Ringleader behind theft of Bernanke's wife's identity sentenced

Waldorf, Maryland's Clyde Austin Gray, Jr. was sentenced on Friday to 11 years in prison and to repay more than $1.4 million in restitution. Gray previously pled guilty to masterminding a nationwide identity theft ring, whose victims included the wife of Federal Reserve Chairman Ben Bernanke.

Tax return preparer charged wiht identity theft

Sharon Meyers-Washington, a Little Rock, Arkansas resident who worked part time as a tax preparer, has been charged with identity theft as a result of fraudulently using Social Security numbers to prepare false tax returns.  Ironically, Meyers-Washington is also an employee of the Social Security Administration. 

Meyers-Washington was a tax return preparer for Jackson Hewitt for tax years 2005 and 2006 and for JBL Refunds in 2007. 

Meyers-Washington was charged with 24 counts of aiding and assisting the preparation of false tax returns, 34 counts of fraudulently using Social Security numbers and one count of aggravated identity theft.

Identity Theft Program Backfires on Consumer

Straight from StatesmanJournal.com.  Unfortunately this is all too common with these identity theft protection companies:

I heard about an identify theft program that protects you for only $110 a year and you can sleep at night with no worries of someone stealing your identity and maxing out your credit cards.


When I agreed to the program, I used my credit card for the yearly fee. But when I received my credit card statement, the company that I had signed onto had billed me twice, for $220.


This is the company that is supposed to protect me. I am supposed to get a credit for that and hopefully I will.

I can only hope this is all that will happen to me on this.

Too bad the person that posted this did not identify the company so others could avoid her fate.

Data breach victims four times more likely to be victims of identity theft

According to a recent study called "Data Breach Notifications: Victims Face Four Tmes Higher Risk of Fraud", those individuals whose information is exposed via a data breach are four times more likely to have their identity stolen than the average person.  The results of this study are contrary to the party line spewed by most companies that victims of their data breaches typically are not later victimized by fraudsters or identity thieves.  The study, conducted by Javelin Research, also underscores the need for stronger legislation to protect individuals from data breaches and require notification when data breaches occur.  As I posted earlier, the Senate Judiciary Committee has approved two such bills - S. 139 and S. 1490.

The study utilized multiple years of data including 2009 data breaches. The report also presents a timeline overview of the most recent and egregious data breaches in U.S. history, with recommendations for how individuals and companies can increase safety.

Possible new law on the horizon regarding data breaches?

On November 5, the Senate Judiciary Committee approved two bills regarding data security.  The first is Senator Feinstein's Data Breach Notification Act (S. 139).  The text of this proposed law can be found here - http://thomas.loc.gov/cgi-bin/query/z?c111:S.139:. 

The Data Breach Notification Act would greatly expand the amount of data combinations that, if breached, would require notification.  Currently, most laws only require notification if a name is released in conjunction with a Social Security number, driver's license number or financial account number.  If S. 139 is passed as is, it would require notification if only the first and last name, address/phone number and date of birth are stolen or inadvertantly released.  The bill would also require notification of the Department of Justice and fines up to $1000 per day per victim up to $1,000,000.

The second bill approved by the Senate Judiciary Committee was Senator Leahy's Personal Data Privacy and Security Act (S. 1490), the text of which can be found here - http://thomas.loc.gov/cgi-bin/query/z?c111:S.1490:.

Senator Leahy's bill goes beyond Senator Feinstein's in that it is styled to be proactive to prevent data breaches, rather than reactive to data breaches that have already occurred.  Think "Red Flag Rules" but with the emphasis on protecting against data breaches of any kind, rather than just recognizing and preventing identity theft.  The bill would require companies maintaining information on 10,000 or more United States persons to implement a comprehensive personal data privacy and security program that includes administrative, technical and physical safeguards to prevent data breaches as well as requiring employee training and vulnerability testing of the safeguards. 

I will do my best to follow these two bills and update you on their status.

Identity thief gets 11 years

A California Federal Court sentenced Garden Grove, California man to eleven years in prison for masterminding two identity theft schemes that allowed him to steal personal information from hundreds of consumers.  He then stole their identities, using the consumers' identities to fraudulently obtain over $1.5 million from credit card accounts and home equity lines of credit.

In additon to his sentencing, Martin Quoc Pham was also ordered to pay restitution of nearly $538,000.  While Pham used the stolen identities to access legitimate home equity lines of credit with Chase Bank, I representing a plaintiff in a similar case involving Bank of America.  While the identity thief initially begins the consumers' nightmare, it is the banks that keep the problem going.  In my case, Bank of America made error after error, completely ignoring my client's proof of his innocence.

In another scheme, Pham used fraud credit cards to buy merchandise from Wal-Mart and Sam's Club stores. Pham and his cohorts were able to obtain over $300,000 in merchandise fraudulently.  Pham's three co-conspirators already pled guilty to the scheme.

Equifax buys Rapid Reporting Verification Company

Equifax has purchased Rapid Reporting Verification Company for a cool $72.5 million.  Amazing how Equifax can have that much to spend on a new company but can't fix its own matching logic.

Rapid Reporting Verification Company is a privately held national provider of IRS tax transcript information and social security number authentication services.  Equifax is allegedly buying Rapid Reporting to increase its ability to prevent and control fraud.  I'll let you know if I can tell a difference.

Crime almost paid ... to the tune of $1.1 million

A New York computer technician almost got away with a scheme that would have netted him $1.1 million.  The key word being "almost".

Adeniyi Adeyemi has been arrested and charged with stealing the identities of more than 150 Bank of New York employees and using their identities to open bank accounts and brokerage accounts to be used as dummy accounts to receive stolen funds.  Adeyemi then allegedly stole funds from the bank accounts of charities and other non-profit organizations, transferring the funds to the dummy accounts.  He later withdrew the funds from the dummy accounts and deposited into other accounts.  Most of the crime was perpretrated over the internet, since charities make their account information readily available in order to encourage donations, which also makes them easy targets for a computer hacking identity thief such as Adeyemi. 

The U.S. Secret Service investigated, finding dozens of credit reports of Bank of New York employees (i.e. Adeyemi's co-workers) on Adeyemi's computer.  Also, investigators also found notebooks containing hundreds of names, SSNs and other personal identifiers, as well as credit cards in the names of Bank of New York employees, in a storage locker rented by Adeyemi.

Sounds like the government's case is pretty solid.

FTC does it again - Red Flag Rules enforcement pushed back to 2010

For a fourth time, the FTC has postponed the effective date of the Red Flag Rules.  The most recent effective date was November 1, but its now pushed all the way back to June 1, 2010.  Also, various groups are still trying to wiggle their way out of having to comply with the Red Flag Rules.

The American Bar Association won such a result for law firms.  A D.C. federal judge ruled that law firms do not fall under the definition of a "creditor".  I posted on this over the weekend.  See my post here - http://fcralawyer.blogspot.com/2009/10/red-flag-rules-does-not-include.html. 

Veterinarians and CPAs are also trying to win exemptions from the new requirements.  But they don't have to sweat it too much until next June . . . if ever.

New York Times compares scores from different sites

The New York Times took the time to analyze and compare the different credit scores from each of the three credit bureaus and other websites where you can obtain your "credit score".  I use quotes because only some of the sites actually provide a score that is likely to be used by a lender.

For instance, the three credit bureaus each offer to sell consumers their credit scores.  But only Equifax uses a score that is actually based on a scoring model used by potential lenders.  Experian and Trans Union's scores are thus less useful to consumers than the score sold by Equifax. 

Also the congressionally required site http://www.annualcreditreport.com/ uses a FICO score, which is used by lenders.  You can also get this score via FICO's website.  But the credit score offered by http://www.creditkarma.com/ does not use a scoring model used by lenders.  The website http://www.quizzle.com/ is not mentioned in the article but also does not use a score based upon a scoring model used by lenders.

The full article is here - http://www.nytimes.com/interactive/2009/11/29/business/scores2.html. 

Father and Son Guilty of Identity Theft

Like father, like son?  A Kansas judge sentenced a Kansas man and his son to prison for providing fake ids to workers at a Desoto, Kansas manufacturer.  The father, Benito M. Dominguez, was sentenced to four and a half years in prison while his son, Jose E. Dominguez, was sentenced to almost two years.

The father and son crime duo possessed the names and Social Security numbers of over 400 people, which they used for bogus SSN cards and resident alien documents.  Both pled guilty to single counts of aggravated identity theft and making false identification documents. 

Equifax drops a spot in Global 100

Equifax, Inc., is still in the Global 100, a list of the world's top technology firms, but has dropped a spot this year to 17.  Equifax, Inc. is the publicly traded parent company of Equifax Credit Information Services, the credit bureau I sue all the time for consumers whose information it reports incorrectly.

Not sure why a company whose computer "matching logic" routinely fails to match a person to his or her credit information is considered a top technology firm.  Whose number 16 on the list - MicroStone, the maker of Fred Flintstone's computer?

Life Insurance Agent Arrested for Identity Theft

Kerry Urban Hunter, an Inglewood, California life insurance agent, was arrested and charged with one count of identity theft and one count of grand theft, both of which are felonies.  Hunter allegedly received over $5,000 in advanced commissions from a duped life insurer after submitting 18 bogus insurance applications for nine different people.

Hunter's scheme was discovered when his company peformed its own investigation after after an inordinate amount of applications were cancelled due to the premium checks bouncing.

Hunter allegedly used his own checking account information on the applications but incorrect dates of birth and SSNs of the supposed applicants.  Police were able to locate one of the alleged applicants who did not know Hunter and did not intend to buy any life insurance from him.

Equifax buys another company

Equifax, Inc., the parent company of Equifax Credit Information Solutions (which is the credit bureau that I'm always suing for consumers), has acquired IXI Corporation, a company engaged in collecting, analyzing and delivering consumer wealth and asset data.  Equifax purchased IXI Corporation for $124 million (apparently I need to be holding out for more money for my clients). 

Just what we need, Equifax keeping up with more data.  Like they don't already have enough that they can't keep accurate!

Five steps to prevent identity theft

Five steps to prevent identity theft - straight from http://www.newsday.com/business/retirement/five-tips-to-deter-identity-thieves-1.1557909.

1. Hang on to your credit card



Culprits who steal identities can get into your records in a blink. Devices as small as a cigarette lighter can be used to "skim" information from any card with a magnetic strip -- even while a sales associate is processing a legitimate transaction.


A re-encoded or cloned credit card is created with another person's name on the front, and the victim's personal info on the magnetic strip. Full service gas stations "have been notorious" for this type of ID theft, Suffolk Police Det. Thomas Gabriele says. Instead, pay by cash, or swipe your card at the self-service island and pump the gas yourself wherever possible.

2.  Get ID theft protection


If a new account is opened by a thief using your personal information, the delinquent payments will be reported to a credit bureau, damaging your credit.

Obtain a free report from the three major credit bureaus, Equifax.com, Experian.com and Transunion.com. (It's important to check all three because they may not all have the same information.) Once you are certain all of the credit information is correct, you can put security measures such as passwords in place.  [ok, I don't agree with this.  Instead, you should get your free credit report via http://www.annualcreditreport.com/ via the written form you can fill out to request your credit reports.  This form (unlike the websites listed above) does not have any arbitration clauses that potentially take away your rights.]


3.  Watch the mail


Thieves may be after more than checks in your mailbox. They also can copy personal information from official correspondence. Install a locked security mailbox, opened with a key. If you are receiving checks, have them deposited directly into your bank account instead of sent to your home.


4.  Better to shred


Any piece of mail with an account number or a code could be used to invade your privacy. That includes a bank statement, medical bills -- even shopping catalogs with codes on the back. If it bears an account number or code, shred before trashing. An inexpensive crosscut paper shredder costs less than $50.


5.  Password diversity


Use different passwords for all your accounts and don't use ones that will tell thieves your personal information, such as your birth date.

If your password is breached, a thief can run rampant with it. For accounts that require passwords, create something new and unique. Write them down and file them in a safe place so they can be referenced when you need them.