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Federal judge OKs MoneyGram fraud deal, $100M fund

HARRISBURG, Pa. — A judge in central Pennsylvania gave his approval Wednesday to a settlement of fraud charges against MoneyGram International Inc., including the establishment of a $100 million victim compensation fund.

US Middle District Judge Christopher Conner accepted a deferred prosecution agreement between federal prosecutors and the Dallas-based payment services provider.

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Prosecutors said the company turned a blind eye to scam artists and money launderers and failed to act against agents linked to fraud schemes.

Assistant US Attorney Kim Daniel said the agreement included ‘‘a clear statement and acknowledgment of responsibility’’ and MoneyGram has agreed to cooperate with investigators. It has already paid $65 million, with the rest due early next year.

MoneyGram lawyer David Zinn noted the company has already made changes, including the replacement of its senior management team and stronger compliance and financial intelligence efforts.

Several of Conner’s questions related to the restitution fund, which will be administered by a vendor chosen by the US Postal Service. Daniel said oversight would ultimately be in the hands of the Justice Department.

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

MoneyGram has agreed to structural changes, and to retain for five years a corporate monitor who will report to the Justice Department.

MoneyGram has about 275,000 locations in 190 countries, with independent outlets owned by agents who split fees with the company. Federal prosecutors said company officials were aware that some agents were engaged in fraud but decided not to sever their relationship, and ended up profiting from the illegal acts.

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