Fact Sheet: The Department of Justice’s Efforts to Combat Identity Theft
Identity theft is a crime that victimizes people and businesses in every community from major cities to small towns, and robs victims of their individual freedoms. The Department of Justice is deeply committed to combating all forms of identity theft, through its use of investigative and prosecutorial resources to bring identity thieves to justice, and its support of outreach and prevention efforts to protect the public from identity theft.
Bringing Identity Thieves to Justice
The Department’s identity theft prosecutions have ranged from simple theft of financial data and documents to credit-card “skimming” operations and high-tech “phishing” schemes and schemes to use others’ online brokerage accounts to manipulate securities markets. As just one example of the Department’s robust efforts to prosecute identity thieves, the Department has made extensive use of the aggravated identity theft statute since it was enacted in 2004: in Fiscal Year 2006, the Department charged 507 defendants with aggravated identity theft, up from 226 defendants in Fiscal Year 2005. Additionally, in Fiscal Year 2006, the Department charged 1945 defendants in cases involving both identity theft and aggravated identity theft charges, up from 1571 defendants in Fiscal Year 2005. The following cases are just a few examples of the identity theft prosecutions brought across the country over the last year.
FEMA Fraud (United States v. Williams, Southern District of Alabama)
On January 24, 2007, a defendant was sentenced to 75 months imprisonment after pleading guilty to defrauding FEMA and aggravated identity theft following Hurricane Katrina. The defendant filed 28 fraudulent claims for disaster assistance she made to FEMA and, in many of those applications, the defendant used Social Security numbers of other people. With the money from FEMA, the defendant purchased real estate, a mobile home, several vehicles, home electronics, home furnishings, and other goods and services. As part of her plea agreement, the defendant agreed to forfeit to the United States the property she obtained with the FEMA money, and to pay full restitution for the money she received by fraud.
“Phishing” Schemes (United States v. Dolan et al., District of Connecticut)
On September 20, 2006, a federal grand jury returned an indictment charging six defendants for their participation in an elaborate Internet “phishing” scheme that targeted and victimized America Online (AOL) subscribers. According to the indictment, the defendants conspired to “harvest” e-mail addresses of AOL subscribers. The defendants then “spammed” thousands of AOL subscribers with counterfeit e-mails purporting, for example, to convey an electronic greeting card. If an AOL subscriber attempted to view the greeting card, the subscriber’s computer would be infected with a software trojan that prevented the subscriber from accessing AOL without entering information including the subscriber’s name, address, Social Security account number, credit card number, bank account number, and personal identification number. The defendants then used the information to produce counterfeit debit cards, which they used at ATM machines, online, and at retail outlets to obtain money, goods, and services.
Skimming (United States v. Matuzovic et al., Central District of California)
On June 19, 2006, eight defendants were arrested for their alleged involvement in an identity theft ring that “skimmed” account information from debit cards used by more than 100 diners at area restaurants, and then used the information to steal money from the victims’ bank accounts. Federal investigators believe the scheme resulted in the theft of more than $1 million. According to the indictment, two of the defendants allegedly orchestrated the scheme and instructed complicit servers at three restaurants to steal account information from patrons’ debit cards. Armed with the stolen account information, those two defendants allegedly “re-stripped” their own debit cards with the stolen information, and then asked the banks to provide them with new PIN numbers for their cards. After receiving the new PIN numbers, the defendants allegedly used the cards to deposit counterfeit checks into the victims’ accounts and withdraw cash.
“Hijacking” of Brokerage Accounts (United States v. Marimuthu et al., District of Nebraska)
On March 12, 2007, two residents of India and one resident of Malaysia were charged with conspiracy, fraud and aggravated identity theft stemming from an international fraud scheme designed to hijack online brokerage accounts. According to the indictment, the defendants hacked into online brokerage accounts of others using stolen usernames and passwords or established new brokerage accounts using stolen identities. The defendants then made scores of unauthorized purchases of the same stocks to drive up the market price. Once the share prices were artificially inflated, the defendants sold their own shares for a substantial profit. As part of this ongoing investigation, at least 60 customers and nine brokerage firms in the United States and elsewhere have been identified as victims, with one of the brokerage firms reporting more than $2 million in losses.
“Carding” (United States v. Roberts, Eastern District of Virginia)
On February 9, 2007, a defendant was sentenced to 94 months in federal prison for aggravated identity theft, access device fraud, and conspiracy to commit bank fraud. The defendant received e-mails or instant messages containing hundreds of stolen credit card numbers, usually obtained through “phishing” schemes or network intrusions, from “vendors” who were located in Russia and Romania. In his role as a “cashier” of these stolen credit card numbers, the defendant then electronically encoded these numbers to plastic bank cards, made ATM withdrawals, and returned a portion to the vendors. Computers seized from the defendant revealed over 4,300 compromised account numbers and full identity information for more than 1,600 individual victims.
Misuse Of Social Security Numbers (United States v. Wagner, Northern District of California)
On January 12, 2007, in connection with the Hewlett-Packard pretexting investigation, a defendant pleaded guilty to two identity theft-related counts. The defendant admitted that he was paid as part of a conspiracy that made fraudulent use of Social Security numbers and other confidential information to obtain the personal phone records of reporters and HP officials, as well as the personal records of these individuals’ family members.
Medicare Fraud (United States v. Ferrer, Southern District of Florida)
On January 24, 2007, a federal jury convicted a defendant in a case involving the theft and transfer of Medicare patient information from the Cleveland Clinic in Weston, Florida. The defendant purchased the patient information from a co-defendant, a former Cleveland Clinic employee, who pled guilty on January 12, 2007 and testified against the defendant at trial. The theft resulted in the submission of more than $7 million in fraudulent Medicare claims, with approximately $2.5 million paid to providers and suppliers.
ATM Fraud (United States v. Potupa, Southern District of New York)
On March 14, 2007, a defendant was sentenced in absentia to 90 months in prison for using stolen account information to fraudulently withdraw hundreds of thousands of dollars from ATMs located in New York City, New Jersey, and Philadelphia. During his fraud scheme, the defendant bought account information and corresponding personal identification numbers from an associate over the Internet, and then electronically encoded this information onto blank ATM-type cards. He then used these cards to withdraw cash from ATM machines and, as a result, stole or attempted to steal at least $960,000 between 2004 and February 16, 2006. A search of the defendant at the time of his arrest revealed that he was carrying approximately 50 plain, grey-colored ATM cards and approximately $7,500 in crisp twenty dollar bills.
Sale of Personal Information (United States v. Giannone, District of South Carolina) On February 8, 2007, a jury convicted a defendant of fraud and identity theft for selling over the internet debit card numbers and other personal information. The defendant was caught in an undercover online investigation run by the United States Secret Service. In May, 2005, the defendant used online chat rooms to contact an individual who had previously developed a highly recognized name among people involved in credit card fraud and identity theft. This individual was working undercover with the Secret Service. Over the course of chats, the defendant downloaded information on 29 debit card accounts to the individual.
Bank Fraud (United States v. Nguyen et al., Western District of Washington)
On June 2 and September 6, 2006, two defendants were sentenced to 54 months and 78 months in prison and ordered to pay restitution in excess of $1 million for their role in a ring that committed more than $1.6 million in bank fraud using the stolen identities and bank account numbers of 90 different individuals. Using the personal information, the ringleader would obtain fake IDs and create phony checks. The imposters would cash or deposit the phony checks into the accounts and then withdraw the funds, essentially raiding the accounts.
Immigration Fraud (Operation Wagon Train)
Federal identity theft charges were brought against over 140 illegal aliens accused of stealing the identities of lawful U.S. citizens in order to gain legal employment. Agents executed civil search warrants on December 12, 2006, at six meat processing plants owned by one of the nation’s largest processors of fresh pork and beef. Many of the names and Social Security numbers being used at the meat processing plants were reported stolen by identity theft victims to the Federal Trade Commission. In many cases, victims indicated that they received letters from the Internal Revenue Service demanding back taxes for income they had not reported because it was earned by someone working under their name. Other victims were denied driver’s licenses, credit, or even medical services because someone had improperly used their personal information before.
New Account Fraud (United States v. Mored and Nissen, Western District of Washington) According to the indictment, one of two named defendants was employed at a janitorial company and worked at night in a U.S. Bank branch. He joined with other conspirators to steal information on more than 200 bank customers. Using that information, the two defendants opened credit accounts in the customers names and used those accounts to purchase expensive items such as laptop computers, flat screen televisions, and airline tickets. In addition, they signed up for on-line banking for accounts that had not previously had on-line banking and then used those accounts to pay their own bills and transfer funds to other checking accounts that they then drained. The indictment charged them with more than $200,000 in fraud against dozens of victims.
Trafficking of Stolen Personal Information (United States v. Mantovani et al., District of New Jersey)
On June 28 and 29, 2006, four defendants were sentenced for their involvement in the Shadowcrew international criminal organization. Using a Web site, the Shadowcrew organization had thousands of members engaged in the online trafficking of stolen identity information and documents, such as drivers’ licenses, passports, and Social Security cards, as well as stolen credit card, debit card, and bank account numbers. The Shadowcrew members trafficked in at least 1.7 million stolen credit card numbers and caused total losses in excess of $4 million dollars. The Secret Service successfully shut down the Web site in October 2004.
Outreach and Prevention
The Office of Justice Programs (OJP) at the Justice Department provides funding and training for victim service programs and victim service providers at the federal, state, local and tribal levels; funding for law enforcement’s, prosecutors’ and crime prevention experts’ efforts to address identity theft through the Bureau of Justice Assistance; research and program evaluation concerning identity theft through the National Institute of Justice; and data collection for policymakers on identity theft through the Bureau of Justice Statistics. Anyone wishing to ask a question about identity theft or to report identity theft may call 1-877-ID-THEFT, or visit http://www.ftc.gov/idtheft. Other resources are available on the Office for Victims of Crime identity-theft resource Web page at http://www.ojp.usdoj.gov/ovc/publications/infores/focuson2005/identitytheft/welcome.html, and on the Department’s identity-theft Web site at http://www.usdoj.gov/criminal/fraud/idtheft.html.
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