Home Equity ID Theft Ring Points to a Bigger Problem

On Monday, Federal authorities informed the public of a series of arrests where identity theft was used to steal the equity out of homes. I guess we've already lost so much money in the mortgage crisis, the identity thieves figured it wouldn't matter?

The four arrested on Monday were Derek Polk, Oluda Akinmola, Oluwajide Ogunbiyi, and Oladeji Craig. The four appeared in federal court in Los Angeles, Newark, Buffalo, and Springfield. Also arrested for home equity schemes between August and October were Daniel Yumi (Brooklyn), Yomu and Olokodana Jagunna (Queens), and Abayomi Lawal (Brooklyn).

Strangely enough — although no one in the mainstream media is saying — most of these names sound slightly foreign. Judging by the surnames my best guess is that they are originally from West Africa, probably Nigeria. Stories of Nigerian fraud are extremely popular in the media so I'm surprised no one took this opportunity to put that twist to this story.

In all fairness, in previous posts, I've lamented that fraudsters often pose as Nigerians or the media incorrectly pegs fraud as coming from Nigeria when it doesn't. There is no doubt Nigeria is known for a lot of fraud, but they didn't invent it and are not the only players in the game.

It should also be noted (out of fairness) that court documents reflect the federal authorities stating that this is the result of an investigation into a multi-national identity theft ring. There are a lot of fraud groups out there, both foreign and domestic, and many of the experts have concluded they are working together when it suits them.

The proceeds of these home equity scams were wired all over the world, including South Korea, Japan, China, Vietnam, Canada, and the United Kingdom. According to news accounts about $2.5 million was wired and the total take in the scheme was about $10 million.

Sadly — although this has been called out as a problem frequently — a lot of fodder (information) used in the scams was obtained by none other than public record searches. The public records used even contained credit applications, credit reports, and the victims' signatures, according to the FBI. BJ Ostegren — who was kind enough to give me a personal demonstration a while back — is the champion of exposing just how much of this information is out there for anyone to grab. If you want to see exactly how much information is available, her website is a good place to start.

Also mentioned in the criminal complaint was that fee-based Internet services were used to obtain some of the information. This is a huge business, which nets billions of dollars a year for the people selling it. I did notice that no one is saying which one of the services were used.

It should also be noted that information like this is bartered in forums on the Internet. Symantec just released a report showing how cheaply some of this information can be obtained. This type of activity is fairly well known and the FBI recently cracked one of the forums (Dark Market). This group allegedly racked up about $70 million in fraud, worldwide.

The individuals arrested in this scheme also used a lot of known technological fraud crutches, such as caller ID spoofing, prepaid cellular, and forwarding calls without the owner's knowledge. Tricking a phone company into forwarding calls is no problem for most fraudsters as little to no due diligence is performed before it is done. You can have your carrier block this feature, or password protect it (recommended) — however doing this is left entirely up to you. So far as caller ID spoofing — it's essentially legal — and anyone can purchase the means to do it right over the Internet.

There probably won't be any effort to change call forwarding, or caller ID spoofing as it is a lucrative income stream for telecom businesses.

You would think as long as we are in a world-class financial crisis, we might begin to wake up and smell the coffee? Although, we can't blame fraud as the cause of the entire crisis, I often wonder how much of a contributing factor it is. We've made identity theft too easy to do and hard to control. The people who committed this latest form of identity theft probably aren't the sharpest tools in the shed. They are just taking advantage of other people making a lot of money by making too much information available and not protecting it.

If you look in the mirror you might get an idea who suffers from this seeming inability to fix a growing problem. Even if you aren't victimized, we all pay for it in the end — either in an organization's expense line or in the form of a government bail-out.

I'll close with a with an interesting satire written by Phillip Maddocks, which came out in the Norwich Bulletin entitled, "Credit card fraud gangs say they can fix economy but need government loan." This satire is about the heads of several credit card gangs who are seeking a government handout to keep credit card fraud alive because it is beneficial to the economy.

Although this is a satire — it has a ring of truth to it!

Unfortunately, we allow a lot of dumb things to continue because someone thinks it's beneficial to the economy.