The largest Iran bank fraud case in the country's history continues to unfold and cast a wider net than previously known. To date, more than $2.6 Billion USD has been stolen by a criminal network operating both inside and outside of Iran. Over 60 people have been brought in for questioning with 31 being detained currently.
9 more people were arrested this week as more details emerge about the case. The prosecutor,Gholam Hossein Mohseni Ejehei, opened the case this past September. Those accused allegedly opened credit accounts at the country's largest financier using fraudulent and forged documents.
While this case unfolds, those opposed to President Ahmadinejad have attempted to use the details to attack his campaign due to his potential ties to the case. They claim that no only was he possibly involved indirectly, but the lack of oversight and prosecution of these high-level criminals could have been prevented if the President had been more zealous in cracking down on this type of economic fraud.
Iran's Minister of Finance,Shamseddin Hosseini, has also been called in for questioning. He may very well lose his job if he cannot answer pointed questions as to what he knew and when, establishing gross negligence on his part.
A number of defendants have begun to crack and are spilling the goods on who all was involved in this overarching scheme to defraud the banks and investors. As more names emerge, more arrests and detainings are sure to follow. However, prosecutors are feeling the heat from interested political parties on all sides looking to either admonish or praiseAhmadinejad's leadership.
Amir-Mansour Khosravi, aka Aria, has been labeled as the criminal mastermind behind this scam. The fraud allegedly began in 2007 when forged documents and illegal transactions began entering the bank's network. Since this was not discovered until 2011, the perpetrators managed to amass a fair bit of success, with billions of dollars flowing into greedy hands.
This unchecked greed follows an ever-growing trend with names like Raj Rajaratnam, Bernie Madoff, and Kweku Adoboli leading the headlines. However, these high profile cases are just the tip of the iceberg. The number of cases involving bank fraud worldwide every year is staggering. For instance, in the US, the FBI estimates over $10 billion worth of losses in mortgage fraud alone.
Iran's credit fraud scam case is just one example of a growing problem worldwide. Luckily, the trend of punishment for these white collar crimes is beginning to turn in the right direction. For a long time, sentences handed out for "paper crimes" have been treated with mostly a slap on the wrist. However, in the case of Raj Rajaratnam, the sentences are beginning to line up with the reality of the damages these types of criminals actually cause.
With every fraud case, there are lessons to be learned. Banks need to implement stronger controls and audit procedures, governments need to better monitor banking activity if they back up the bank loans, and those involved in the processing of these fraudulent loans need to know more about identity theft to prevent forged documents from getting past the initial submission. Time will tell how Iran's case plays out, but the larger, more troubling issues grow increasingly important.
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