There’s No Such Thing As a Lot of Free Pennies

Here’s an easy and, in most cases, probably legal to make a few pennies: open up an online brokerage account. Really, that’s it. Brokerages have a small problem: it’s their job to make you money and, when they do, they need to make sure they give that money to the right person — or, more accurately, to the right person’s bank account. (Think about how bad it would be if they transferred all your money to someone else.) One of the ways they do this is something called deposit verification. 

The process is simple. You sign up for a brokerage account and provide your bank account information. Then, the brokerage makes two small deposits — usually a couple of pennies, but sometimes as much as a dollar or two — and waits. You log into your brokerage account and enter those amounts into some sort of verification form. Assuming the amounts you provide match the amounts they deposited, you’re good to go. The system works.

But it also creates a loophole — a very, very tiny loophole. While it’s easy for the brokerage firm to send you an $0.83 and $0.31 cent deposit, it’s not as easy for them to get that money back. You’d need to send it back to them, and let’s face it, if you’re doing billions of dollars in business, it’s not worth hassling a customer over a one-time combo-payment of $1.14. So almost all of the companies using deposit verification schemes let their customers keep these pennies, nickels, and dimes. It’s not enough money for a customer to bother scheming their way into, anyway.

Except for one time, a bit more than a decade ago.

In 2007 and 2008, a California man named Michael Largent turned his computer programming prowess into a very slow money-making machine. As Wired reported, Largent, using false names like “Rusty Shackleford” (which King of the Hill fans will recognize as the fake name used by character Dale Gribble), “allegedly used an automated script to open 58,000 online brokerage accounts, linking each of them to a handful of online bank accounts.” In total, Largent amassed a nice little bounty for himself — he collected more than five million pennies, or more than $50,000 from brokerage houses and more than $8,000 from Google. 

Largent, for his part, probably didn’t think he was doing anything wrong — after all, these online services did have to give him free money. Wired continues: 

When the bank asked Largent about the thousands of small transfers, he told them that he’d read Google’s terms of service, and that it didn’t prohibit multiple e-mail addresses and accounts. “He stated he needed the money to pay off debts and stated that this was one way to earn money, by setting up multiple accounts having Google submit the two small deposits.

Unfortunately for Largent, the idea, while literally penny-ante, was also illegal, at least insofar as the brokerage house deposits were concerned. (Largent wasn’t charged for his efforts to get that Google money.) When one of the brokerage firms, Charles Schwab, noticed a lot of odd account openings, they notified the FBI to investigate. The FBI was able to determine that Largent was the cause of these oddities and, on May 22, 2008, the government indicted him (pdf here) on four counts of computer fraud, four counts of wire fraud, and one count of mail fraud.

Threatened with up to 25 years in prison, Largent ultimately pled guilty to some of the charges. According to a September 2009 FBI press release, Largent  was sentenced “to 15 months in prison and restitution of $200,073.44 for fraud and related activity in connection with computers.” That’s a lot of micro-deposits, and an amount Largent couldn’t make back the way he lost it — as the FBI further notes, after being released from prison Largent “face[d] three years of strict restrictions on his use of computers and the Internet.”

Bonus fact: If you have sixteen U.S. pennies nearby and want to measure something, you’re in luck! The way pennies are designed also makes them into a makeshift rule. Those sixteen pennies, stacked in a neat pile, will measure one inch high. Need to measure more than an inch? If you lay them flat, in a straight line, that line will measure one foot. (And yes, I tested this.)

From the Archives: When a Penny Saved is 10,000 Earned: But it has to be the right penny.