Biggest ID Theft Bust in History

111 Arrested, Charged in $13 Million Scheme

By , October 10, 2011.
Biggest ID Theft Bust in History


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he biggest ID theft bust in history is the result of equally impressive international cooperation, observers say.

On Oct. 7, the District Attorney of Queens County, N.Y., and City of New York Police announced the results of a two-year investigation that resulted in the biggest identity theft takedown in U.S. history.

The elaborate scheme, which involved five organized crime rings with ties to Europe, Asia, Africa and the Middle East, resulted in financial losses exceeding $13 million over a 16-month period.

So far, 111 individuals have been indicted, and authorities say 86 are now in custody.

McAfee consultant Robert Siciliano says the bust is a reflection of more international cooperation. "Despite bad blood between countries and their politics, when it comes to fraud regarding economic systems, governments and their security forces are coming together like never before," he says.

The Bust

Dubbed "Operation Swiper," the investigation involved physical surveillance, intelligence gathering and court-authorized electronic eavesdropping on dozens of telephone conversations, many of which required translation from Russian, Mandarin Chinese and Arabic.

The fraudsters' focus: credit card fraud, which exploited magnetic-stripe weaknesses the criminals could use to their buying advantage in the United States. Chip-and-PIN technology, known as the Europay, MasterCard, Visa standard in other parts of the world, is not widely deployed in U.S.

More than 90 of the defendants have been charged with Enterprise Corruption under New York State's Organized Crime Control Act. They are accused of being members and associates of organized criminal enterprises that operated in Queens County and elsewhere. Between May 2010 and September 2011, the defendants allegedly defrauded thousands of unsuspecting consumers, financial institutions and card brands, including American Express, Visa, MasterCard and Discover Card.

According to the indictments, the defendants fraudulently obtained credit card numbers that were used to create counterfeit credit and identification cards.

Card numbers are believed to have been sent to crime bosses from individuals in Russia, Libya, Lebanon and China. U.S. employees at restaurants, bars, retail stores and financial institutions also have been linked, using handheld skimming devices and illegal websites to collect consumers' card details.

The counterfeit cards were supplied to hired shoppers who were instructed to purchase high-end electronics and other merchandise, items that could easily be fenced and re-sold, usually over the Internet. Some of the shoppers also have been accused of using counterfeit cards to stay in five-star hotels and rent luxury cars during their so-called shops. In one case, a shopper allegedly commissioned a private jet to travel from New York to Florida.

Fraud analyst and consultant Jerry Silva says the busts should serve as a wake-up call about the growing threat of insider fraud. The use of money mules at restaurants and bank branches is a particularly disturbing part of the case.

"For banks, this calls for renewed focus on employment policies, security measures at the point of customer contact and, at the legislative level, new and stiffer laws and penalties covering workers entrusted with sensitive information - and I would include waiters and merchants in the same breath as bank tellers and representatives - that are found to be misusing or collecting financial data."

Some 20 defendants also have been linked to suspicions of burglaries and robberies throughout Queens County. Seven have been accused of stealing approximately $850,000 worth of computer equipment from the Citigroup Building in Long Island City.

Follow Tracy Kitten on Twitter: @FraudBlogger

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