At Prosper Days 2008 Chris Larsen announced the 1st conviction for fraud in which Prosper as been involved. Citing this newspaper article from the news tribune (Lakewood man off to prison for bank fraud.) Many people have asked how this fraud was allowed to occur; what actions Prosper took to facilitate the conviction; and the precautions taken to mitigate future occurrences.
All transactions were reviewed for risk and Mr. Kilen was contacted prior to authorization of his transfers (both before and after Prosper became aware of the investigation.) Prior to Prosper’s knowledge of the investigation transactions were allowed because the transactions posed no risk to any Prosper member’s money and were deemed to be minor risk to Prosper. Additionally, the transfers were allowed in this case (as opposed to similar cases where they were stopped) because they were initiated from Key bank offices by a bank employee. Additional controls have been put in place to reduce the likelihood of a similar occurrence.
As for Prosper’s involvement in the case, after being contacted by authorities about the illegal activity in which Mr. Kilen was involved, Prosper cooperated fully with federal investigators — providing a significant portion of the evidence used to locate and prosecute Mr. Kilen.
Mr Kilen was ordered by the courts to pay restitution to Prosper and Key Bank (the victims) as part of his sentencing.
Prosper is committed to providing a safe and secure marketplace. Prosper members can trust that Prosper will facilitate the prosecution of criminals to the fullest extent of the law. Prosper is not a safe haven for crooks and thieves.