PALO ALTO, Calif.— Stanford Federal Credit Union is requesting that a federal judge dismiss fraud allegations related to a $600,000 “pig butchering” scheme, arguing that it did not act with fraudulent intent and was unaware of the scam until it was too late.
In a court filing last week, the credit union denied any wrongdoing in connection to the case, where a member claims to have been tricked into transferring large sums of money to scammers posing as legitimate investors. The victim, who is not named in court documents, alleges that the fraudulent activity took place over several months and resulted in substantial financial losses.
The member’s complaint claims that the credit union facilitated the scam by allowing the transfers to be processed without flagging them as suspicious.
‘Followed All Applicable Laws’
“There was no indication that the transactions were anything other than normal,” the credit union’s motion stated. “We followed all applicable laws and regulations.”
As the CU Daily had reported, “pig butchering,” a term used to describe a type of investment fraud where scammers build fake relationships with victims, only to later “slaughter” them by convincing them to invest large sums of money, has become an increasingly prevalent scam in recent years. The scam often begins with a friendly, seemingly genuine relationship through social media or dating platforms before evolving into a fraudulent investment opportunity.
‘No Direct Role’
Stanford Federal Credit Union’s legal team argues that it cannot be held responsible for the scam, citing that it had no direct role in the fraudulent communications or the creation of the fake investment scheme. The credit union also contends that it adhered to all necessary protocols for handling financial transactions and that any potential warning signs were not sufficiently obvious to prompt intervention, court documents reveal.
The case has drawn attention to the growing issue of financial fraud and digital scams, particularly those targeting older individuals or those new to investing. The U.S. Department of Justice has warned about the rise of “pig butchering” scams, and financial institutions are facing increasing scrutiny over their role in facilitating or failing to detect fraudulent activities.
CU Requests Dismissal
The $3-billion Stanford Federal Credit Union has requested that the court dismiss the fraud allegations and any associated claims for damages. A ruling is expected later this month.
