True crime, fake romance: One victim's fight to recover $337,000 from major banks
In a case that lays bare the limitations of US banking safeguards, an elderly man with dementia was systematically drained of $337,000 in a sophisticated, AI-enhanced “romance scam.” While two financial institutions promptly refunded the stolen funds, five major banks—including JPMorgan Chase and Goldman Sachs—are fighting the victim’s family in court. The legal battle highlights a growing systemic failure: financial institutions spending more on high-powered defense attorneys than the value of the fraud itself, while regulators struggle to close legal loopholes that leave vulnerable customers exposed.
Background and Context
Romance scams have evolved from isolated cons into a heavily industrialized criminal enterprise. The underworld committing these frauds now operates like a legitimate business, often using offshore shell companies and artificial intelligence to deceive victims. According to the Federal Trade Commission, reported losses from romance scams soared to $1.4 billion in 2023, up from $547 million in 2021. Research by Chainalysis indicates that impersonation scams rose by 1,400% in 2025 alone, with the average amount stolen increasing by 600%.
Despite these staggering figures, law enforcement and consumer protection agencies face an uphill battle. The Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corp (FDIC) have issued guidance urging banks to treat unauthorized transactions as fraud-induced transfers, yet the legal framework governing these disputes remains rooted in a pre-digital era.
Key Figures and Entities
The victim, Alan Cutler, is a 72-year-old former computer security expert from Pennsylvania suffering from frontotemporal dementia. His cognitive decline made him a prime target for AstraSoft Projects Ltd, a Cyprus-based company operating the websites MySpecialDates.com and okamour.com. Court filings reviewed by American Banker allege AstraSoft is an international criminal enterprise targeting US consumers.
The fraud was discovered by Jeffrey Katz, an elder law attorney in Bethesda, Maryland, hired by Cutler’s children to qualify their father for Medicaid. Katz documented that between 2022 and 2024, Cutler’s life savings were siphoned through seven financial institutions.
The responses from the financial institutions involved were starkly divided. PayPal and Woodforest National Bank investigated the claims and refunded the money under the Electronic Fund Transfer Act. However, Barclays, Citizens Bank, Goldman Sachs, JPMorgan Chase, and USAA Federal Savings Bank have rejected the claims. Instead of refunding the disputed amounts—totaling roughly $296,000—these banks have retained major law firms such as Holland & Knight and McGuireWoods to contest the liability.
Legal and Financial Mechanisms
At the heart of this litigation is Regulation E, a 1978 regulation implementing the Electronic Fund Transfer Act. The regulation requires banks to investigate “unauthorized” transactions, but banks often argue that in romance scams, the victim “authorized” the transfer, even if they were tricked or mentally impaired. This regulatory gap leaves many victims without recourse.
Katz alleges the scammers exploited this blind spot by rotating transactions across multiple accounts to keep volume below fraud-detection thresholds. Documents show the scammers made 16 charges in a single hour and 157 transactions in one day, pulling $8,000 from a single account in 24 hours. Under Regulation E, banks have 10 business days to investigate errors, a period that can be extended to 45 or 90 days if provisional credit is provided. Katz argues the banks failed to meet this statutory duty to investigate and provide provisional credit.
“These banks are just too big to care,” Katz said, noting that the institutions are spending more on legal defense—some billing up to $1,250 per hour—than the $337,000 Cutler lost. In one instance, Barclays retained Holland & Knight to defend against a claim for just $20,000. Similarly, Goldman Sachs reported to the New York Department of Financial Services that it found “no suspicious, fraudulent, or unauthorized” activity across 820 transactions totaling $92,444.60 directed to known romance scam merchants.
International Implications and Policy Response
The Cutler case underscores the fragility of a consumer protection system designed for the analog age. Lawmakers have begun to take notice, but progress is cautious. During a recent hearing, the House Financial Services Committee subcommittee on financial institutions debated the issue. Chairman Andy Barr, R-Ky., acknowledged the severity of the crisis but warned against simply requiring banks to reimburse all claims, arguing it could incentivize customers to falsely report legitimate transfers as fraud.
“Fraud and scam losses are not abstract statistics,” Barr said in his prepared remarks. “At the same time, we must also guard against proposals that could unintentionally fuel more scams.”
Rebecca Coleman, a senior attorney at Goodwin and former senior litigation counsel at the CFPB, noted that when the EFTA was passed, “nobody envisioned a world where people didn’t have to go into a bank to make an electronic fund transfer.” As the Justice Department takes over enforcement of certain CFPB duties, questions loom over whether banks’ compliance postures will adapt to the modern digital landscape or continue to rely on costly litigation to deny claims.
Sources
This report draws on court filings related to Katz v. AstraSoft Projects Ltd, public statements from the Consumer Financial Protection Bureau and Federal Trade Commission, data from Chainalysis, and reporting by American Banker. It also references testimony from the House Financial Services Committee and responses from the New York Department of Financial Services.
