A West Los Angeles man was arrested Tuesday for allegedly laundering $2 million obtained from victims of “grandparent” scams who were defrauded with bogus claims that their relatives were in distress and in urgent need of funds, officials said.
James Wesley Jackson III, 42, pleaded not guilty Tuesday to one count of conspiracy to commit money laundering and one count of conspiracy to commit bank fraud, according to the U.S. Attorney’s Office.
A two-count indictment also charges Christopher Fagon, 45, who at the time of the alleged scheme lived in the Beverly Grove neighborhood of Los Angeles, and who is now believed to reside in or near Toronto, Canada.
Perpetrators of grandparent scams convince victims to send money — purportedly to help relatives, often their grandchildren, who are typically described as being in legal trouble — to bank accounts, business entities, and physical addresses specified by the scammers for the supposed purpose of assisting the relatives.
The victims’ money often is initially handled by “money mules,” who allow their addresses or bank accounts to be used or agree to receive or negotiate cashier’s checks. Fagon allegedly was a manager of money mules, including Jackson, who allegedly also recruited his own money mules.
The indictment further alleges that Fagon created business entities and opened bank accounts using information stolen from identity theft victims. Once money was in the accounts associated with the money mules or identity theft victims, Fagon and Jackson engaged in transactions designed to conceal the true nature of the funds, which had been obtained via wire fraud, according to papers filed in Los Angeles federal court.
The indictment alleges that the scheme laundered funds obtained from victims of grandparent scams who live in California and as far away as Pennsylvania. Fagon, Jackson and a co-conspirator allegedly worked together to contact the bank and impersonate the identity theft victim to secure the issuance of a check for nearly $83,000 that was remaining in the account.
At his arraignment Tuesday in downtown Los Angeles, Jackson was ordered released on bond, and a trial was scheduled for Feb. 6.
The charge of conspiracy to commit money laundering carries a possible penalty of up to 20 years in federal prison, and the charge of conspiracy to commit bank fraud carries a sentence of up to 30 years, prosecutors noted.