Terrorists Collect Millions From Coupon Scheme

N E W Y O R K, Jan. 22 — Coupons for 25 cents or a dollar off can save money for consumers, but another group of coupon-clipping enthusiasts is also filling its coffers: terrorists.

For years, people with ties to terrorism have been cutting coupons and illegally redeeming them, collecting between $100 million and $125 million annually without actually purchasing any products, Consumer Correspondent Greg Hunter reports for Good Morning America.

One investigator says that given the historical connection, it is likely that the funds contributed to the recent terrorist attacks.

"Did coupon fraud help fund Sept. 11th? I believe it contributed to the funding of Sept. 11th, yes," said Ben Jacobson, a private investigator with Peregrine Group in Miami.

Since Sept. 11, investigators have found that terrorists use a wide array of low-risk and high-reward petty crimes to fund their operations — including cigarette smuggling and credit card fraud. In Maryland, for instance, the state comptroller's office turned over a list of people who have smuggled cigarettes from one state to the other, benefiting from differing state taxes. For years, coupon fraud has also been part of this illicit portfolio.

Surprise Suspects

A former New York City police detective who testified before a U.S. Senate subcommittee on this topic in 1998, Jacobson said he uncovered a direct link between coupons and the people who turned out to be the perpetrators of the first bomb attack on the World Trade Center in 1993.

In 1987, he was hired by NCH, the nation's leading Consumer Coupon Clearing House, to uncover coupon fraud in the New York metropolitan area. Jacobson thought he would end up reeling in a few crooked grocery store owners.

Instead, one of the culprits turned out to be Mahmud Abouhalima, the man who is now serving a 240-year prison sentence for masterminding the 1993 attack on the World Trade Center.

Abouhalima was the manager of a Brooklyn video store that served as a meeting point for those involved in the coupon scheme and as a processing center for millions of dollars of coupon fraud in the New York area.

Omar Abdul Rachman, the blind sheik now serving life for the 1993 Trade Center bombing also operated a coupon fraud processing operation out of the second floor of a mosque in Jersey City, N.J., Jacobson said.

"The whole investigation surprised me when it turned into a terrorist operation," Jacobson said.

Crumpled Coupons

Terrorists operating coupon-cutting operations start by crumpling up new coupons to make them look used. Through a nationwide network of grocery stores in on the scam, they are able to turn the coupons in to the manufacturer.

The Brooklyn video store "was used as a shipping center where they would box the coupons and then send them out through UPS," Jacobson said. "We believe it helped fund the bombing of the World Trade Center the first time. Financing all the terror networks in the New York area."

Back in 1987 in Florida, dozens of grocery store owners were arrested in a coupon sting, and six were later convicted of fraud. The leader of the operation, Adan Bahour, claimed on undercover tapes that he had ties to the Palestinian Liberation Organization.

Florida investigators had found that illegally obtained coupon money was being sent to the Middle East. Former Broward County Sheriff Nick Navaro tried to warn other law enforcement agencies about the terrorist connection.

"We couldn't get anyone motivated to go on with the investigation,"Navaro said.

Easy Money Online

With the advent of online coupons, it is now easier than ever for terrorists to commit coupon fraud. Good Morning America was able to get 1,000 pre-cut coupons worth about $700 for just $5 off of the Web. So can anyone, a fraud specialist said.

"I went on eBay, clicked a few mouse strokes, bought these coupons and they were delivered to my business," Bud Miller, who represents companies victimized by fraud, showed how easy it is to obtain large amounts of coupons. With an investment of $10, he can make $1,000.

Miller sent letters to eBay CEO Meg Whitman asking her to prohibit the sale of coupons on the online auction site, arguing that the company could simply put coupons on its prohibited list.

When Good Morning America asked eBay about it, officials said they would cooperate if law enforcement asked them to, but they had no plans to stop the coupon auctions.

"If federal authorities contacted eBay and suggested any illegal or inappropriate activity associated with these coupons and ask for our cooperation in any formal investigation, we will cooperate fully," a spokesperson told GMA.

Since his 1998 testimony before a committee that included Senators Jon Kyl and John Aschcroft (now the U.S. Attorney General), Jacobson says nothing has been done to fight the fraud and no one has gotten back to him about the issue.

"Nothing, not a word," he said.