Archive for November, 2012

Elk Grove man headed to prison for ID theft, credit card fraud

Friday, November 30th, 2012

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Your wallet is still the easiest source for ID thieves

Friday, November 30th, 2012

Only 15 percent of identity fraud was attributed to an online or data breach even amidst increased adoption of online shopping, mobile payments and use of banking apps, Travelers said. About 10 percent of identity theft happened as a result of forgery, and 2 percent from change of address or postal fraud.

Checking monthly statements consistently is important for catching ID theft. But here are some preventative measures to keep top of mind, especially during this holiday season:

Carry only the essentials: Leave unnecessary credit cards and critical documents in a discrete, location in your home.

Beware of scams: Do not fall for scams intended to pull at your heart strings. Do not disclose personal information, such as credit card and bank account details, if you receive an unsolicited request.

Do not throw away — destroy: Shred, shred, shred! Don’t just throw old bills and financial statements in the trash.

Make security a priority: Keep purses and wallets in a safe place, never print account information on envelopes of outgoing mail, and be careful about sharing personal information on social media.

Travelers says it was the first insurance carrier to offer identity fraud insurance, which it makes available as an endorsement on a homeowners policy, or as an employee, customer or membership benefit through financial and other commercial entities.

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Man Sought in ID Theft Scheme, Child Endangerment

Friday, November 30th, 2012


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Man Sought in Elaborate ID Theft Scheme

Man Sought in Elaborate ID Theft Scheme


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National City police are searching for a man accused of an elaborate identity theft scheme and felony child endangerment.

According to detectives, the suspect stole and assumed the identity of a man named Benjamin McClarnon, working two jobs, making large purchases and even committing crimes under the stolen, assumed name.

Investigators said the man worked under the ID at Rent-a -Wheel in Chula Vista and Cox Cable in San Diego. He obtained a DMV driver’s license, bought everything from a car to diamonds and paid utility bills under the name “Benjamin McClarnon.”

Police said the man went well beyond simply stealing someone’s identity.

“He’s actually become the victim. He’s actually gone out and gotten two jobs in San Diego County as the victim, [using the] victim’s name, victim’s social security number, victim’s address,” said Tom Di Zinno with the National City Police Department.

Police said the suspect assumed the stolen identity for about seven months, from May through November 2012. He even changed his facial hair and weight to resemble the ID theft victim, who actually knew the suspect.

“[The ID theft victim] rented a room at a house where our suspect actually lived and his girlfriend lived there. So I’m assuming that that’s where the compromise took place,” explained Di Zinno.

The phony Benjamin McClarnon worked for a short time for Cox Communications through a temporary employment agency, according to investigators. He also allegedly worked at Rent-a-Wheel in Chula Vista, though current employees told NBC 7 Thursday they did not recognize the suspect in photos.

Police said he was eventually dismissed from both jobs.

Recently, the suspect expanded his range of criminal activity by using two young children to shoplift, investigators said.

In that instance, police said the suspect used his girlfriend’s 10-year-old and 6-year-old children to steal merchandise from a JCPenney store in Plaza Bonita while he waited in the car. When the kids were caught, the suspect drove off, leaving them behind.

The children’s mother was also there and she was arrested. For whatever reason, she’s not cooperating with the investigation, police said.

Although the suspect hasn’t been seen since the shoplifting attempt, police believe the fake McClarnon’s luck might soon run out.

A surveillance camera near the JCPenney store caught the suspect on tape, so now investigators have something to go on.

Police describe the suspect as an adult Hispanic male, 6 feet tall, approximately 250 to 290 pounds. He has a shaved head, black hair, brown eyes, an earring in his right ear and may have a goatee.

Detectives believe the man may be trying to cover up additional crimes.

“Why is he hiding himself? [Has he committed] a capital crime that he’s trying to hide himself from? That may very well be a possibility,” said Di Zinno.

Anyone with information on the suspect pictured above is urged to contact Di Zinno with the National City Police Department at (619) 336-4473 or the Crime Stoppers anonymous tip line at (888) 580-8477.

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Romanian gang arrested in Australia’s biggest-ever credit card ID theft

Friday, November 30th, 2012

An Australian Parliamentary committee is looking at potential reforms of national security legislation to battle cyber crime.

Hong Kong (CNN) — Australian police say seven people have been arrested in Romania as part of a joint international criminal investigation into the largest credit card data theft in Australia’s history.

Among those detained by the Romanian investigative agency was Gheorghe “the Carpathian Bear” Ignat, a Greco-Roman heavyweight wrestling champion.

Officials say the year-long investigation, dubbed “Operation Lino,” involved 14 countries and uncovered phony credit card transactions worth AUD30 million (US$31 million). The criminal syndicate had access to half a million Australian credit cards, the Australian Federal Police (AFP) stated in a press release.

“Initially we were approached by the banking industry, who had noticed irregular charges on credit cards… All of the information led back to Romania,” an AFP official told CNN. “We then built a brief of evidence to provide to the Romanian police, which allowed them to carry out an investigation in Romania.”

The majority of victims were small businesses, service stations, petrol stations and corner stores, who often have less-secure payment gateways. The hackers profited by selling data to do “Card Not Present'”(CNP) transactions — the use of account information without the physical card being involved — or to create counterfeit credit cards. They then carried out thousands of counterfeit transactions across the globe in Asia, Europe and the U.S., according to the AFP.

“There’s very good consumer protection here in Australia. The AUD30 million was spread across banks, credit unions and the membership and no cardholder lost money,” Heather Wellard of the Australian Bankers’ Association told CNN. “The important thing is banks’ systems were not compromised.”

Statistics from a self-regulatory body in Australia’s payment industry show that of the one million cases of bank card fraud reported in Australia in 2011, 65% were perpetrated overseas.

Latest industry figures also show that CNP fraud in Australia is on the rise, accounting for 71% of all fraud value on Australian-issued bank cards.

“Such crimes tend to come from overseas,” the Australian police told CNN. “This same group has targeted businesses in other countries as well.”

Earlier this year, the Attorney-General of Australia, Nicola Rox acknowledged the increased danger of identity theft and fraud posed by cyber criminals on the internet.

“We’re no longer just dealing with guards and gates, bombs and bullets when we talk about defending our nation and its secrets,” Rox said. “We’re now fairly and squarely working in an online environment. And this has created a whole new dimension of both opportunity and threat.”

In July, Australia’s Parliamentary Joint Committee on Intelligence and Security began an ongoing inquiry into potential reforms of national security legislation to battle cyber crimes.

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IRS needs bigger weapons to fight exploding identity theft-related tax refund …

Friday, November 30th, 2012

There is a battle going on between what seems to be an army of fraudsters bent on using stolen identities to steal tax refunds and the Internal Revenue Service which has weapons to fight the problems but is obviously overwhelmed.

As of September 30, 2012, the IRS had identified almost 642,000 incidents of identity theft that impacted tax administration in 2012 alone, an almost three-fold increase over 2011 and a rate almost six times (47,730 incidents) that of 2008 when the fraud was initially tracked, according to a Government Accountability Office report out this week.

RELATED: IRS: Top 10 things every taxpayer should know about identity theft

IRS officials told the GAO that one of the challenges they face in combating identity fraud is its changing nature of the crime and how it is concealed. For example, IRS officials described several areas where the extent and nature of identity theft is unknown.

  • Total number and cost of fraudulent returns. IRS does not know the full extent of the occurrence of identity theft. Officials said that they count the refund fraud cases that IRS identifies but that they do not estimate the number of identity theft cases that go undetected.
  • Identity of the thieves. Unless IRS pursues a criminal investigation, IRS generally does not know the real identity of the thieves.
  • Whether a fraudulent return is an individual attempt or part of a broader scheme. Identifying new schemes or significant cases, such as one thief using numerous taxpayer identities, depends on analysts noticing patterns or other indications that a few cases may be part of a larger scheme. As a result, some schemes or cases involving multiple taxpayers may go undetected.
  • Characteristics of known identity theft returns. IRS officials told us that the agency does not systematically track characteristics of known identity theft returns, including the type of return preparation (paid preparer or software), whether the return is filed electronically or on paper, or how the individual claimed a refund (check, direct deposit, or debit card).
  • IRS captures data on the amount of money it recovers from all types of fraudulent returns, but it does not distinguish whether the type of fraud was identity theft or some other type of fraud. In some cases, external entities, such as banks or other agencies, may notify IRS of potential refund fraud, including suspected identity theft-based refund fraud. IRS reported it had received information from 116 banks and external leads on more than 193,000 accounts between January 1 and September 30, 2012, for all types of refund fraud. IRS reported that banks and other external entities returned almost $754 million dollars during this period.

Another challenge is prosecuting confirmed identity thieves.  While the number of cases has obviously grown, the prosecution of these thieves has not even scratched the surface.  For example according to the GAO, only 898 cases in 2012 have had formal criminal investigations been instigated.  The IRS typically only goes after “the most egregious and significant identity theft cases, as measured by volume and refund amounts,” the GAO stated. 

MORE: IRS warns of Dirty Dozen 2012 tax scams

An audit of the IRS this past summer found that the agency stands to lose as much as US$21 billion in revenue over the next five years due to identity theft.  The Treasury Inspector General for Tax Administration (TIGTA), which is part of the US Treasury.  According to an IDG News Service story, TIGTA stated at the time that the IRS did not agree with the $21 billion figure, but wrote that the figure does include estimated savings from new fraud control filters. Without new controls, TIGTA estimated losses of $26 billion.  Part of problem is that the IRS is not gathering enough data about fraud trends, such as how a return was filed, income information from W-2 forms, the amount of refunds and where those refunds were sent, TIGTA said.  “We found that $8.1 million in potentially fraudulent tax refunds involved tax returns filed from one of five addresses,” the audit said.

For its part the IRS has taken a number of steps to combat the problem.  For example, the GAO notes the IRS developed new filtering processes in 2012 to detect identity theft based on the characteristics of incoming tax returns that do not rely on a duplicate filing or self-identification by filers. “Identity theft indicators-also known as account flags-are a key tool used to resolve and detect identity theft. Identity theft indicators speed resolution by making a taxpayer’s identity theft problems visible to all IRS personnel with account access. In some cases, IRS uses its identity theft indicators to screen tax returns filed in the names of known identity theft victims. If a return fails the screening, it is subject to additional IRS manual review, including contacting employers to verify that the income reported on the tax return was legitimate.”

The IRS uses the Identity Protection Personal Identification Number (IP PIN)-a single-use identification number sent to victims of identity theft that have validated their identities with IRS-to prevent refund fraud, the GAO stated. 

According to the GAO, when screening returns for possible identity theft, IRS excludes returns with an IP PIN, which helps avoid the possibility of a “false positive” and a delayed tax refund. If a taxpayer was issued an IP PIN and does not use it when filing electronically, IRS rejects the electronically filed return and prompts the taxpayer to file on paper. Taxpayers that do not use an IP PIN or enter an incorrect IP PIN filing on paper experience processing delays as IRS verifies the taxpayers’ identity. As of June 30th, IRS reported providing more than 251,500 IP PINs to taxpayers in 2012 and of those, 150,506 taxpayers filed using an IP PIN. Of filers that filed using an IP PIN, 8.6% (12,936) used an invalid IP PIN. IRS officials told us their review of a sample of these cases found that the majority of the invalid IP PINs were due to transposition or keying errors. Details on other IRS actions can be found in our previous reports.

IRS also developed the internal Refund Fraud and Identity Theft Global Report in July 2012 to consolidate and track existing information about identity theft incidents from multiple sources within IRS. IRS officials said that the information in the report is not new, but that they saw the need for consistency in identity theft-related information drawn from several data sources, the GAO noted.

Other steps taken in 2012 include temporarily reallocating hundreds of staff from other business units to resolve duplicate filing cases and issue refunds to legitimate taxpayers. Officials in IRS’s accounts management function told the GAO that in October 2012 there were more than 1,700 staff working to resolve identity theft cases.

The IRS has also stated that in 2011, it identified and prevented stopped over $14 billion in fraudulent returns, of which identity theft is a subset.  From 2008 through the middle of 2012, the IRS said it identified more than 600,000 taxpayers who have been affected by identity theft. With respect to these taxpayers, during 2011 the IRS protected $1.4 billion in refunds from being erroneously sent to identity thieves. Through mid-April 2012, the IRS had stopped over 325,000 questionable returns with $1.75 billion in claimed refunds using filters specifically targeting refund fraud.

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Guard your kids against child ID theft, the ‘silent bankrupter’

Friday, November 30th, 2012

Wyatt D. McVay of Troutdale, held by dad Matthew in 2003, had his identity stolen at a very young age. Dad tried to open a savings account for Wyatt but the bank found the Social Security number had been used by someone else, who had written fraudulent checks.

You take your child for an orthodontist consultation, and the form asks for Social Security number, next of kin, date of birth. Or you sign your child up for tee-ball, the grade school choir, the Scouts …

All those registration forms, all those instances of your child’s personal identification data floating around out there. Do you know who’s keeping that data secure, and how?

Joe Mason bets not. “We as consumers recognize we are very exposed — we’re also a very trusting society.” So we continue to provide our children’s information as requested, not realizing we’re setting them up for possible ID theft.

Mason is senior vice president of Intersections Inc., which aggregates information for consumers to protect their IDs. He warns of an explosive growth in the theft of kids’ identities, which can go undetected for years and cause big headaches down the road.

Mason calls it a “silent bankrupter,” saying many don’t realize the theft until many years — and thousands in dollars of fraudulent debt — later. He wrote a book, “Bankrupt at Birth: Why Child Identity Theft Is On The Rise How It’s Happening Under Parents’ Noses,” about the issue this year. The statistics speak for themselves:

  • The average age of an identity theft victim now is in elementary school. 
  • The averaged debt incurred by child ID theft victims is $12,779.
  • A million or more families in the U.S. have been exposed to data breaches.

Most adults know they should be on the lookout for signs their personal information has been compromised, but children seem to be at greater risk these days. A recent study done by Richard Power, a fellow at Carnegie Mellon CyLab, used identity scans of more than 40,000 U.S. children. It found 10.2 percent had someone else using their Social Security number; that’s 51 times higher than the 0.2 percent rate for adults in the same population.

Why do identity thieves target kids? Because they have new, “unused” Social Security numbers (parents must get a Social Security number for their infants in order to claim the dependent tax deduction), and because they’re unlikely to have a file with the credit-reporting bureaus, much less a credit monitoring service.

Mason says thieves get their hands on identifying information in many ways. Doctors offices, day cares, hospitals, schools, sports teams all commonly ask for SSNs and all are sources of ID thefts. Mason encourages parents, “Don’t be shy, ask why.” Why is the SSN needed? How will the organization protect the data? Is there another ID number that can be used?

He notes that 33 states collect Social Security numbers as part of K-12 enrollment, but 80 percent of states don’t have proper data retention policies to protect IDs. Reported data breaches at educational institutions are on the rise, and several medical providers and insurers in Oregon have reported that personal ID information has been stolen, lost or compromised.

In addition, kids are famously unwise about their computer use, both in sites they visit (perhaps clicking on ads or sites a grownup would understand are suspect) and in the personal information they share. Netsmartz has a good guide to keeping kids safe online

The identity thief may be the classic criminal who will use a “clean” SSN to create a synthetic identity and get credit cards or loans, or it could be an illegal immigrant trying to create documents in order to work.

Sometimes, it’s even a relative or a family friend. Mason said some parents have used a child’s SSN to get a clean credit file to sub for their own shaky financial record.

You can watch for red flags that indicate your child’s information has been swiped:

Watch the mailbox. If your child starts getting material that doesn’t match his or her age, check into it. Examples: Offers for credit cards, collections letters, medical or other bills.

Answer the phone even if it’s a telemarketer. If a telemarketer calls asking for your child, get as much information as you can about how they obtained your child’s name and number.

When your teen goes to the DMV to get a driver’s permit or license, ask if there are unpaid tickets (or any tickets) under his or her name already.

Act immediately if you or your child is denied government benefits because benefits are being paid to another account under the SSN, or if your tax deduction is denied for the same reason.

When your teenager or college student tries to buy a cellphone, get a car or rent an apartment, help them investigate if they’re denied for bad credit. 

If you do find evidence of ID theft, you should first file a police report. That document may be key in helping to address the damage later.

Then, follow the steps the FTC suggests.

You will need to contact the three credit reporting agencies in the U.S.: TransUnion, Equifax and Experian. Then, you can consider placing an initial fraud alert on the credit file.

Work with the credit bureaus to find out where the ID has been used and to shut down those accounts. Mason strongly advises that you note whom you talked to and when on each call, and to request written documentation of account closures.

After that, request your child’s credit report every few years. It’s free once a year at (watch out for similarly named sites, which charge for the information and try to sell you credit protection services).

If you wish, you can enroll in identity protection services. Mason is general manager of Identity Guard, one such service. It offers “kID Sure” for $5 a month. You can find other services online as well. 

— Kathy Hinson

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Macy’s Parade stuffed with personal documents

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6 arraigned in Ala. identity theft ring

Thursday, November 29th, 2012

MONTGOMERY, Ala. (AP) — Six people were arraigned Wednesday for their involvement in an identity theft ring.

The U.S. Attorney for the Middle District of Alabama says members of the identity theft ring conspired to fraudulently obtain credit cards by diverting mail to a phony mailbox at a Montgomery post office.

A postal worker diverted mail, which included credit cards, to the dubious mail box and the suspects ran credit reports on victims before opening accounts in their names.

Officials say about $600,000 total was stolen from innocent victims.

The six who were arrested are from Alabama and Georgia, and are charged with identity theft, wire fraud and bank fraud.

They may be sentenced to up to 30 years in prison and may have to pay a fine of up to $1 million.

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Inmates who ran ID theft ring from prison get 25 years

Thursday, November 29th, 2012

Two men associated with the Armenian Power gang were each sentenced to 25 years in federal prison Wednesday on charges of perpetrating a sophisticated identity theft ring from lockup, according to the United States attorney’s office.

Angus Brown, 36, whose nickname is “Homicide,” and Arman Sharopetrosian, 33, known as “Horse,” were two of the 20 defendants named in an indictment last year related to an identify theft scheme that looted at least $8 million, authorities said.

Under the scheme, which involved the Armenian Power gang working in concert with other street gangs, bank insiders were bribed to steal personal information from mostly elderly victims whose signatures were forged, with big checks deposited into phony accounts, authorities said.

Brown and Sharopetrosian had been convicted of running the identity theft ring from Avenal State Prison in the Central Valley.

Brown had already been serving time at the prison for identity theft, authorities said, while Sharopetrosian had been serving time for shooting at an occupied vehicle and carrying a concealed weapon.

Prosecutors said the fraud ring picked elderly victims because they were less likely to keep watch of their accounts by the Internet.

All 20 defendants were convicted and most are expected to be sentenced in the coming months, authorities said.


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–Christopher Goffard

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Oakville Man Gets 94 Months in Jail for Fraud, Identity Theft

Thursday, November 29th, 2012

An Oakville man who confessed to mail fraud and aggravated identity theft in September was sentenced to 94 months in prison Tuesday in a case investigated by the FBI and prosecuted by the U.S. Attorney’s Office.

William Lubker, 51, will also have to forfeit the money he earned from his illegal activities, including jewelry, a Rolex watch, a Breitling watch and three firearms.

SEE PREVIOUS STORY: Oakville Man Pleads Guilty to Fraud, Identity Theft

Mail fraud has a maximum penalty of 20 years in prison and a maximum fine of $250,000. The aggravated identity theft count carries a minimum term of 2 years in prison.

Lubker admitted to defrauding Medstaff Locums, a medical staffing company based in Chicago. Court documents said Lubker stole $400,000 by creating phantom employees within the company between 2009 and earlier this year. He would tell his employer he’d placed a medical professional when there was no placement and then siphon portions of the employees’ payments for himself. 


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