The son of a Pittsburgh-area woman who discovered an accounting glitch that allowed PayPal users to withdraw more than $1 million from Dwelling House Savings & Loan without paying it back was sentenced to more than four years in prison on Jan. 5 for his role in the financial crime. Also sentenced was a 55-year-old woman who participated in the illegal withdrawals. The federal judge presiding over the case handed down nearly six years in prison for her.
Prosecutors charged the two defendants with exploiting a loophole that allowed people with a PayPal Internet account and an account with Dwelling House to overdraw on the bank account and not be charged for the excess funds. The male defendant's mother reportedly was the first to discover the error and taught her son how to do it. The son went on to open up accounts in six women's names, while the other defendant also learned about the glitch and taught others how to exploit it, prosecutors said.
The mother was sentenced on Jan. 4 to 12 ½ years in prison. The next day, the son received a prison sentence of four years and two months, while the other woman was sentenced to five years and 11 months. Her longer sentence may have been influenced by her record of 34 prior criminal convictions, which the judge said was one of the longest records he had seen.
The funds apparently came out of Dwelling House's operating funds. The savings and loan went bankrupt in 2009.
Source: Pittsburgh Post-Gazette, "Dwelling House defendants sentenced to prison terms," Rich Lord, Jan. 6, 2012