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Moneygram fraud case in federal court

Published On: Nov 28 2012 10:53:13 AM EST



Prosecutors and representatives of MoneyGram International Inc. are due in federal court as a judge considers a plan to defer a fraud prosecution as part of a deal in which $100 million will be set aside to pay victims.

The hearing in Harrisburg Wednesday is the first court appearance since the charges and deferred prosecution deal were announced three weeks ago.

Federal prosecutors say the payment services provider knowingly turned a blind eye to scam artists and money launderers.

The $100 million will be used to compensate victims. MoneyGram has agreed to structural changes, and to retain for five years a corporate monitor who will report to the Justice Department.

The company's already paid $65 million toward the fund, which will be administered by a vendor chosen by the U.S. Postal Service.

If the company fulfills its obligations under the deal, after five years federal prosecutors will seek dismissal of the charges of aiding and abetting wire fraud, and failure to maintain an effective money laundering prevention program.