Wall Street Journal Identity Theft Information

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November 26, 2002=20

U.S. BUSINESS NEWS=20

Federal Prosecutors Break Ring of Identity Thieves
Authorities Arrest Three Men Accused Of Draining Consumers' Bank
Accounts
By COLLEEN DEBAISE and YOCHI J. DREAZEN=20
Staff Reporters of THE WALL STREET JOURNAL

Federal authorities arrested three men in what they said was the biggest
identity-theft case in U.S. history, involving more than 30,000
Americans whose identities were systematically stolen and sold to people
who emptied the victims' bank accounts and opened credit cards in their
names.
Prosecutors said the three were part of a ring that downloaded credit
reports with stolen passwords and sold them to street criminals for $60
each. The reports, which list a person's bank accounts, credit cards,
mortgages and other financial information, were "exploited in every way
imaginable," Manhattan U.S. Attorney James B. Comey said at a press
conference.=20
=20
The criminals reaped millions of dollars, he said, by draining bank
accounts and ruining the credit of tens of thousands of people. So far,
losses have been calculated at $2.7 million, but are expected to rise
significantly in coming weeks, Mr. Comey said. Authorities believe the
three men stole identities from people in all 50 states.
"This case is every American's worst financial nightmare, multiplied
tens of thousands of times," Mr. Comey said.
=20
The announcement by the New York prosecutors comes amid a continuing
government crackdown on identity theft, the nation's fastest growing
crime. The Privacy Rights Clearinghouse, a nonprofit San Diego group,
estimates that 500,000 people are victimized each year, costing
financial institutions, utilities and merchants more than $5 billion.
The Federal Trade Commission has said that identity theft accounted for
42% of its consumer complaints last year.
=20
Identity theft has become increasingly prevalent online, and surveys
have regularly shown that it is the single biggest concern of many
frequent Web users. Since the Sept. 11 attacks, it has also become a
high-priority issue for state and federal law-enforcement agencies, who
are concerned that terrorists will steal identities to enter the country
or cover their tracks as they plan or execute an attack.
=20
In announcing a new federal crackdown on identity theft earlier this
year, for example, Attorney General John Ashcroft cited the example of
an Algerian man facing federal identity-theft charges for allegedly
stealing the identities of 21 members of a Bally's Total Fitness health
club in Cambridge, Mass., and transferring them to an Algerian convicted
for his part in a failed 1999 plot to bomb Los Angeles International
Airport.
=20
Monday, prosecutors said that greed, not terrorism, appeared to be the
motive in the New York case, but that the investigation was continuing.
The officials said the scheme began in early 2000 when a help-desk
employee at Teledata Communications Inc., a company on New York's Long
Island that provides credit reports to banks and other lenders, was
allegedly recruited to download credit reports with stolen passwords and
sell them to street criminals.
=20
The reports were generally run from a "wish list" of victims' names
provided by 20 or more individuals of Nigerian descent from the Bronx
and Brooklyn, N.Y., according to the complaint. These individuals
already had victims' names, addresses and sometimes Social Security
numbers, but wanted more information from the credit reports that would
make it easier to access bank accounts or apply for credit cards, Mr.
Comey said.
=20
With the credit-report information, they would request new ATM cards or
checkbooks and deplete people's bank accounts, or apply for credit cards
in the victims' names and then quickly max them out, he said.
=20
Philip Cummings, one of the three men arrested in the scheme, worked on
Teledata's help desk from mid-1999 to March 2000. Mr. Cummings, who
faces as much as 30 years in prison if convicted of wire fraud, was
allegedly recruited by a man who is now cooperating with authorities,
Mr. Comey said. Mr. Cummings was released on $500,000 bond after an
appearance in Manhattan federal court at which he did not speak. His
lawyer, Nicole Armenta, a public defender, told the judge he
"voluntarily surrendered on a moment's notice" after learning of the
charges.
=20
The two others, Linus Baptiste and Hakeem Mohammed, were arrested
earlier this year. Mr. Mohammed, who pleaded guilty to charges that he
opened accounts in the name of two victims, is scheduled to be sentenced
in January. Marshall Mintz, an attorney for Linus Baptiste, who was
arrested last month on a wire-fraud charge related to Cummings' case,
declined to comment.
=20
According to the criminal complaint, Mr. Cummings stole the password and
codes of Teledata clients such as Ford Motor Credit Corp. and Washington
Mutual Bank in order to download credit reports from the three major
credit-reporting agencies, Experian, Equifax Inc. and TransUnion.
=20
 In one case, the password and code for Ford Motor Credit's Grand
Rapids, Mich., branch were used for about 10 months to download about
13,000 credit reports from Experian, according to the complaint. Ford
Motor Credit spokeswoman Melinda Wilson said the company became aware of
the security breach last spring when consumers complained that someone
there had been seeking their credit reports even though they hadn't
requested a loan.
=20
Ford Motor Credit personnel investigated and soon contacted the Federal
Bureau of Investigation. When it realized what happened, the company
sent out letters to consumers last April warning them that their
personal data might have been taken. The company has since taken steps
to change its procedures to make it harder for someone to repeat the
theft, Ms. Wilson said.
=20
In a statement, Teledata said it has been aware of the probe for more
than eight months and has cooperated fully.
Terrorism fears and high-profile identity-theft cases have led many in
Washington to seek new tools for preventing the crime and new
punishments for those found guilty of it. Mr. Ashcroft and his aides
crafted legislation sponsored by Sen. Dianne Feinstein (D., Calif.)
earlier this year that would make it illegal to possess stolen
identities with the intent to use or sell them to someone else. Current
law only prohibits the use, sale, and transfer of the identities. The
Senate Judiciary Committee approved the bill but it never came to a
floor vote; Ms. Feinstein plans to reintroduce it next year.
=20
 Many banks and credit-card companies, meanwhile, have begun offering
increased identity-theft protections as a way of winning new customers
and persuading existing ones to use their debit or credit cards more
frequently. Bank of America Corp., for example, has a "zero liability"
policy for credit and debit cards. If a card or card number is stolen or
lost, the bank will reimburse the cardholder for all unauthorized
transactions. Credit-card companies have long offered such protections.
=20
 -- Carrick Mollenkamp and Joseph B. White contributed to this article.=20

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<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">November 26, 2002 =
<BR><BR>U.S.=20
BUSINESS NEWS <BR><BR>Federal Prosecutors Break Ring of Identity=20
Thieves<BR>Authorities Arrest Three Men Accused Of Draining Consumers' =
Bank=20
Accounts<BR>By COLLEEN DEBAISE and YOCHI J. DREAZEN <BR>Staff Reporters =
of THE=20
WALL STREET JOURNAL<BR><BR>Federal authorities arrested three men in =
what they=20
said was the biggest identity-theft case in U.S. history, involving more =
than=20
30,000 Americans whose identities were systematically stolen and sold to =
people=20
who emptied the victims' bank accounts and opened credit cards in their=20
names.<BR>Prosecutors said the three were part of a ring that downloaded =
credit=20
reports with stolen passwords and sold them to street criminals for $60 =
each.=20
The reports, which list a person's bank accounts, credit cards, =
mortgages and=20
other financial information, were "exploited in every way imaginable," =
Manhattan=20
U.S. Attorney James B. Comey said at a press conference.<SPAN=20
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><SPAN=20
class=3D200381922-03122002>&nbsp;</SPAN><BR>The criminals reaped =
millions of=20
dollars, he said, by draining bank accounts and ruining the credit of =
tens of=20
thousands of people. So far, losses have been calculated at $2.7 =
million, but=20
are expected to rise significantly in coming weeks, Mr. Comey said. =
Authorities=20
believe the three men stole identities from people in all 50 =
states.<BR>"This=20
case is every American's worst financial nightmare, multiplied tens of =
thousands=20
of times," Mr. Comey said.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">The announcement by the =
New York=20
prosecutors comes amid a continuing government crackdown on identity =
theft, the=20
nation's fastest growing crime. The Privacy Rights Clearinghouse, a =
nonprofit=20
San Diego group, estimates that 500,000 people are victimized each year, =
costing=20
financial institutions, utilities and merchants more than $5 billion. =
The=20
Federal Trade Commission has said that identity theft accounted for 42% =
of its=20
consumer complaints last year.<BR><SPAN class=3D200381922-03122002><FONT =

color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">Identity theft has =
become=20
increasingly prevalent online, and surveys have regularly shown that it =
is the=20
single biggest concern of many frequent Web users. Since the Sept. 11 =
attacks,=20
it has also become a high-priority issue for state and federal =
law-enforcement=20
agencies, who are concerned that terrorists will steal identities to =
enter the=20
country or cover their tracks as they plan or execute an =
attack.<BR><SPAN=20
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">In announcing a new =
federal=20
crackdown on identity theft earlier this year, for example, Attorney =
General=20
John Ashcroft cited the example of an Algerian man facing federal =
identity-theft=20
charges for allegedly stealing the identities of 21 members of a Bally's =
Total=20
Fitness health club in Cambridge, Mass., and transferring them to an =
Algerian=20
convicted for his part in a failed 1999 plot to bomb Los Angeles =
International=20
Airport.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">Monday, prosecutors said =
that=20
greed, not terrorism, appeared to be the motive in the New York case, =
but that=20
the investigation was continuing. The officials said the scheme began in =
early=20
2000 when a help-desk employee at Teledata Communications Inc., a =
company on New=20
York's Long Island that provides credit reports to banks and other =
lenders, was=20
allegedly recruited to download credit reports with stolen passwords and =
sell=20
them to street criminals.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">The reports were =
generally run=20
from a "wish list" of victims' names provided by 20 or more individuals =
of=20
Nigerian descent from the Bronx and Brooklyn, N.Y., according to the =
complaint.=20
These individuals already had victims' names, addresses and sometimes =
Social=20
Security numbers, but wanted more information from the credit reports =
that would=20
make it easier to access bank accounts or apply for credit cards, Mr. =
Comey=20
said.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">With the credit-report=20
information, they would request new ATM cards or checkbooks and deplete =
people's=20
bank accounts, or apply for credit cards in the victims' names and then =
quickly=20
max them out, he said.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">Philip Cummings, one of =
the three=20
men arrested in the scheme, worked on Teledata's help desk from mid-1999 =
to=20
March 2000. Mr. Cummings, who faces as much as 30 years in prison if =
convicted=20
of wire fraud, was allegedly recruited by a man who is now cooperating =
with=20
authorities, Mr. Comey said. Mr. Cummings was released on $500,000 bond =
after an=20
appearance in Manhattan federal court at which he did not speak. His =
lawyer,=20
Nicole Armenta, a public defender, told the judge he "voluntarily =
surrendered on=20
a moment's notice" after learning of the charges.<BR><SPAN=20
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">The two others, Linus =
Baptiste and=20
Hakeem Mohammed, were arrested earlier this year. Mr. Mohammed, who =
pleaded=20
guilty to charges that he opened accounts in the name of two victims, is =

scheduled to be sentenced in January. Marshall Mintz, an attorney for =
Linus=20
Baptiste, who was arrested last month on a wire-fraud charge related to=20
Cummings' case, declined to comment.<BR><SPAN =
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">According to the =
criminal=20
complaint, Mr. Cummings stole the password and codes of Teledata clients =
such as=20
Ford Motor Credit Corp. and Washington Mutual Bank in order to download =
credit=20
reports from the three major credit-reporting agencies, Experian, =
Equifax Inc.=20
and TransUnion.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><SPAN=20
class=3D200381922-03122002>&nbsp;</SPAN>In one case, the password and =
code for=20
Ford Motor Credit's Grand Rapids, Mich., branch were used for about 10 =
months to=20
download about 13,000 credit reports from Experian, according to the =
complaint.=20
Ford Motor Credit spokeswoman Melinda Wilson said the company became =
aware of=20
the security breach last spring when consumers complained that someone =
there had=20
been seeking their credit reports even though they hadn't requested a=20
loan.<BR><SPAN class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">Ford Motor Credit =
personnel=20
investigated and soon contacted the Federal Bureau of Investigation. =
When it=20
realized what happened, the company sent out letters to consumers last =
April=20
warning them that their personal data might have been taken. The company =
has=20
since taken steps to change its procedures to make it harder for someone =
to=20
repeat the theft, Ms. Wilson said.<BR><SPAN =
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">In a statement, Teledata =
said it=20
has been aware of the probe for more than eight months and has =
cooperated=20
fully.<BR>Terrorism fears and high-profile identity-theft cases have led =
many in=20
Washington to seek new tools for preventing the crime and new =
punishments for=20
those found guilty of it. Mr. Ashcroft and his aides crafted legislation =

sponsored by Sen. Dianne Feinstein (D., Calif.) earlier this year that =
would=20
make it illegal to possess stolen identities with the intent to use or =
sell them=20
to someone else. Current law only prohibits the use, sale, and transfer =
of the=20
identities. The Senate Judiciary Committee approved the bill but it =
never came=20
to a floor vote; Ms. Feinstein plans to reintroduce it next =
year.<BR><SPAN=20
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><SPAN=20
class=3D200381922-03122002>&nbsp;</SPAN>Many banks and credit-card =
companies,=20
meanwhile, have begun offering increased identity-theft protections as a =
way of=20
winning new customers and persuading existing ones to use their debit or =
credit=20
cards more frequently. Bank of America Corp., for example, has a "zero=20
liability" policy for credit and debit cards. If a card or card number =
is stolen=20
or lost, the bank will reimburse the cardholder for all unauthorized=20
transactions. Credit-card companies have long offered such =
protections.<BR><SPAN=20
class=3D200381922-03122002><FONT=20
color=3D#0000ff>&nbsp;</FONT></SPAN></FONT></FONT></DIV>
<DIV><FONT style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><FONT=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'"><SPAN=20
class=3D200381922-03122002>&nbsp;</SPAN>-- Carrick Mollenkamp and Joseph =
B. White=20
contributed to this article.</FONT> </FONT></DIV></BODY></HTML>
=00
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