The Art of the Steal (25 page)

RED FLAGS

Obviously, you just can’t be too careful with your money. Before you part with it, look at all investments on the SEC database to be sure they’re registered. All American companies with more than five hundred investors and $10 million in assets must be registered with the SEC. Smaller companies have to file information with the SEC, or with the state securities regulators where they’re based. To check if a broker is licensed, go to the website of the National Association of Securities Dealers Regulation. One thing the Internet has done is made it easier to do research on a company, so go to reliable sites and check analyst reports. There’s no need to rush into something.

I would never invest in anything described as “risk-free” or “guaranteed,” particularly offshore investments. It’s an automatic red flag if the promoters say the state Attorney General has approved it. Check with the Attorney General’s office and find out for yourself. Take note of how you’re asked to pay. If a broker wants your bank account number to speed things along, forget it. If you’re told to send money to a P.O. Box or someplace offshore, forget that, too.

The bigger the promised return on an investment, the higher the likelihood that it’s a scam. But just because a return is reasonable, don’t assume the investment is real. One of the biggest scams in recent years is fraudulent promissory notes sold to the elderly. Promissory notes are a short-term debt companies use to borrow cash. Con artists exploit a loophole in securities laws that exempt some nine-month promissory notes from regulatory scrutiny. The con artist starts a marketing firm and recruits unwitting insurance agents to sell the notes. Unlike so many investment schemes with their 100-percent-plus returns, these typically promise 9 to 12 percent interest, enough to attract a conservative investor without arousing suspicion. They’re touted as risk free and bonded by foreign insurance companies, which usually are fake. The local agents are often known and trusted by the investors, and are fooled as well by the con artists. Eventually, investors get notices that the company behind the notes has gone bankrupt and that’s the end of their investment.

A good rule of thumb is, the more exclusive something is positioned to be, the more likely it’s trouble. Once-in-a-lifetime opportunities are usually once-in-a-lifetime chances to lose all your savings. If something is billed as getting “imminent” regulatory approval, that means it will never get regulatory approval. When I see ads on television promoting some new elixir or wonderful product, the words that always tell me it’s a scam are “not sold in stores.” Think about it, if someone has a great product, why wouldn’t he sell it in stores? The reason is because there’s something fishy about it.

It’s the same with investments. When I hear about an investment opportunity and am told it’s not available through brokerage houses, then that’s criminal-speak for “only available through con artists.” If you really could make 100 percent on your money in a week, you wouldn’t need to find out about it in an e-mail from a total stranger. You can bet Merrill Lynch and Paine Webber would be selling it, too.

11

[STEALING
YOUR SOUL
]

F
or Michelle Brown, there was life before identity theft and then there was life after identity theft. Life after was a torment.

Brown, the young California woman I began this book with, couldn’t understand why someone had stolen her identity. Why her, of all people? And how did it happen? One day she told her property manager about how someone was going around using her name and her credit, and that the police and credit bureaus had mentioned that identity thieves are sometimes a relative or someone you know. Did she have sisters who might have something against her, a close friend with a grudge? She had been offended. She had two sisters, but she knew neither of them was the one, and no friend was that malevolent.

Her property manager listened to her carefully, and then he said, “I know who’s doing it.”

Or he thought he did. A woman he knew vaguely, Heddi Ille, had a history of committing credit fraud. He figured it might well be she.

The police looked into it, and they concluded that it was indeed she. Heddi Ille was a woman in her early thirties, about five-foot-seven and weighing 200 pounds. She looked nothing like Michelle Brown. And she was mixed up with drugs. For months, the police pursued her, but it wasn’t until more than a year after she had stolen Michelle Brown’s identity that she was caught, and then it was only because someone had turned her in. To add to the insult, Ille was arrested under the name Michelle Brown. On her record, that name was listed as an alias.

Heddi Ille had never met Michelle Brown, and knew virtually nothing about her. Like most crooks, she had wanted one thing: a vehicle that allowed her to steal. One day, she had happened to sneak a look at the rental applications at the apartment complex where Michelle Brown was living, and had chosen her information to work with. She was a similar age, and that may have been all that mattered. That one document was all it took.

In their arrogance, thieves rarely consider the consequences for the victim. They’re in it strictly for the money. For a long time, Michelle Brown wondered if she would ever become whole again. It required a massive effort for her to get her credit straightened out. “Identity theft leaves a very dark and filthy cloud around the victim,” she said. Even now, she is extremely circumspect. She has eliminated all but one credit card. She refuses to write checks when she buys something in a store. She worries that her name will be on a list of delinquents and she’ll be hustled off by security guards. Her mail comes to a private mailbox. For her birthday, a friend gave her a shredder, and she now shreds all credit card solicitations and any other material containing personal information.

She carries around official papers that confirm who she is, though she’s afraid to travel overseas, particularly to any third-world country, out of fear she’ll be mistaken for the jailed Ille and be imprisoned. Even in this country, she shudders every time she sees a police car. She drives safely under the speed limit and never forgets to signal if she’s making a turn. The last thing she wants is to be stopped and somehow mistaken for the other Michelle Brown, the one who ought to be in prison.

Two years after she started, Heddi Ille was convicted of perjury, grand theft, and possession of stolen property, though, as so often happens, not of identity theft. Not only was she initially booked as Michelle Brown, but also when she sent letters to friends from federal prison she wrote that name on the return address, until the real Michelle Brown objected. She felt Heddi Ille had stolen quite enough from her for long enough.

THE CRIME OF THE FUTURE

I’ve saved identity theft for last, because I’m convinced it’s the crime we have the most to fear going forward. To my mind, identity theft is the crime of the future. And I think of it as the mother of all scams, because it steals everything, a person’s very being.

In so many ways, it’s the scariest and most seductive white-collar crime of all, and we’ve barely scratched the surface. It’ll probably be ten years from now before identity theft is in full swing, but we’ve already seen its striking escalation. At the beginning, someone stole your identity because he wanted to get a credit card in your name. These days, he’ll say, wait a minute, I’ll get a car loan in your name, wait a minute, I’ll get a mortgage in your name, wait a minute, I’ll assume your entire identity and get a job in your name and you’ll have to pay the taxes.

Physical attributes like DNA are unassailable and unique to you. No criminal can steal them. But we have become the various numbers that have been assigned us, and, with modern technology, that makes us increasingly vulnerable. All a thief has to do is get hold of a single set of digits—your bank account, your credit card number, or especially your Social Security number—and he can take up residence in your life. If you have great credit, he suddenly has great credit.

Anyone with a Social Security number can become a victim—even a newborn baby or someone who’s dead. Some identity thieves can pick your pocket for months and even years before they’re detected. They know just how to keep a victim’s suspicions at bay.

A Virginia couple was puzzled when a friend said he couldn’t reach them because their number was unlisted. They knew they were in the book, but figured it was a lame excuse for not inviting them to a party. When they heard the same thing from another friend, they checked with the phone company. It said the husband had asked that the number be unlisted. They shrugged that off as some mix-up, until they got a call to verify that they wanted their new Visa card mailed to a different address. They had ordered no card and had no new address. They quickly got a credit report and found that someone had already obtained another card in their name and a cash advance against it. Then they got it. The identity thief had requested that their number be unlisted so creditors couldn’t reach the couple.

Back in my criminal days, I engaged in identity theft of sorts. To be precise, I guess you could say that I engaged in profession theft. Although I never took on the identity of a living person—I never believed in crimes against the individual—I became a generic copilot and a lawyer and a doctor, among my guises. To pull this off took cleverness and perhaps a bit of a diabolical mind. You needed to be able to turn on the sweet grease and charm. I had to learn about airplanes and pilot lingo. I had to learn the law. I had to learn a suitable amount of medicine. I had to create believable IDs and acquire uniforms. I had to be able to stay cool under pressure.

Today, the identity thief can do what I did, and so much more, hiding behind numbers. No one tests his knowledge.

Identity theft is so new that it wasn’t even formally recognized as a specific federal offense until 1998, when, prompted by growing evidence of the crime, Congress passed a law, the Identity Theft and Assumption Deterrence Act. And though I speak of it as the crime of the future, because of its potential, it already is an enormous problem. I’ve heard estimates that half a million Americans a year are victims.

Identity theft is a chilling crime because the perpetrator is innocent until proven guilty, while the victim is guilty until he proves himself innocent. Until you’ve been caught up in this crime, you can’t imagine how hard it is to prove that innocence. It can be a nightmare of unimaginable proportions to get your credit and your identity back, if you ever fully do.

A HORSE OF MANY COLORS

The approaches taken by identity thieves vary a great deal. Most often, the thief is a total stranger, someone you’ve never seen and who has never seen you. But not always. A woman living alone in her own house took on a roommate for some added income and companionship. The roommate lived with her for nine months. She was amiable enough, and always paid her rent on time. One day she told the woman she had gotten a job offer out West, and so she would be moving. The woman was happy for her, and thought nothing of it.

A few weeks after the roommate left, the woman got a call from a bank officer. The officer said the bank had received her most recent mortgage payment, the same as always, but it hadn’t received the payment for her second mortgage. “Second mortgage?” the woman said. “What second mortgage?” It seems that the roommate, by rummaging through the woman’s utility bills and other mail, had acquired enough information to pose as her and take out a second mortgage, the money that got her out West.

One identity thief managed to accumulate more than one hundred thousand dollars in credit card debt, take out a federal home loan, buy several homes, motorcycles, and handguns, all in the victim’s name. But that still wasn’t enough for him. He would also call the victim and hector him, taunting him that he could buy all he wanted for as long as he wanted, and he would never be caught. Finally, the thief filed for bankruptcy—naturally in the victim’s name. At the time, identity theft wasn’t a federal crime, so when he was finally caught the criminal served a brief sentence for making a false statement to purchase a gun. There were no other repercussions. He made no restitution to the victim. Meanwhile, it took the victim and his wife four years and fifteen thousand dollars to restore their credit and reputation.

A Milwaukee man used a stolen Social Security number to obtain additional identity documents and set up an array of fraudulent accounts. Under his new identity, he got a job at the Wisconsin Supreme Court then stole eighty thousand dollars of computer equipment from the court. While he worked there, he also collected Social Security benefits because he claimed he was disabled and unemployed.

Con artists will steal the identities of the prominent as well as the unknown. The FBI came across two Memphis thieves that said they stole the identities of six leading executives, including the chief executive officers of Lehman Brothers, Coca-Cola Enterprises, and Hilton Hotels. Two of the impersonated executives had recently died.

Before they were caught, the hucksters managed to order $730,000 worth of diamonds and Rolex watches over the Internet. They did this by having the credit card companies and banks change the billing addresses of the executives to hotels in the Memphis area, then ordering the merchandise to be shipped to the hotels. The attraction of using the names of wealthy executives was their credit was so good. When the jewelers that sold the goods contacted American Express about putting purchases of $40,000 on cards purportedly belonging to the executives, there was no hesitation. They got immediate approval.

IT’S AS EASY AS . . .

How does someone steal your identity? With the sharp erosion of privacy, the variants are endless. A thief doesn’t have to break into your home or hold you up. It all gets done on the sly.

One straightforward method is “shoulder surfing,” which I told you about earlier with ATM fraud. A thief watches you as you punch in your credit card or calling card number at a pay phone. Or he eavesdrops on your conversation as you give your number to a hotel or merchant. From that one number, he gathers other information about you and is on his way.

Another popular approach is “Dumpster diving.” Crooks root through your garbage cans, trash bins outside stores, or on street corners, or communal Dumpsters. They toss away the chicken bones and old newspapers, and collect credit card statements, bank statements, phone bills, copies of checks, or anything that shows your name and address. These records are gold to an identity thief.

How many times have you gotten a stack of “preapproved” credit cards in the mail and, already being flush with cards, simply tossed the envelopes in the garbage without ripping them up? The identity thief thanks you very much. He goes ahead and attempts to activate the cards, often with success. Some credit card companies require that you activate a new card only from your home phone number, but this precaution hasn’t been universally adopted. A few years ago, federal authorities broke up the Trash Ring, a group that stole more than $10 million in dozens of states, largely by recovering cards and account information from Dumpsters and trash cans.

If you’ve been divorced, the transcript of your case, bulging with financial and credit information that you had to reveal, as well as your Social Security number, is public record. A thief need only stop in at the courthouse and scribble down what he needs.

One recently-arrested identity thief, a low-level employee at a drug company, happened to come across a box of personnel records for three dozen former employees. The box was lying in a storage closet of the company. When you’ve got a criminal mind, a box like that is a bonanza. The thief, along with several accomplices, used the records to get credit cards, buy more than one hundred thousand dollars of goods, and rent three apartments in other people’s names. For a time, they lived a joyous life that was way beyond their own means.

Employees at a New Jersey car dealer used the company access to the three leading credit bureaus—Equifax, TransUnion, and Experian—to find strangers with good credit histories, some of them living as far away as Alaska, and then opened up credit card accounts in their names.

A group of Nigerians established themselves in the industrial cleaning business. They had trucks. They had uniforms. They had cleaning supplies. In due course, they had customers. They would come into the company offices at night and clean the place. And they did a beautiful job. But they cleaned the offices of more than grime. They knew how to get at personnel records and would copy Social Security numbers and whatever other useful information they found and steal identities.

And there are endless come-ons that thieves use to sucker people into unwittingly divulging personal information. Not long ago, some fairly provocative flyers suddenly popped up in scores of black communities throughout the South and Midwest. They were stacked on tables in churches, stuck in windshield wipers of parked cars, and tacked to the bulletin boards of senior citizen centers and nursing homes. The headline on them read: “Apply for Newly Approved Slave Reparations! Claim $5,000 in Social Security Reimbursements!” The body of the flyers said that blacks born before 1928 could be eligible for slave reparations under the “Slave Reparation Act.” Those born between 1917 and 1926 could apply for Social Security disbursements because of a “fix” made in the Social Security system.