Gov't is increasingly scammed by crooks using inmates' IDs

DALLAS - Fraudsters are increasingly getting help from an unlikely source: prison inmates.

Identity-theft rings are borrowing or stealing prisoners' Social Security numbers to use in financial crimes against the government, such as posing as legitimate applicants to steal student-loan money or unemployment benefits, or filing bogus tax returns to obtain unearned refunds.

A federal crackdown has led to an increase in prosecutions against identity thieves across the country, but authorities estimate they are missing many more such crimes, which typically are committed by rings involving hundreds of people.

Fraud involving government benefits was the most common type of identity theft in the nation in 2011, according to a Federal Trade Commission report. Of that, tax-related fraud was at the top, the report said.

Government authorities would not discuss the trend. But identify-theft experts say they are not surprised that inmates' identities are turning up in fraud cases.
"They're criminals. They're not thinking of the future," said Robert Siciliano, a McAfee identity-theft expert in Boston. "They're thinking of right now. Their next fix."

The fraudulent schemes can be committed easily with a computer and an Internet connection. Because thieves are using valid names and Social Security numbers, internal controls can't detect the swindlers.

Inmates' Social Security numbers are desired for these crimes because they are "clean," experts say, meaning they are not on file with the credit bureaus.
"As with children, these people typically do not regularly check their credit activity, making them easy targets for identity thieves," according to a recent article from the Federal Reserve Bank of St. Louis. "When they are released from prison, this fraudulent credit history is another impediment to securing employment, housing or access to credit."

And inmates who voluntarily give up their Social Security numbers for fraud stand to profit.

In one student-loan scheme, 15 inmates' identities were used to defraud the government out of $110,000. Some of that money was sent to the inmates in the form of money orders, authorities said.
The U.S. Department of Education noted in a 2011 report that one person had used the identities of more than 50 prison inmates, most of whom were serving long sentences, to receive $300,000 in fraudulent student loans.
"Currently, there is no method to ensure that ineligible prison inmates are not awarded Title IV funds," the report said, referring to student loans.
A Dallas man, for example, pleaded guilty in 2009 to using the identities of sex offenders and "people he found on a real estate website and from family court documents" to apply for more than $180,000 worth of federal student loans for bogus online college enrollments, according to court documents.
Desmond Ladell Johnson's scheme involved enrolling people in online community college courses and applying for student financial aid on their behalf. Colleges that offer online courses aren't required to verify prospective students' identities.
One person whose name Johnson used to apply for student financial aid in 2006 was serving time in an Indiana prison, with a release date in 2010, records show.
Since 2005, a total of 215 people have been convicted in 42 student-loan fraud rings, according to the Education Department report.
In other cases, criminals stole the identities of prison inmates using private information posted online or included in public records years ago, before anyone knew how the data would be misused.
Although such information is no longer posted online, "If it's digital, it's forever," said Siciliano, the identity-theft expert.
It's clear from criminal-court records that thieves are still using data mined years ago.
A recent IRS investigation uncovered a $10 million tax-refund scam in which tax returns were filed electronically from Africa. Some were mailed from the Dallas area. A Kenyan national living in Plano was among those convicted in the scheme, which used the Social Security numbers of former Indiana prison inmates, court records said.
Texas ranked fifth in the country in 2011 for identity theft, according to federal statistics.
It takes many forms. Data breaches at large companies are a common problem in which thieves hack into confidential customer information online.
Insider theft also is a problem. Employees can get access to sensitive information from a computer hard drive or a file cabinet. Someone, for example, stole a hard drive from American Airlines' parent company in 2010 that contained information on 79,000 retirees and former employees.
The potential for such theft also exists in prisons.
A South Carolina woman who was serving nine months in a state prison for forgery in 2008 used the personal information of other inmates without their knowledge to apply for student financial aid. Michelle Owens had access to the data in the prison's education department where she worked, records show.
She received $467,500 in student loans and spent more than $124,000. She was sentenced to federal prison.
Despite such cases, prisoner access to Social Security numbers was still a problem as of 2010.
That was when the Social Security Administration's inspector general issued a report saying eight states still allowed prisoners access to Social Security numbers during work details "despite the risks."
Siciliano said people about to serve prison time should request a credit freeze to avoid becoming victims while behind bars.
Avoid becoming a victim
The government and consumer advocates recommend these precautions to avoid becoming a victim:
Do not click on links in unsolicited emails even if they appear to be from real companies or government agencies.
Never send your personal information by email.
Do not include your full birth date on Facebook or any other website. Use the month and day only if you want friends to know your birthday.
Shred sensitive financial records and receipts before putting them in the trash or take your records to a business that will shred them for a fee.
Check your bank and credit-card statements online periodically to check for unauthorized charges. If you find that thieves have made purchases in your name, call the police, contact all three major credit reporting agencies and report your case to the Federal Trade Commission.
Use direct deposit instead of getting a paycheck by mail, which can be stolen from your mailbox.
Do not respond to calls or emails from banks or other businesses that request your personal information to "update their records." They are almost always scams.
Destroy your hard drive before throwing away your computer so thieves cannot access it.
Use long passwords with a mix of letters, numbers and characters.
The Dallas Morning News

2013-01-06T00:00:00ZGov't is increasingly scammed by crooks using inmates' IDsKevin Krause The Dallas Morning NewsArizona Daily Star
10 hours ago Kevin Krause The Dallas Morning News
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DALLAS - Fraudsters are increasingly getting help from an unlikely source: prison inmates.
Identity-theft rings are borrowing or stealing prisoners' Social Security numbers to use in financial crimes against the government, such as posing as legitimate applicants to steal student-loan money or unemployment benefits, or filing bogus tax returns to obtain unearned refunds.
A federal crackdown has led to an increase in prosecutions against identity thieves across the country, but authorities estimate they are missing many more such crimes, which typically are committed by rings involving hundreds of people.
Fraud involving government benefits was the most common type of identity theft in the nation in 2011, according to a Federal Trade Commission report. Of that, tax-related fraud was at the top, the report said.
Government authorities would not discuss the trend. But identify-theft experts say they are not surprised that inmates' identities are turning up in fraud cases.
"They're criminals. They're not thinking of the future," said Robert Siciliano, a McAfee identity-theft expert in Boston. "They're thinking of right now. Their next fix."
The fraudulent schemes can be committed easily with a computer and an Internet connection. Because thieves are using valid names and Social Security numbers, internal controls can't detect the swindlers.
Inmates' Social Security numbers are desired for these crimes because they are "clean," experts say, meaning they are not on file with the credit bureaus.
"As with children, these people typically do not regularly check their credit activity, making them easy targets for identity thieves," according to a recent article from the Federal Reserve Bank of St. Louis. "When they are released from prison, this fraudulent credit history is another impediment to securing employment, housing or access to credit."
And inmates who voluntarily give up their Social Security numbers for fraud stand to profit.
In one student-loan scheme, 15 inmates' identities were used to defraud the government out of $110,000. Some of that money was sent to the inmates in the form of money orders, authorities said.
The U.S. Department of Education noted in a 2011 report that one person had used the identities of more than 50 prison inmates, most of whom were serving long sentences, to receive $300,000 in fraudulent student loans.
"Currently, there is no method to ensure that ineligible prison inmates are not awarded Title IV funds," the report said, referring to student loans.
A Dallas man, for example, pleaded guilty in 2009 to using the identities of sex offenders and "people he found on a real estate website and from family court documents" to apply for more than $180,000 worth of federal student loans for bogus online college enrollments, according to court documents.
Desmond Ladell Johnson's scheme involved enrolling people in online community college courses and applying for student financial aid on their behalf. Colleges that offer online courses aren't required to verify prospective students' identities.
One person whose name Johnson used to apply for student financial aid in 2006 was serving time in an Indiana prison, with a release date in 2010, records show.
Since 2005, a total of 215 people have been convicted in 42 student-loan fraud rings, according to the Education Department report.
In other cases, criminals stole the identities of prison inmates using private information posted online or included in public records years ago, before anyone knew how the data would be misused.
Although such information is no longer posted online, "If it's digital, it's forever," said Siciliano, the identity-theft expert.
It's clear from criminal-court records that thieves are still using data mined years ago.
A recent IRS investigation uncovered a $10 million tax-refund scam in which tax returns were filed electronically from Africa. Some were mailed from the Dallas area. A Kenyan national living in Plano was among those convicted in the scheme, which used the Social Security numbers of former Indiana prison inmates, court records said.
Texas ranked fifth in the country in 2011 for identity theft, according to federal statistics.
It takes many forms. Data breaches at large companies are a common problem in which thieves hack into confidential customer information online.
Insider theft also is a problem. Employees can get access to sensitive information from a computer hard drive or a file cabinet. Someone, for example, stole a hard drive from American Airlines' parent company in 2010 that contained information on 79,000 retirees and former employees.
The potential for such theft also exists in prisons.
A South Carolina woman who was serving nine months in a state prison for forgery in 2008 used the personal information of other inmates without their knowledge to apply for student financial aid. Michelle Owens had access to the data in the prison's education department where she worked, records show.
She received $467,500 in student loans and spent more than $124,000. She was sentenced to federal prison.
Despite such cases, prisoner access to Social Security numbers was still a problem as of 2010.
That was when the Social Security Administration's inspector general issued a report saying eight states still allowed prisoners access to Social Security numbers during work details "despite the risks."
Siciliano said people about to serve prison time should request a credit freeze to avoid becoming victims while behind bars.
Avoid becoming a victim
The government and consumer advocates recommend these precautions to avoid becoming a victim:
Do not click on links in unsolicited emails even if they appear to be from real companies or government agencies.
Never send your personal information by email.
Do not include your full birth date on Facebook or any other website. Use the month and day only if you want friends to know your birthday.
Shred sensitive financial records and receipts before putting them in the trash or take your records to a business that will shred them for a fee.
Check your bank and credit-card statements online periodically to check for unauthorized charges. If you find that thieves have made purchases in your name, call the police, contact all three major credit reporting agencies and report your case to the Federal Trade Commission.
Use direct deposit instead of getting a paycheck by mail, which can be stolen from your mailbox.
Do not respond to calls or emails from banks or other businesses that request your personal information to "update their records." They are almost always scams.
Destroy your hard drive before throwing away your computer so thieves cannot access it.
Use long passwords with a mix of letters, numbers and characters.

Gov't is increasingly scammed by crooks using inmates' IDs