From the President

Welcome to our special case study issue


By James D. Ratley, CFE

The editors of Fraud Magazine know the value of a good story. They like to begin feature articles and many of the columns with case histories because they know you want illustrations of fraud examination principles in action.

We go one step further in this issue. Most of the feature articles are detailed analyses of case histories, including the cover article, "To snare a menace: 'Synthetic identity' fraudster stole millions."

The authors — Anthony P. Valenti, CFE, CAMS, and Stephen G. Korinko, CFE, CAMS, CPP — tell of a cyberfraudster who not only ripped off the identity of a client but created new "synthetic" guises to do it.

Fraudsters create synthetic identity persons, according to the authors, by combining real Social Security numbers with different dates of birth plus fictitious names and addresses. The combinations are endless. Law enforcement personnel now are trying to track identities that technically don't exist.

The author's perpetrator went to extreme measures — he bought a credit reporting agency's protection service, changed the date of the birth linked to the victim's account and effectively blocked the victim's access to his credit file. The fraudster changed the victim's telephone number and address so now the agency would call or write the fraudster whenever it detected any "unusual activity." Thus, the fraudster had an open window into the client's financial movements and the fraud examination almost from the start.

Apparently, the fraudster could now unlock the credit history just before filing a fraudulent loan application so merchants could access his credit history, then lock the account and await responses from those merchants and financial institutions.

Ultimately, the authors write that they were able to identify the fraudster's given name (and numerous synthetic persons with multiple addresses, which the fraudster had created) by comparing the victim's actual addresses with those listed in credit reports and with fraudulent information on applications the fraudster submitted to credit card companies, retail merchants and banks.

The authors then were able to link the fraudster to other victims and crimes, which amounted to millions of dollars in losses.

They connected the fraudster to the theft of $2 million from a hedge fund, fraudulent student loan applications and fraudulent receipt of veterans' benefits, among other crimes. They referred all the frauds to the U.S. Postal Inspection Service, which presented the case to the local U.S. attorney's office. (Be sure to read the interview with the inspector in charge of the New York Division of the U.S. Postal Inspection about synthetic identity fraud.)

The cyberfraudster received a multi-count indictment and faces mandatory jail time. Not a bad story.





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