The Art of the Steal (4 page)

I do recognize that by revealing how scams work, I run a risk. During my career, I have never conducted seminars open to the general public, but always under the sponsorship of an association, a company, or a financial institution. I hope, when you read this book, you see it as a useful educational tool for a business person or a consumer. I, with a criminal mind, know that some will see it as a bible and a great instructional book for the amateur forger. In order to educate the masses, though, I feel it’s worth taking that risk. Why should only the criminals know the tricks?

Fraud goes on every day, in every city, all over the world. Practiced today by increasingly wily criminals, fraud is incredibly complex, and full of nuance and creativity. Businesses and consumers have never been more vulnerable. To more and more people, fraud is no longer an abstraction but an act with a face and a name. The most effective strategy to prevent it is to make things difficult and complicated enough to raise a murmur of distress from the crook. That way he’ll decide it’s not worth the effort to try and take advantage of you.

A criminal always looks for the easiest path to riches. At my house, I have a security camera and security system, and after dark the place lights up like Yankee Stadium. A burglar takes one look at my house and heads to the next block. It’s the same thing with a forger or a con artist. He’ll search for the easy mark. So let’s learn how to keep it from being you.

2

[LOOKING FOR
MR. GOODCHECK
]

A
few years ago, a man double-parked his rental car in Miami and was given a parking ticket. He was from Argentina, visiting on vacation. He stuck the parking ticket in his briefcase and it went back with him to Argentina. While he was unpacking his luggage, he came across the ticket. The fine was twenty dollars. He searched around in his pockets and found that he still had some leftover U.S. currency. He stuffed a twenty-dollar bill and two singles in the envelope along with the ticket, sealed it, and mailed it to the Miami city clerk.

When the city clerk opened the envelope, he noted that the man had overpaid by $2.00. Instead of sending him the $2.00 back, the city mailed him a check for $2.00. When the man opened the envelope and found the check, he thought it was too good to be true. He took that check, scanned it into his computer and changed the amount to what he deemed was a more appreciative refund—$1.45 million. He printed out the corrected check and deposited it in a bank in Argentina. The city of Miami dispenses many checks for more than $1 million, and so it was paid without question. Because we don’t have extradition rights with Argentina, the man got away with it. He became a millionaire from a twenty-dollar parking ticket.

Since he was never caught, I can only speculate on the actual mindset of the Argentinian. But I happen to think the guy was doing this little caper as a lark, just to see if he could get away with it. Obviously, since he knew the mechanics of how to forge a check, he had to be at least a little bit crooked. But I sort of doubt that he ever imagined he could succeed at something so outrageous; he just couldn’t believe that forgery had become so easy.

Oh, but it has.

THE TRULY NOTEWORTHY NEWS

Despite the fact that we read a lot of stories in the newspapers about someone downloading credit card numbers from a website, or manufacturing phony Visa cards in some warehouse in Queens, the truth is, check fraud is much more prevalent. And although the average value of a fraudulent check is less than one thousand dollars, the Office of the Comptroller of the Currency estimates that total check fraud losses exceed $19 billion a year (and if we start giving out more parking tickets it might get a lot worse). Visa and MasterCard losses are less than 10 percent of that. And bank robbers, by contrast, got away with a relatively paltry $68 million in 1999.

Payment by check is far and away the most popular form of payment in the United States, easily exceeding payments by cash and credit card combined. Americans wrote 69 billion checks in 1999, and every year they write a billion more. No one knows that better than criminals. That’s why worthless checks are one of the most serious white-collar crimes affecting businesses today. Every day, American banks, savings banks, and credit unions return 1.3 million worthless checks. That’s $27 million of bad checks, every single day.

But only about 2 percent of bad check passers are arrested, and only about 62 percent of all bad checks are ever collected. And the conviction rate for bad check passers is lamentably low.

A SLIPPERY SLOPE

Things have changed so much since my days as a check forger. Years ago, when a forger came to a city, there was a great deal of preparation involved if he wanted to forge checks. First, he would have to rent an apartment to establish a physical address. He’d try to find a place he could rent by the month so he wouldn’t have to bother with a lease. Still, he’d have to pay the first month’s rent along with a security deposit.

Then he’d go down to the County Bureau of Vital Statistics and search through the death records for the year of his birth. He’d find an infant who was born around when he was born and died shortly afterward. He’d copy the vital information off the infant’s death certificate—the mother’s name, the father’s name, and so forth. Armed with this information, he could apply for a birth certificate. After he got the certificate, he’d go down to the Motor Vehicles Department and get a driver’s license. Then he’d go to the bank and open an account. That was the risky part, because he had to identify himself to the teller to fill out a new account card and a signature card. Then he had to wait ten days for checks to be printed up. That gave the bank ten days to run a credit bureau report, ten days to check on where he said he was employed, and ten days to contact his previous bank to see how he maintained his account.

None of this is necessary today. You just buy your checks through
TV Guide,
one of the Sunday magazines you find in newspapers, or over the telephone. Anybody can order anybody’s checks. We’ve made it so easy for people to steal from us. In fact, we’re the only country in the world that does make it so easy. In every other country, you have to pick up your checks at the bank. In Australia, for instance, if you want to reorder checks, you have to physically go to your bank branch and place the order. When the checks arrive, you have to return to the bank and get them. Only recently have a few banks in Australia begun to entertain the idea of mailing reordered checks to customers.

This whole notion of ordering checks directly from vendors started in an entirely innocent fashion. About fifteen years ago, a woman in Colorado Springs, Colo., named Miriam Loo had a greeting card and gift company called Current, which she started in the basement of her home. She had the idea of selling novelty checks, personal checks with special designs on them. She began with dogs. There were so many dog-crazed people, she figured they’d get a kick out of putting their dog on their checks. Sure enough, orders flowed in for checks with Beagles and Cocker Spaniels. Then she expanded beyond dogs into sailboats, cars, birds, flowers, whatever you wanted. It was a nice little business.

The DeLuxe Corporation in Minneapolis, the king of checks, found out about this and said, hey, she’s encroaching on our turf. DeLuxe went and bought her company and entered the personal check business. At first, DeLuxe sold only to banks. Then it began to sell directly to individuals by mail. Banks didn’t like the idea, but DeLuxe didn’t back off. The three other check companies said, well, we’d never do that. But one by one, they entered the business. Since the late 1980s, advertisements like this have appeared in newspapers and in direct mail: “Get two hundred checks for just $3.95. Or get one hundred fifty duplicate checks for only $4.95.” There are more than 200 companies that sell checks through magazines and the Internet. And there are no controls over them. It’s all perfectly legal.

People can get anyone’s check. All they have to do is see it. Criminals nowadays will drive around until they find a ritzy neighborhood with million-dollar homes. They’ll knock on a door. When someone answers, they’ll say, “Boy, you’ve got a lot of leaves lying on your lawn. What’d you got, an acre here? I’ll tell you what, my buddy and I will clean up your leaves, leave the place immaculate, and it’ll cost you just seventy-five dollars.” The guy thinks it’s a great deal, the crooks clean up the leaves, and the owner pays them with a check for seventy-five dollars. That’s all they came for: the check. Then they go to the Internet and order the checks of a guy from a million-dollar home, forge them, and start cashing them. Next time, the guy will rake his own leaves.

Or forgers drive to a wealthy neighborhood and park in a grocery store parking lot. They wait until you pull in in your Porsche or your Jaguar and they follow you into the store. You buy groceries. You have to write your check on a little pad that’s sticking up on the counter. They’re right next to you, loading items onto the counter. They look over your shoulder—most of them are women—and they can memorize your check in eight seconds. All they have to do is glance over your shoulder. You haven’t gotten past writing the date, and they’ve memorized it. Everything on it. They go back and fill out an order coupon. Name and address you’d like on the check? They put your name and address on the check. Style of check? You’ve got flags on your check, so they order checks with flags. How many? Two hundred. Last question: if you’d like these checks sent to an address other than the printed address on the face of the check, so state here. They fill in a P.O. Box. Ten days later, they’ve got your checks.

And don’t think these activities are limited to personal checks. A Fortune 500 company in Chicago got ripped off when somebody outside the organization ordered the company’s business checks through a catalogue—and all he gave them to put on the check was the company’s name and address. He didn’t know where the company banked. He didn’t have an account number. He didn’t know who signed the checks. The person ordered two hundred of the company’s checks and had them sent to him. Then he went to all the grocery stores he could get to and cashed them, because the company was a household word and employed thousands of people. Its checks were gold.

Not long ago, a company in Long Beach, Calif., got a disturbing invoice in the mail from its check printer. The company’s checks were being shipped to 110th Street in Los Angeles. The problem was, the company didn’t have an office there. Someone had reordered the company’s checks and changed the ship-to location to 110th Street. The printer had gotten the reorder with an address change and had simply processed it. One way things like this happen is that criminals recruit company employees to steal check reorder forms. Or they buy them. A stolen check reorder form is worth one hundred dollars on the street.

WHAT TO DO

The solution is to order checks through your bank, not a mail-order catalogue. A crook can’t waltz into Chase or Citibank and try to order your checks. And when you buy checks through a bank, they usually have more security features on them to prevent forgeries. Mail-order houses don’t bother with these things, and that’s why their prices are lower. [Although prices may soar if other states follow Illinois’s example: Illinois, to my knowledge, is the first state to pass a law actually making it a felony to order someone else’s checks. If you live in Illinois and a catalogue sells your checks to a crook you can sue the catalogue company.] Businesses also ought to order their checks through a bank, or else directly from one of the major business check-printing companies, which dispatch a salesman and follow strict ordering procedures to keep your checks from falling into the wrong hands.

HEARD OF THAT SPERM BANK?

A big reason for the proliferation of forged checks is that the tellers and clerks who cash them don’t pay close attention to the IDs they get handed. Even if they do, it’s so easy today for criminals to obtain bogus IDs that look genuine. Recently, a man showed up in Salt Lake City and went around to local banks claiming to be a Russian official doing preparatory work for the Russian Olympic team in advance of the 2002 Winter Games. He had a fake passport and other well-crafted fraudulent documents, and as an added precaution he brought along a young female accomplice who posed as his interpreter. In just three days, banks cashed $90,000 worth of worthless checks for him.

For the less creative forger, there are numerous check cashing stores that require no ID whatsoever, which is the reason they charge steep commissions. But the criminal doesn’t care; the fee’s not coming out of his account.

Too often, tellers and salespeople ignore an important precept, which is to be impressed with the check, not the person. Once, to demonstrate the point before a hidden television camera, I put on an expensive suit and drove up to a bank in a Rolls-Royce, where I managed to successfully cash a fifty-dollar check written on a cocktail napkin because the bank teller was more impressed by my appearance than by what I had handed her. Remember, the way someone looks, what he drives, or how friendly he is has no bearing on whether a check is good. It’s all part of the scam.

I went into a store recently, and if this hadn’t happened I wouldn’t have believed it. I bought a piece of luggage and wrote a check for it. Within a moment, the saleswoman handed me the luggage on the counter and gave me my check back. I looked puzzled, and she said, “Oh, we have a new program. It’s called e-check, from TeleCheck.” I asked her how it worked, and she said, “Well, you wrote me a check, and I put it through this machine that looks like a Scotch tape dispenser. It read your account number off the bottom of it. Then I keyed in the amount of the purchase and it sent all of that data electronically to TeleCheck’s file. Three days from now, the money is automatically deducted from your bank account and it shows up on your statement as an electronic deduction. In the meantime, your check is your receipt.”

I was flabbergasted. I couldn’t resist asking her, “What if I’m not Frank Abagnale? Since you didn’t ask me for any identification, what if I happened to have forged this check? Where’s your evidence?” This is a forger’s dream come true. I write you a check, you give me the merchandise, and you give me the check back. When the police show up and ask for the forged check, you have to say, “Oh, we gave it to the forger.” It’s absolutely amazing. I’d like to know where this was thirty-five years ago when I needed it.

The truth is, people who cash checks today are often so blasé about it, that a forger hardly has to even try. You wouldn’t believe some of the ludicrous checks I’ve run across that stores saw fit to cash. One check cashed in a grocery store in Houston, Texas, for fifty dollars, was literally signed, “I Screwed You.” The bank wrote back, “unauthorized signature.” I guess so. Another check was signed, “U. R. Stuck.” A clerk took that one, too. Another check listed an ordinary person’s name in the upper left-hand corner along with an address. The address read, “Your City, U.S.A.” The bank was listed as National State Bank, also located in Your City, U.S.A. Still another check for ten dollars was cashed at a liquor store in Denver that was drawn off “The Sperm Bank of America.” Must be a new financial institution. The television show, “Dateline,” for a report on check fraud, managed to get a bank to cash a one-thousand-dollar check that had “void” written all over it and the message, “Please Don’t Pay Me. I Am A Counterfeit Check!”

HOT CHECKS

The most common type of bad check is the proverbial “hot” check. A hot check is a check drawn from a legitimate checking account that lacks the funds to cover the amount, or has been written off of an account previously closed.