Prison inmate accused of orchestrating $11M fraud using cell cellphone
Judge rejects defense effort to toss warrantless device search on privacy grounds
A US prisoner has been charged with orchestrating an $11 million scam from his cell using a hidden … cellphone.
On June 8, 2020, an individual claiming to be billionaire film producer and philanthropist Sidney Kimmel contacted brokerage Charles Schwab by phone and stated that he had uploaded a wire disbursement form using the service's secure email service.
The only problem was the call apparently came from prison. Still, the caller made reference to a transfer verification inquiry earlier that day by his wife – a role said to have been played by a female co-conspirator.
The individual allegedly posing as Kimmel had contacted a Schwab customer service representative three days earlier – on June 5, 2020 – about opening a checking account, and was told that a form of identification and a utility bill would be required.
On June 6, a co-conspirator is alleged to have provided a picture of Kimmel's driver's license and a Los Angeles Water and Power utility bill.
According to court documents [PDF] filed by the US Attorney's Office in the Northern District of Georgia, the uploaded documents consisted of a request for funds to be wired to an external bank and a forged letter of authorization – both of which appeared to be signed by Kimmel.
On June 9, satisfied that Kimmel had been adequately authenticated, the brokerage sent $11 million from Kimmel's Schwab account to a Zions Bank account for Money Metal Exchange, LLC, an Eagle, Idaho-based seller of gold coins and other precious metals.
The real Kimmel had no knowledge of the transaction, which resulted in the purchase of 6,106 American Eagle gold coins. The individual who orchestrated the fraudulent purchase of the coins is alleged to have hired a private security firm on June 13, 2020 to transport the coins from Boise, Idaho to Atlanta, Georgia on a chartered plane. An associate of the fraudster allegedly took possession of the coins three days later.
All the while the alleged mastermind, Arthur Lee Cofield Jr, was incarcerated in a maximum security prison in Butts County, Georgia, according to the government. Cofield is serving a 14-year sentence for armed robbery and is also under indictment in Fulton County, Georgia for attempted murder.
Prison phones aren't just for family
The day after the coins were purchased, prison staff are said to have searched Cofield's cell and recovered a blue Samsung cellphone hidden under his arm. The prison forensic unit apparently determined that Cofield had been using an account on free voice and messaging service TextNow and matched the phone number with calls made to Money Metals Exchange.
On December 8, 2020, a federal grand jury indicted Cofield and two co-conspirators for conspiracy to commit bank fraud and money laundering. Cofield's attorney, Steven Sadow, subsequently sought to suppress the cellphone evidence on Fourth Amendment grounds, arguing that the warrantless search of the device by prison officials was unrelated to the legitimate function of prison security and maintenance. The government said otherwise, insisting that Cofield does not have standing to contest the search, having no "legitimate expectation of privacy in the contents of a contraband cell phone."
The judge overseeing the case sided with the government [PDF] and certified the case to proceed to trial. "Neither Supreme Court nor Eleventh Circuit precedent recognizes an inmate's expectation of privacy in contraband he possesses while detained," the judge wrote in her recommendation.
Sadow did not immediately respond to a request for comment.
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The Register asked Charles Schwab whether any changes to its customer authentication procedures had been put in place as a result of Kimmel's impersonation.
"We want our clients to have the highest level of confidence when doing business with us," a Charles Schwab spokesperson replied in an email. "Our Security Guarantee promises that Schwab will cover 100 percent of losses in any Schwab account due to unauthorized activity and in this case, we reimbursed the client and made his account whole."
"As soon as Schwab was aware of suspected fraudulent activity, we launched an investigation, initiated measures to protect the client's account, and notified the authorities. As you can appreciate, this is an ongoing investigation, and as such, we cannot comment further." ®