Federal indictment: Bank teller machine scam netted hundreds of thousands of dollars

Four people stole nearly half a million dollars through a scheme that involved depositing phony checks and making cash withdrawals at teller machines in the Twin Cities, according to a newly unsealed indictment.

A federal judge on Monday unsealed an indictment that included allegations of conspiracy, bank fraud and aggravated identity theft after one of the defendants — Cornelius Anthony McDade — was arrested in Wisconsin. Three others have yet to be apprehended and their names were redacted from the charging document made public this week.

Prosecutors allege that McDade, 32, of Minneapolis, and the others focused on interactive teller machines at the Edina, St. Paul and Maple Grove branches of Wings Financial Credit Union during a scheme that lasted from November 2021 through March 2022 in Minnesota “and elsewhere.” They deposited more than 150 fraudulent or forged checks at Wings and used the deposits to illegally take out about $272,545 in cash, according to charges, and deployed similar tactics to take out another $150,000 from other financial institutions, including Affinity Plus Credit Union and Huntington Bank.

McDade and the others are accused of fraudulently gaining access to bank accounts, debit cards and checkbooks of numerous customers of Wings and other financial institutions. The charges say they recruited people on social media to open new bank accounts at the institutions to carry out the scheme and also stole debit cards and checkbooks from other people in the Twin Cities area.

As outlined by the charges, the plot relied on opening bank accounts to deposit forged or fraudulent checks at the Wings teller machines — also referred to as XTMs — and immediately withdrawing and stealing cash from the accounts. This led to negative account balances after the checks did not clear.

McDade did not have an attorney listed for him as of Tuesday afternoon. A spokesperson for Wings Financial Credit Union declined to comment, citing a company policy not to comment on pending litigation.

McDade and three others were indicted by a federal grand jury Sept. 19. Following McDade’s arrest, Assistant U.S. Attorney Rebecca Kline asked a judge Monday to unseal a redacted indictment because “the government no longer has flight and destruction of evidence concerns.”

Similar to ATM machines, XTM machines let customers deposit checks and withdraw cash immediately without waiting for the check to clear. Customers can also use the machines to withdraw larger amounts of cash than would normally be allowed at an ATM. According to the indictment, Wings customers can use XTM machines after their accounts have been open for 30 days and Wings caps transactions at $5,000 in deposits per day and $2,000 cash back per transaction. The credit union placed a hold on accounts that reached the $5,000 limit.

According to the charges, the defendants carried out their transactions during overnight hours on weekends, the indictment read, “so the fraudulent transactions were not alerted to the accounts until the following Monday morning.”

The defendants used the same bank accounts until Wings became aware of the fraud and closed them. The defendants would simply move on to another account, according to charges.

The charges come one month after a wave of viral TikTok videos showed people depositing checks for large amounts of money at Chase Bank ATMs and withdrawing lesser, though still sizable, amounts of cash. Many purportedly believed they found a bug that allowed them to access free cash, but they were instead committing fraud.

The Minnesota federal indictment did not identify what social media applications were used in the local scheme, and it did not appear connected to the viral Chase Bank videos.