admits to $70M Fraud
krebsonsecurity.com
krebsonsecurity.com
“... a person could open checking accounts at bank A and bank B, at first depositing $500 into bank A and nothing in bank B. Then, they could write a check for $10,000 with account A and deposit it into account B. Bank B immediately credits the account, and in the time it might take for bank B to clear the check (generally about three business days), the scammer writes a $10,000 check with bank B, which gets deposited into bank A to cover the first check. This could keep going, with someone writing checks between banks where there’s no actual funds, yet the bank believes the money is real and continues to credit the accounts.”
I still don't understand how is it possible for a bank to not see a balance on another account right at the time they saw a check deposited? I mean it's not like they have to call someone to get a paper records of an account balance, it is all digital anyway, so why is there such a big delay?
https://engineering.gusto.com/how-ach-works-a-developer-pers... (How ACH works: A developer perspective - Part 2)
https://engineering.gusto.com/how-ach-works-a-developer-pers... (How ACH works: A developer perspective - Part 3)
https://engineering.gusto.com/how-ach-works-a-developer-pers... (How ACH works: A developer perspective - Part 4)
My note: The Federal Reserve is working on an ACH modernization program (Real-Time Gross Settlement [RTGS]) to move towards real time settlement. It is still several years off. Financial infrastructure requires the same cautious handling as say, air traffic control systems, when modernizing.
https://en.wikipedia.org/wiki/Check_kiting
It is a scheme that goes back literally centuries in commerce. I'm amazed that I can hit send on an iMessage now and within seconds (or fractions of a second!) somebody's phone gives out a "ping!," anywhere in the world, yet cheque kiting hasn't been eliminated in 2019.
---
(I am speaking rhetorically. Yes, I understand about legacy systems and legacy processes. I'm not surprised that it works with what we have running today, I'm surprised that it hasn't been fixed in the 40-odd years that I've been old enough to have a bank account.)
If your iMessage doesn't get sync'd 1 out of 10,000,000 times because of some software bug then there's really no harm but if your balance isn't correct because of a bug in the software, that's a whole different category level of concern that has cascading negative effects.
Let's say there are two bugs in our banking code. Bug A means that every once in a while, it fails and a user can't log in. Bug B means that the system always works, but every once in a while, it shows an incorrect balance on an account.
Hmmm... Which one is worse?
Well, that depends. Obviously B is very bad in some very obvious ways. But A could be catastrophic if one of the system's uses is doing something like making payroll for hundreds or thousands of people.
Hmmm...
/ducks!
First off, killing cheques would have to be a Universal - global - and immediate, thing.
For as long as the technology is still in use (everywhere) - even for obscure purposes - it will remain supported and thusly these issues will remain.
Nobody in the bank industry is stupid enough to self-sabatoge by not accepting or pressing cheques, because when your landlord wants a stack of post-dated cheques (still) - you’re going to be flying to the next bank.
Updating a new system, yes, we’re careful, as all hell, but we push iOS updates consistently.
Destroying an old one that is still in place by unfortunate necessity? We can’t do that yet. Doesn’t matter how insecure it is.
We just focus on making the apps and web and the new technology that we have a lot more control over as secure as possible.
If transactions were "instant" the bank wouldn't be able to kite your money.
There really is no reason transactions need to take as long as they do other than that money disappears from one account and re-appears two days later in another account. In the meantime those funds are still a part of the bank's bottom line. It's not technically yours, and it's not technically the other account holders.... but the bank still possesses it. And the amount of money the bank has "floating" around probably coincidentally lines up pretty closely with a sum of money the bank has invested in high-risk investments.
Banks are essentially legal "Kiting centers" where they get to kite everyone elses money because it's federally insured anyway.
https://www.nytimes.com/1985/05/27/business/squeezing-profit...
There is - confirmed here by a dev - at least in our instance, absolutely no technical reason why transactions can not happen immediately.
It is an intentionally-staggered process for bureaucratic purposes, certainly.
Well, that and legacy systems that run batch jobs in COBOL at midnight to do the bank-to-bank transfers:
> Roughly 80% of their systems are batch jobs. These are jobs that runs at a certain time or interval, doing some processing on their data or sends data to other banks/agencies/etc. For example when I buy a can of Coke, the money is withdrawn from my account balance, however the money is not actually transferred anywhere until one of their batch jobs does so. These jobs are usually executed during the night, which is usually why it takes a day before transactions between banks are completed. Transactions to the same bank are usually instant because it executes immediately.
https://hackerfall.com/story/interviewing-my-mother-a-mainfr...
Also, that interview convinced me that the busfactor of the entire Swedish economy is a handful of old Cobol programmers.
The real-world needs to account for laws, geographies, timezones, physical movement of goods and cash, risk management, etc. that is not modeled in a simplistic database class. I do wish they would pick a different domain to avoid this confusion.
Banks need to follow regulatory regime. Batch jobs are very convenient, they usually produce flat files that can archived, easy readable by humans and can be consumed in downstream systems regardless of programming languages. My biggest beef with CSV format is multiple specification and poor tooling.
Transaction can completed instantly but risk, reporting, regulatory and reconciliation would be performed later as batch job.
Given its debugging capabilities Smalltalk sounds like it could be a surprisingly sane option for banks actually, all things considered. Was it like that in real life too?
Banks can’t kite money with ACH either, that’s why overnight lending market exists to cover between debits and credits even if they are break even for the bank.
If the banks really wanted to lobby the government and change whatever laws or regulations keep them from offering instant, free transfers.... they'd have done so already.
The fact that the US doesn't have instant, free inter-bank transfers is 100% on the banks. In fact, I bet they lobby the shit out of the government to keep it slow and expensive.
Banks can be pretty silly with accounts at the same bank, too.
A friend of mine finished a contract job at a major defense contractor, which had a lump sum payment at the end. The company wrote him a large check, drawn on their account at the local branch of a major bank.
What he wanted to do was (1) open a checking account at that bank, (2) deposit about 95% of the check in that new account, and (3) take the remaining 5% as cash, for first and last month's rent at an apartment he wanted to rent that afternoon.
The bank could not do that. Even though the check was drawn on an account at that branch, they said it would still take three days to clear, so he would have to wait for the cash.
Finally, he ended up going to a teller and asking to cash the check. That, of course, worked, although it was a big enough check that it apparently triggered some safeguards that required getting a couple of levels of management above the teller involved, and so it took about an hour for them to actually hand him the cash.
He then took his cash, set aside 5% for getting that apartment he wanted, and took the remaining 95% back to the new accounts desk, and said "I want to open a checking count here, and deposit this cash".
Well, except it doesn't work and banks are no doubt lobbying the government to avoid having to actually offer "innovative" new products.
Their excuses to the government are no doubt "waaaaaahhh... we have all this legacy COBOL code and it would cost us MONEY to offer new services.... please protect us from any competition!!!"
(where "innovative" means something other countries have had for decades)
This technology should have been sun-setted years ago, and wire transfers should be free and instant.
All you really want to know is "is this check good?" If I write you a check for $4.69, I don't want you or your bank getting access to the fact of my bank balance, just the fact of whether or not my bank will settle that $4.69 check.
Is free.
Protip, it costs a lot of money. More money than it is worth.
Who do you imagine the "us" is, in let's? It's not me and you, nor people in this forum. The banks that have negative financial incentive? The regulators who just caught this guy with the existing system as is and would never win the political battle to roll out this expensive system addressing a rare issue that already is handled? The average powerless citizen? Who will likely never be victim to this.
Calls for pie in the sky actions don't stop being pie in the sky just because they are just, reasonable, "good" for society. We live in a greedy capitalist society. At the society scale. If it's not causing so much problems it can't be ignored or if it doesn't make someone money. It doesn't happen.
There's no way of knowing whether a cheque is good. The banks can always claw back the money from a fraudulent cheque.
There's some scams around that make use of the fact that people think a cleared cheque is a good cheque and that they money is now theirs. That's wrong, it isn't.
When I deposit a check in an account only a portion of it is immediately "available".
So I'm guessing they're just using that available proportion all the time?
If you don't think a check will clear, don't deposit it. Ask for cash or a wire from the sender (cashier check fraud is a thing).
Indeed! Many people are not aware that even valid cashier checks can have a stop-payment put on them if someone claims the check has been 'lost'
There's what you see as clearing vs. actual clearing.
I've also had, with very large deposits, to call my bank and insist they call the other bank because they only way they'll clear the check is through manual verification. (This was a big bank and a smaller credit union -- 15 days later the big bank would only clear the check with a phone call from the credit union, but wouldn't tell me why/how and took a lot of digging from me to get the hold lifted. It also turned out the credit union had given the big bank the OK two days in, but big bank's system didn't "read" it somehow).
In other words, things can still VERY manual when it comes to check clearing, particularly large checks.
"‘...Gordon’s great insight was to design a program which allowed you to specify in advance what decision you wished it to reach, and only then to give it all the facts. The program’s task, which it was able to accomplish with consummate ease, was simply to construct a plausible series of logical-sounding steps to connect the premises with the conclusion.
‘And I have to say that it worked brilliantly. Gordon was able to buy himself a Porsche almost immediately despite being completely broke and a hopeless driver. Even his bank manager was unable to find fault with his reasoning. Even when Gordon wrote it off three weeks later.’"
(they could batch the transactions/fees and still share information about the members of the batch…)
(it wouldn't be an antitrust problem, the communication would also benefit their customers)
In Canada we have many service providers (Interac and Symcor being two big examples)that are joint ventures between all the banks they service.
So things like (historically) bill printing and mailing and more currently fraud detection and various digital transformation initiatives are being done by these service providers, so that the banks don't all have to spend money on the same stuff separately (and can interoperate more easily).
As a bonus, they can also offer those services to other parties and increase profit for the bank owners.
This was awhile ago, up until 2001, so things may have changed but I strongly doubt they have changed very significantly given that even then they were using an NCR mainframe which was literally the very last operational one of its kind (the owner of the 2nd to last one gave us theirs for free when they replaced it with a PC, so we got a DR site!). Their policy was to never change anything that cost a penny if it still functioned. When I left, the bank had been acquired by a larger bank and the plan was to move the smaller banks processing into the larger ones data center. I ran into one of my coworkers 5 or so years later and none of that had happened. Everything was still as it was.
In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.
https://creditwritedowns.com/2009/01/quote-of-the-day-john-k...
Even if they did put it back, still overdraft fees during that time if someone had a check cashed or automatic payment sent due to those funds being removed.
I don't know why anyone would think they could get away with a fraud this large. I just think this stuff highlights how outdated the banking system is.
I've always hated the idea of checks, I rather the money be gone right away then keeping track of it... Since checks still show on your balance even if not cashed yet. Then checks have your entire account number people could misuse. I have never wrote a check in my life though, but I know my family does for bills but I know more and more places have online bill pay... They trust mailing their entire account info than doing it online.
However I feel both banking and the whole social security number thing needs to be rethought. it's insane you use the same number for everything and you pass it around to employers, contracting jobs freelancing or affiliate programs that pay commissions, credit cards, cable company, satellite tv, cell phone, doctors, dentists, etc. Well I know for doctors and stuff they say you can refuse to give it, but pretty sure they'll give you a hassle for exercising your rights. I know a while back there was some dentist storing patient information in a unsecured FTP account.
They also refuse cash and donation as a settlement, so in the spirit of the deceased I don't cash it, and a new one arrives every six months.
I guess I'll find know the Solicitor has retired when the cheque stops coming...
Also MyPayrollHR did have direct deposit:
> This communique came after employees at companies that depend on MyPayrollHR to receive direct deposits of their bi-weekly payroll payments discovered their bank accounts were instead debited for the amounts they would normally expect to accrue in a given pay period.
https://krebsonsecurity.com/2019/09/ny-payroll-company-vanis...
My first paycheck from my first summer job in high school was a check, and my severance from my last company was by check. Other than that, it's all been electronic. My previous three jobs don't allow regular paychecks by physical check, you have to have direct deposit. Physical paychecks are definitely the exception, not the norm.
There's also a lot of resistance to electronic banking in... certain circles. I'm not sure what they think "normal" banking when you speak to an actual teller is.
In the USA as of 2017, 8.4 million households (6.5% of households) don't have any bank account. [1]
Where? Everywhere I've banked offered checking accounts for completely free with no minimum balance, and I know many credit unions operate this way. If you're paying money to your bank, stop it.
> Add to that the fact that many banks purposely reorder transactions to force you to take as many overdraft fees as possible, banking for those living paycheck to paycheck is not cheap
This is really scummy but many banks allow you to, for debit cards, deny the transaction instead of overdrafting. That won't help with bounced checks or electronic transfers but it can make a big difference.
Most major banks in the US require something if not a minimum balance to waive the monthly fee. Something like $x threshold for certain direct deposits, or you're a student/young adult, or you use your debit card x times a month.
Smaller banks and credit unions can have problems too: locations or lack of participating ATMs or the same problems as the big banks. There are absolutely scenarios where it can be easier (time and money-wise) to just go to the check cashing store.
Some unbanked people are undocumented and afraid to open accounts that might be closed/seized. Some have piss poor credit. Some of those folx won't be able to open new accounts because their chexsystems report has some negative item on it. A single issue like your car breaking down once can snowball into a much bigger situation.
> deny the transaction instead of overdrafting
Honestly, for paycheck to paycheck folx, this can still hurt. There won't be $200 in overdraft fees, but imagine, your PG&E bill is now past due because they couldn't charge your card. Now they want $20 for reconnection on top of the past due bill and 2x more in the form of a deposit due to bad credit. Welp, maybe the $200 in overdraft fees would have been easier to deal with.
Living paycheck to paycheck sucks for so many reasons, and so many of those reasons out of the individual's control.
US banking is a decrepit mess because the treasury allows it to be.
And no one in the US has problems sending and receiving money from anyone else in the US either...
The parent's point is that legacy systems still exist in the US, as I'm sure they do in the EU. That doesn't mean that getting paid by a paper check is particularly common for regular workers. The vast majority of people are paid electronically. No one likes dealing with checks and for the most part no one really has to. The only times I ever do that is when I'm paying a contractor many thousands of dollars for e.g., work on my house. Usually those guys are older and self-employed, and either don't know how to accept money electronically or don't want to because of fees (and I don't blame them). In those instances I get a cashier's check made. That's the only time I have to deal with it.
There are of course instances where an employer might not provide direct deposit because they find the added expense too much to bear (as another poster pointed out). We're not living 50 years in the past, as you might imagine. Checks are not particularly common.
And the actual point is that no, they don't, they were cleared away because their existence is a pox on everyone.
Having seen both systems upclose, for the average consumer the European banking system is about a hundred years in the future from the American one, which is a steaming hot cesspit of legacy systems and banking institutions that spend all their time figuring out ways to milk more money out of consumers.
Case in point:
> or don't want to because of fees
It's not okay to charge people fees to send or receive money.
(Technically, European banks still can do that, but since the EU has forced all banks to accept transfers from each other using a common system, and that all money transfer are executed as "shared fees" where the sender pays the fee to their institution and the receiver pays the fee to theirs, free and open competition has driven the price of sending and receiving money to 0€.)
You’re telling me checks don’t exist in the EU anymore? Forgive me for being skeptical.
> where the sender pays the fee to their institution and the receiver pays the fee to theirs, free and open competition has driven the price of sending and receiving money to 0€.)
You’re gonna have to elaborate, because that sounds like both parties pay money to perform an exchange, which is even worse than what we have, where one party does.
Are you saying that if I wanted to pay someone $100 I have to cough up an additional $5 and the receiving party has to pay $5 to get their $100? In what way is that “no fees” unless the receiving party is reimbursing the paying party directly? Unless I’m missing something here, a transfer of $100 cost $110 under this system.
You pay the fee to your banking organization, which is 0€. The receiver pays the fee to their banking organization, which is also 0€.
Or in other words, there are no fees.
The idea being that the EU has made it very easy to switch banks, and forced a regime where a customer can freely pick the bank that has the lowest fees, which lead to a situation where no bank that wants to retain customers can bill them for transferring money.
They still exist in a couple countries but have completely disappeared in most. When wire transfers are free to consumers and cost cents to business account holders, why would anyone use something else?
I worked in a bank for a bunch of years, a decade ago we were processing <100 checks a year, which was an unusual (and expensive) service; about half of the checks was companies doing international sales to unusual countries and the other half was scams; so that business was shut down - some banks do offer a service of cashing checks, but many banks will not.
A wire transfer to an account in another banks is (depending on your bank) either free or something like 0.15-0.30 eur, certainly cheaper than a stamp if one would need to send a paper check.
That's an odd way to phrase it, since it doesn't seem like a particularly large sample as you state it. So how many individuals are you talking about, given your turnover?
So I walked a $300K check from my bank two blocks to my escrow company to save the $50. The check must have been more expensive for everyone to handle (even at the bank, they had to wait for a manager to operate the special "check typewriter" - not everyone was allowed to operate it), but for whatever reason, it was "free".
Also, the government no longer sends out physical social security checks, they stopped doing that like five years ago.
All of which is disturbing to me now but I was young and dumb and didn't stay with them long.
(A few years earlier, I had an after-school job at K-Mart and they paid everyone with actual cash in an envelope!)
So I don't think anyone is out, right?
I know a while back the local news was talking about this issue and interviewing workers, and some of them were unsure about their money. but sounds like they got it back at least. So sounds like now just a court battle, but at least the individual workers aren't involved in the nightmare directly it looks anymore.
Sounds like it probably was days before putting it back, as they had to call and talk to someone - told them it was a mistake then later yet another disappeared... Then call again, etc... Even a Facebook group was started with many employees who all had the same issue.
Here's the clip https://youtu.be/ELZaXpJiMFU
Your reasoning isn't flawed but one big reason why I still write some checks is this: they're accepted as payment for free by the receiver where most electronic methods are charged. For example, my apartment's management company charges me $12.95 for a one-off direct debit payment, $6.95/payment for an automatic recurring debit payment, $32.50 for a payment made by debit card, or a whopping $109.55 for a payment made by credit card.
(This means that the free--or at least "included in my rent"--payment option is for me to write a physical check and put it in the night drop box the day before rent is due and then their employees have to deal with the check, as opposed to the computers handling it all. Since the night drop is right there on my way out the door, the convenience factor is still high for me.)
I don't like checks but I flatly refuse to pay money to pay a bill. If I owe you money, you will figure out how to accept it in a way that doesn't cost me more. What I owe is already figured into the balance; charging me more to hand you money is obnoxious. My apartment company isn't the only company like this so I still hand out about 20 checks per year. Fortunately, my credit union gives me one box of checks for free every year and I only use less than one book of them per year so there's no added cost there, too.
I used to do ACH transfers since those were free at the last place I rented. The management company only charged a $3 debit/credit card fee...
However I know some phone and satellite tv companies give you a tiny discount if you pay online. Also another thing that annoys me, with satellite radio in the car apparently you can't cancel online. You have to call and be put on hold and then they try to retain you. Seems so unfriendly, I know they don't want people to quit but people sell cars, etc... and knowing that it makes me kinda not want to signup in the first place on a new car, but it is a nice service at least using it.
I assume the deal is that an outside service sets up these things for municipalities for "free" but they take a cut so the person paying the bill pays for the free service.
Yes, I could leave sufficient money in that account to deal with it but I send most of my paycheck to savings and retirement accounts that earn much better interest than the paltry 0.05% my credit union's checking account gives me. Plus, the walk is good for my health.
It's mind-boggling that this is cheaper and lower hassle for me than the alternatives.
And it's not just monetary charges. It's also a desire to not demonstrate consent when I'm blasted with a CAPTCHA. The instant I get a CAPTCHA, I reflexively hit Ctrl-W to close the tab and either (1) take my business elsewhere or (2) mail a check in.
It's especially infuriating when they wait to hit me with a CAPTCHA at the very end of the process, after I've already copied over account numbers and other information from the paper bill they sent me. I'll find any way I can to waste the time of that company's employees at that point.
If you have a better means of stopping automated fraud, you could make yourself a tidy amount of money...
Checks are far less risky for the payment receiver, it’s much more difficult dispute it and yank the money back.
The apartment staff would not take a check...and there was no posted mailing address to send it too either. There was no way to pay the bill except to also pay them a fee. I hated that just on principle the entire time i stayed there, and is, in fact, my biggest complaint about that apartment complex (which otherwise was a delight to live in)
They he set up some form of electronic payment that took something like 1.5% of the amount paid; it seemed to be largely ignored because paying extra $20-30 feels like more expense than spend time to write and mail the check.
By now the landlord set up another electronic payment system that takes a fixed $2.99 fee for the transaction. I've never written him a paper check since then.
So, if you want to not walk to the bank with a wad of checks, find a payment provider with a right price.
There are thousands, if not millions, of people doing business like this. When I was shopping around for a home mortgage, a broker that I knew by personal family recommendation had me send tax returns to hername@isp and I, figuring that this stuff could land anywhere regardless of whether the broker operates so sadly, applied AES to the PDF and sent it on over, calling by phone to provide the password. I guarantee 99% of her clients don't bother. And I wouldn't be the least bit surprised to learn that she renamed the saved file on her computer to include the password.
You can refuse to give it to anyone who doesn't need it for tax purposes. Which is almost everyone. But, this is the stupid part, they can refuse to do business with you on that basis.
Per the article, Cachet Financial Services ended up holding the bag. They tried reversing a bunch of payroll account payments, but ultimately relented. Presumably some of that money will eventually be recovered.
> I don't know why anyone would think they could get away with a fraud this large.
Given the M.O., it's likely that this started small (as most fraud does). He cheated once with a float to cover a shortfall, then started making larger and larger bets. And eventually he lost a bet too large to cover, and had to try cheating in a different and more dangerous way with money in the payroll account, and got caught.
> That action caused so much uproar from affected companies and their employees that Cachet ultimately decided to cancel all of those reversals and absorb that $26 million hit, which it is now trying to recover through the courts.
2) Cachet is as useless bank ran by useless apes that don't know the basics about banking, their internal audit must be a bunch of untrained monkeys. I have investigated financial frauds for quite a while, and removing the funds from the employees, is the best way to make them walk out and never come back. This story has so many holes, a $20m+ was diverted from a corporate account to a personal account and systems didn't go off???
I see on Catcher's website: "The World's Most Convenient ACH Payroll Processing Services" yups, well played Cachet!! Key word there is "convenient" which always makes me run to the opposite direction when it comes to financial services and security. That website needs a "military grade security" to be complete!
Edit: I know my sarcasm is all the way to 11 but this story has has so many control points broken (or worse non-existent) for all these to happen, that I am getting a headache just by thinking of this story.
https://www.bloomberg.com/opinion/articles/2019-09-24/don-t-...
The easiest, though, is to simply subscribe to his newsletter, which has all the articles in full. There is rarely an edition I find myself immediately archiving.
He's bang on.
I'm curious what his "other companies" were, that they became a source of such financial pressure. One would think a payroll middleman has the easiest job in the world next to printing money. Companies put money in the kitty, you disburse the monies to other parties and take a cut. HN crew could probably set up an event-sourced system with Lambda to automate it all. 8000 employees, that does not seem like a lot?
Oh falling into the "could built it in a weekend" trap? Go right ahead, start a payroll company from scratch that can correctly pay, with proper auditing, checks and balances, any employee in the US (nevermind international) as quickly as possible, deal with wage garnishments, special deductions (401Ks, IRAs, FSA, HSA, and so on, part-time hourly and full-time salaried, bonuses with net-to-gross and gross-to-net, commissions for sales people along with "draw").... annnnnnnnd go!
Heh, I beg your indulgence for my cheeky comment, I of course know nothing of this matter, it seems easy, as all those task you mentioned can be converted to single rules. Not a weekend worth of work, but perhaps 20 weeks worth of work for a prototype?
Single rules, yes. For each State in the US. And every other country in the world. And that can change at any time of the year. Oh, and nobody form those various state and federal government agencies are reaching out to tell you when and what is cahnging.
And GP just listed a few things off the top of his head - there are literally hundreds of complexities in doing this that he glossed over...
Dude. Stop while you are ahead. Payroll is edge case upon edge case upon edge case. And if you fuck up any of those edge cases, you are fucking up some poor soul's livelihood (or maybe making their day and the expense of their employer!).
Sure, you can create a non-union, full-time, no overtime, citizen/permanent resident, no taxable benefits, CA resident and company location only payroll company “trivially,” but who the hell would use your software when there are ones that handle much more complex situations?
Can someone explain why banks don't have systems in place to detect this kind of fraud? It seems like even the most minimal communication between banks would help detect it.
Also banking is a hugely complex problem involving two of the hardest things to deal with, money and people.
It's particularly the case where you have a lot of small banks geographically spread out running a variety of legacy systems all of which talk to each other in weird and whacky ways.
I'm surprised kiting still works though.
I'll wait! 'Cause if it got even remotely adopted and mainstream, I'll be waiting... for years or decades.... before I can ever hope to make a single transaction.
Yup. Nothing like Satoshi's Glorious Blockchain and its blazing fast 4 transaction per second reference implementation that is Bitcoin.
What's needed to fully solve something like this is to put a block or reservation on a chunk of funds. So when bank A checks whether there's sufficient balance at bank B to clear a check, they'd need to put some kind of hold on those funds at bank B to have confidence that the check will clear. This is basically what credit card authorizations do, especially if the credit card is attached to a checking account.
Isn't that a debit card (rather than a credit card)?
Example: https://en.wikipedia.org/wiki/Paycheck says
”A paycheck, also spelled pay check or pay cheque, is traditionally a paper document (a cheque) issued by an employer to pay an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit
[…]
A salary statement, commonly called a payslip, pay stub, paystub, pay advice, or sometimes paycheck stub or wage slip, is a document that an employee receives either as a notice that the direct deposit transaction has gone through or that is attached to the paycheck.“
The French and Swedish versions (sorry, can’t check the other ones due to language issues) of that page only discuss the pay slip, I think because “recent times” started half a century ago in those countries.
I think it also is telling that that page doesn’t even have a German or Dutch version linked to it, while https://de.wikipedia.org/wiki/Entgeltabrechnung (German for ‘pay slip’) exists
It might be interesting for a poll: when did you last receive a physical pay check, and in which country?
For the majority of professional Americans, we receive our pay via direct deposit so we never see a pay check. The working lower-class still uses pay checks since they're paid on a weekly basis. I think when margins are thinner, it's cheaper to write checks than to set up direct deposit.
How does that follow? People make electronic payments of a few dollars millions of times a day, with the banks still somehow making money on it. Now, paying a few hundred a week isn’t feasible?
”I think when margins are thinner, it's cheaper to write checks than to set up direct deposit.”
From what I know about automation and American banks, I (perhaps too cynically) think it’s less about being cheaper than about being more profitable for the banks.
How would maintaining the infrastructure to move pieces of paper around, check them for validity, moving the necessary cash around, etc. be cheaper than scaling an existing digital system to handle 10% or 20% more customers?
It seems to me that the obvious reasons for not using a bank account are not the ones people mention in these threads. The ones that occur to me are:
- You're not a legal resident
- You're in ChexSystems
- You're subject to some sort of legal judgment or garnishment
I just used to walk over the road to my Natwast branch and deposit it at lunch time.
The US banking system is built on a foundation of batched communication, with batches arriving via mail several days later.
Each bank is operating as an independent ledger, with no global awareness; so, while each bank can see the deposits may be coming from the same account, they wouldn't necessarily see that the check redemptions were going into the same account. It's not unreasonable to get a series of checks from the same person, or to make a series of payments to the same bank.
Because of the delays are inconsistent and sometimes complex, it's more convenient to act on the shared fiction of deposits being immediate, and take escalating punitive action when the fiction unravels. Ex: large fees for both despotiting a check that is not honored, and writing a check that is not honored when presented. If it happens frequently, your account may be limited to transacting only in fully cleared funds, and you may be blacklisted from banking through credit reporting companies, or referred to law enforcement.
However, there have been several changes to shorten clearing times in (somewhat) recent times, including Check 21 in 2004, which allowed all checks to be processed as images instead of paper, and Same Day ACH starting in 2016, with planned enhancements through 2021. As the clearing window shortens, kiting becomes less feasible and useful.
As a long-time Raymond Smullyan fan, I was delighted to read the different article about Ghosn and Nissan and undisclosed compensation.
Matt raised a Smullyan-esque question:
If the act of prosecuting Ghosn meant that the undisclosed compensation would no longer be paid, does that mean that prosecuting the crime prevents the crime from occurring?
I suppose the rational answer is that the crime is in the conspiracy to attempt to do the thing, not the successful carrying out of the thing, but still, it is amusing to imagine a crime that is only a crime if it isn't revealed to be a crime.
Obviously, if he tried to "disappear" previously you could argue that, but now his passport has been confiscated. And usually the higher profile you are the easier it is to argue you aren't a flight risk.
If there's any indication a perp might fly then you should keep them inside, passport or no.
I'll stick with the case law. The Court looked at the risk of flight here with all the evidence (which is more than you or I can say) and determined he is not a significant flight risk, I'll side over your gut feeling since he fraudulently took money, he can get a fake passport (1 has nothing to do with the other).
It can easily be argued any criminal defendant "might fly", so essentially under your proposed standard no defendant would be entitled to bond (you wouldn't be the first to argue such a thing). Innocent until proven guilty and all that jazz. And yes even with a confession you are still innocent until adjudicated/convicted, its not like police don't have a history of obtaining false confessions or making confessions up out of whole cloth (I know, that's not applicable here).
As I said the higher profile you are/the case is, the more difficult it is to abscond anyway. If he gets a fake passport (which is unsupported by any facts) and is caught, his bond is revoked. Also he likely has a GPS tracker as a condition of bond, so if he violates his travel restrictions/curfew restrictions, his bond is revoked. Not to mention, the people involved in fake passports are not generally going to supply a guy in the middle of a high profile criminal case involving the FBI, who is out on bond with a GPS tracker. Then even if he gets a fake passport, good luck buying a plane ticket or going to an airport.
Do you think passport forgers only supply to law abiding citizens who don't have lots of money and want to flee a country?
You say people held over on a bond following confession "are innocent" [here's me thinking it was 'considered innocent before the law', otherwise there would never be any sound convictions].
If you think a GPS tracker is any limitation to someone who can afford to leave the country then you've a serious lack of imagination.
OT: I liked the "gut feeling" bit where you attempted to disparage my position with an appeal to emotions whilst simultaneously presenting your own position with no more factual backing, and IMO a good deal less believability.
I'm guessing he thought he'd make enough money off the loans by "buying businesses" that he could pay back the millions he was borrowing?
Or did he just hope to Ponzi the various loans for as long as possible? The next bigger one pays off the last one type of thing.
https://en.wikipedia.org/wiki/Charles_Ponzi
Not only did Ponzi bring this scheme (which is far older than him) to the public's attention, but he also "got in over his head." He wound up running the scheme far longer than he wanted or needed, for the (correctly divined) fear of it suddenly collapsing.
A similar thing happened with Bernie Madoff, if his account is given credence:
This is such a fun and interesting rabbit hole. And now I get how the whole thing worked from a computing perspective. I'm now just confused as to why the scam broke down the way it did. From my understanding, it seems that Pioneer was going to freeze his account (and they did). So in order to fix that issue, he temporarily diverted funds to his Pioneer account, settle debts(?), and continue trying to get money to cover the money he now owed to Cachet. But that doesn't make sense, does it? Because this fraud was going to be detected instantly (most likely) or ~3 days later. But that is nowhere near enough time to settle debts with Pioneer and get enough money to cover the Cachet debt.
It seems to me like it was an extremely long Hail Mary that was likely never ever going to be successful.
What they also don't tell you is how difficult it is to find a federal bail bondsmen. I called every where in the Hampton Roads area to no avail. I ended up being rescued by one from several hours away. $9,500.... never to be seen again.
My understanding is that bond from a bail bondsman works kind of like a loan. The bail bondsman puts up the money ($50k in this case) and if you show up to court he gets his $50k back. This works kind of like a loan between you and the bondsman, I would expect you to pay some amount on the total, something akin to extremely high risk loan interest, but $9,500 is almost a quarter. Is that a standard rate for a bond?
The bail bondsperson did not even have an office. When I did get out and had to pay her she asked me to meet her in a Harris Teeter parking lot. She pulled up in an Audi R8 spyder. It's ridiculous. There was absolutely no way I could be considered a flight risk. I only did it because my parents were on vacation and I was responsible for keeping their pet alive for 3 weeks. It came down to a dead animal or $9,500.