Financial Fraud Charges in ISIS-Related Arrests in the US

February 8, 2016 by Denise Hutchings

Yesterday the House Homeland Security Committee reported that law enforcement authorities have arrested 81 individuals in ISIS-related cases in the United States since 2014 – 62 in 2015 alone.

The cases include individuals plotting attacks; attempting to travel to join ISIS overseas; and sending money, equipment and weapons to terrorists. The report also indicated that there have been 21 ISIS-linked plots to launch attacks in the United States. It further noted that approximately 250 Americans have traveled – or attempted to travel – to Syria to fight and that several dozen were believed to be fighting with ISIS in 2015. FBI Director James Comey estimated in late 2015 that law enforcement authorities have around 900 active homegrown extremist cases – the overwhelming majority of which are related to ISIS. Law enforcement authorities have open investigations of suspected ISIS supporters in all 50 states.

Loans, Overseas Wire Transfers, and Stolen Checks: Financial Transactions Noted in Several 2015 ISIS-Related Arrests in the US

In December 2015, I shared a piece titled A US Court Case to Illustrate that Card Fraud Funded Terrorism. In response to the significant interest shown by readers and emails from financial institutions with questions about the case, I thought I would provide 3 additional examples of recent ISIS-related arrests in the U.S. that had various financial transactions referenced in the court documents. Although the defendants’ names are public information, I have opted not to cite them since these cases have not yet been prosecuted.

Example #1: Minnesota Case Includes Charges for Financial Aid Fraud

For more than 10 months, the FBI conducted an investigation into a group of young men between 18 and 24 years of age, who tried to join and in some cases succeeded in joining – terrorist organizations overseas. This group of individuals plotted together to travel to Syria to fight and assisted each other with planning and funding their efforts.

In February 2015 and April 2015, seven defendants were charged with Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization and Attempting to Provide Material Support to a Designated Foreign Terrorist Organization. In addition to these charges:

Defendant X was charged with Financial Aid Fraud and using over $1,269 of federal financial aid to purchase a plane ticket to travel to Greece.

Defendant Y was charged with Attempted Financial Aid Fraud and attempting to use $5,000 of federal financial aid to fund travel to Turkey.

Defendant Z was charged with Financial Aid Fraud and using $1,048 of federal financial aid to fund travel to Turkey.

Additional References to Exploiting Loans for Terrorism Purposes

New York Case: Co-conspirator Communication Noted in Indictment

In June 2015, three co-conspirators, together as part of a NY cell, had plans to attack NY before joining ISIS. One co-conspirator communicated to another that he had his passport but needed cash to purchase his ticket. The response to this communication is noted below:

“if u can take a loan out for 5k or even 2.5k then ur [sic] good, they take US dollars in dawlah [transl. “state,” referring to ISIL] so u can eat and buy stuff, and they provide u with housing when u reach the land of Islam.”

Kansas Case: Email Communication from Defendant with Subject Line “Re: Student loans” Noted in Indictment

“Of course taking a loan and agreeing to pay interest on it is haram [forbidden]. There’s another opinion that taking a loan from a nation that is at war with Islam while having no intention to repay it or the interest on it is allowed and even commendable as an act of war to weaken the enemy.”

Excerpt from ISIS Literature:

“Other Muslims ‘borrowed’ a loan as maximum as they could and used it to emigrate to the Islamic State.”

Foreign Terrorist Fighters (FTFs) – Financing Trends (Cited in a Report by United Nations Security Council Analytical Support and Sanctions Monitoring Team, May 2015)

Information from Member States indicates that foreign terrorist fighters will seek to obtain money to travel in any way that they can. Given the small amounts necessary, it is not difficult to put together sufficient funds. While financial activity by foreign terrorist fighters usually relates to small amounts and thus may be difficult to detect, activities such as emptying bank accounts and taking out high-interest loans could serve as indicators to detect potential travel.

Illegal sources of income include embezzlement, tax fraud, misuse of government benefits, robbery and theft, taking out loans from banking and non-banking institutions (short-term loans from small credit institutions that charge higher interest rates) without intention to repay or using fraudulent documents, and opening numerous bank accounts and abusing the bank overdraft limit to withdraw cash. Other methods include the establishment of small companies to obtain loans and support from other foreign terrorist fighters.

Example #2: California Case Includes 26 Counts of Bank Fraud and Use of Federal Financial Aid to Buy Plane Ticket to Turkey

In May 2015, two California men, both 24 years of age, were arrested on charges of conspiring to provide material support to ISIL. Defendant M allowed Defendant N to use his debit card to purchase a one-way airline ticket from online travel company for travel from Los Angeles to Tel Aviv, Israel, with a 6 hour layover in Istanbul, Turkey.

Defendant N attempted to travel to the Middle East to allegedly join ISIL. Defendant M indicated that he would be traveling to the Middle East in the future. Defendant N was arrested at Los Angeles International Airport and according to the allegations in the criminal complaint admitted that he planned to disembark in Istanbul to join ISIL and did not intend to travel on to Israel.

Stolen Checks Deposited into 3 Different US Banks

Defendant N and co-schemers obtained stolen checks that were drawn on bank accounts that did not belong to any of the co-schemers. They deposited the stolen checks into Defendant N’s accounts at 3 different US banks. According to the indictment, from April 9, 2015 to May 14, 2015 – numerous checks for the total amount of $12,082.70 were deposited into the 3 banks – checks totalling $5,327.70 into Bank 1; checks totalling $1,755 into Bank 2; and a check for $5,000 into Bank 3.

Defendant N and co-schemers withdrew funds from Defendant N’s accounts through cash withdrawals drawn against the deposited stolen checks. The deposited stolen checks were ultimately returned unpaid. Defendant N’s and co-schemers’ cash withdrawals caused overdrafts in the Defendant N accounts and the banks to suffer losses.

Example #3: Maryland Case Includes Funds Transfers from ISIL Operatives Overseas to be used for “Operational Purposes” in the US

In December 2015, Defendant E, a 30-year old Maryland-based ISIS supporter who had pledged allegiance to ISIS leader al Baghdadi in February 2015 was arrested. “According to the allegations in the complaint, [Defendant – name omitted here] received money he believed was provided by ISIL in order to conduct an attack on U.S. soil,” said Assistant Attorney General for National Security John P. Carlin.

In June 2015, the FBI became aware of an individual located in Egypt who was attempting to send money to the United States, possibly for nefarious purposes. Through review of [FI – name omitted here] transactional records, the FBI was able to confirm that on June 28, 2015, this individual wire transferred a sum of $1,000 to Defendant E from a location in Egypt. The [FI – name omitted here] records identified Defendant E as the payee at his residential address in Maryland. The pay agent was identified as a convenience store located near Defendant E’s residence.

The [FI – name omitted here] records confirm that Defendant E received the $1,000 remittance from the individual in Egypt on the date of transfer. After receiving the money, FBI agents observed Defendant E drive to his local bank branch where he conducted a transaction at the drive-up ATM. A review of the bank’s records confirm that Defendant E made an $800 cash deposit into his account at that time and subsequently transferred $200 from that deposit to a joint account held with his wife.

Upon being questioned by FBI agents, Defendant E eventually revealed that he had a childhood friend who had been arrested on terrorism-related offenses in Egypt and had fled to Syria upon his release from custody. Defendant E indicated that he and his friend began communicating thereafter through social media. Defendant E further indicated that his childhood friend had contacted him a few months earlier to connect him, through social media, with a member of ISIL. Defendant E began communicating with the ISIL operative.

Defendant E and his co-conspirators utilized various financial accounts and services to transfer monies into the United States from overseas to be used to conduct a terrorist attack, including among other things, bank accounts, online financial accounts, prepaid credit/debit cards, online e-commerce accounts, and the business account of a company headquartered overseas.

Defendant E allegedly received at least $8,700 from individuals he understood to be associated with ISIL to be used to conduct a terrorist attack on behalf of ISIL. Defendant E received the following funds transfers by an overseas company into his online financial account: $1,500 on March 23, 2015; $1,000 on April 16, 2015; $1,000 on May 1, 2015; and $3,000 on May 14, 2015. On June 7, 2015, Defendant E received a $1,200 transfer of funds by an overseas company into an account held in the name of the woman with whom he resided. On June 28, 2015, Defendant E received a $1,000 wire transfer (noted above) by an individual located in Egypt.

Defendant E stated that he was instructed to use the monies he received from the ISIL operative for “operational purposes,” which Defendant E understood to mean causing destruction or conducting a terrorist attack in the United States. Defendant E stated that the ISIL operative did not provide specific guidance as to what weapons to buy or how to conduct an attack, but the Draw Mohammed Contest in Texas was given as an example.

Defendant E told his brother that he had pledged allegiance to ISIL and that he had received money from ISIL and expected to receive even more. Defendant E indicated to his brother that he had intended to go join his childhood friend overseas, but now he had his own higher plan and would stay here (in the United States) for now. He indicated that eventually he would go to Syria or Iraq and take his wife with him. Defendant E further stated that he would become one of the mujahideen like his childhood friend, and if he died in the sake of Allah, that would not be a problem for him.

Movement of Funds Through Banking System Noted As Predominate Method to Move Money to Terrorists and Terrorist Organizations

The Treasury Department’s 2015 National Terrorist Financing Risk Assessment stated that “broadly speaking, based on an analysis of U.S. law enforcement investigations and prosecutions relating to TF [terrorist financing], two methods of moving money to terrorists and terrorist organizations have been predominate in the convictions and cases pending since 2001: the physical movement of cash and the movement of funds through the banking system.” The physical movement of cash accounted for 28% of these cases; movement directly through banks constituted 22%; movement through licensed money services businesses (MSBs) constituted 17%; and movement by individuals or entities acting as unlicensed money transmitters constituted 18%. The remaining 15% was a mix of checks, wire transfers through unspecified financial institutions, and trade-based money laundering (TBML).


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