Scammers posing as Treasury officials

Doris Teno, of Rockford, admits panicking when she recently took a call from someone claiming to be with the Treasury Department who complained that she and her husband hadn’t properly filed their taxes for 2010.

He told her she had to pay him $1,000 or the U.S. marshal would arrive at her house to arrest her and seize her properties.

“He threatened me, since I wasn’t cooperating,” she recalled. “And then he said he’d arrest my husband too.”

Teno was one of thousands nationwide targeted by scammers who pose in calls or emails as Treasury or Internal Revenue Service officials threatening arrest, deportation or loss of property, authorities say.

The thieves seek personal identification information, money orders or prepaid credit or debit cards in order to void the phony arrest warrants, according to Thomas Bruton, clerk of the U.S. District Court for the Northern District of Illinois.

The Better Business Bureau of Chicago and Northern Illinois estimated that victims have lost a combined $1 million.

The scammers claim to have arrest warrants for offenses ranging from missed jury duty to bank fraud and money laundering. The bogus warrants display logos of unspecified district courts and false case numbers.

The Better Business Bureau said wrongdoers leave voice mail messages warning victims to immediately contact the IRS or face legal consequences. Other voice mails have threatened arrest by deputy marshals for failure to pay taxes in full.

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Boston Gang May Be Behind Car-Wash Credit-Card Thefts

At some car washes, it wasn’t just the cars that were getting cleaned out: Members of a Boston street gang were allegedly logging into the computerized cash registers of car washes across the United States, stealing credit card data and using the cloned cards to transfer money to prepaid gift cards.

The dirt on this squeaky-clean case was unearthed last month, when a South Carolina sheriff’s department contacted police in Everett, Massachusetts, because a South Carolinian’s credit card had been fraudulently used several times at a Dollar Store in Everett.

Detective Michael Lavey of the Everett police department found that a few people were visiting Dollar Stores in and around Everett, always in pairs. They would routinely purchase $500 in prepaid gift cards, paying with several different credit cards until one of the credit cards was approved, Lavey told independent security expert Brian Krebs.

Lavey posted store security footage online, but the suspected bandits behind this money-laundering scheme weren’t caught until one ended up in a Boston hospital, having been stabbed in an unrelated robbery.

Police recognized the man, allegedly a member of a local Bloods gang, from the security tapes. When his bloody pants were confiscated as evidence, police found a large number of credit cards in the pockets.

Lavey found at least one card had been cloned from a card whose data had been stolen from a Splash Car Wash in Connecticut. This led Lavey to connect with Monroe, Connecticut police detective Michael Chaves.

Chaves had been investigating card-data thefts at 14 car washes in Connecticut. He discovered many of the car washes used an outdated version of a point-of-sale software system developed by Randolph, New Jersey-based Micrologic Associates — and which could be accessed via the aging pcAnywhere remote-desktop software, sold until last month by Symantec.

Micrologic had created default pcAnywhere login credentials for its products, but many clients never changed the defaults, which stayed the same for years, Chaves told Krebs.

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The ABC7 I-Team exposed a surge of calls hitting Chicago and the suburbs where thieves are asking for your information. The scheme involves technology known as “telephone spoofing.”

It starts with a mysterious call from what may look like a legitimate local number. It can end with you giving a scam artist your check or credit card information.

In recent weeks, consumer activists say the Chicago area has been hit hard by people who are “spoofing” and trying to rip you off.

The call can come from an unknown number, or even one with a Chicago area code, ut the people on the other end are most likely overseas. Federal authorities say they’re using technology to fool you into thinking the number is local – a technique called spoofing.

“I answered it and it was an automated computerized voice telling me that my Chase card had been locked in that up I wanted to reactivated I need to press one so I pressed one at that point the automatic voice asked me to enter my card number,” said Cheryl Kopczyk.

Instead, Joliet resident Kopczyk hung up, then called the number on the back of her Chase card. The bank and consumer experts say she could have been several digits away from allowing someone to access her checking account.

“Until they asked for my credit card information, that’s when it threw up the red flag,” said Kopczyk.

A Chase spokesperson tells the I-Team that it is warning consumers about the scheme and telling them to handle the situation like Kopczyk did. But the Better Business Bureau says people have fallen for it and this pitch can be convincing.

“There is a problem with your credit card and you got to take immediate corrective action and call up and they want you to verify it’s you by giving your credit card number ,” said Steve Bernas, Better Business Bureau.

BBB president Bernas and federal investigators suspect the people making the calls somehow buy lists of cell and home phone numbers, or use robo-call capabilities to randomly dial. Bernas says the Chicago area has been flooded with these calls in the last few weeks.

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Airline Employees Charged in Cash-Smuggling Sting

Five airline employees were charged Thursday in a sting operation with using their security clearances to secretly smuggle more than $400,000 in cash through Boston’s Logan Airport.

Four ground operations crew members of JetBlue Airways and one Delta Air Lines customer service ramp agent were arrested on charges of conspiracy to commit money laundering and conspiracy to defraud the Transportation Security Administration.

Federal prosecutors said they used their security clearance to circumvent TSA checkpoints and smuggle cash to secure areas such as passenger departure gates. In return, each allegedly received a payment from a cooperating witness who posed as a member of a drug-trafficking organization while working with law enforcement.

“Security at our nation’s airports is paramount and the conduct alleged today is alarming,” said U.S. Attorney Carmen Ortiz. “Thanks to the hard work and commitment of the federal and state investigators and airline security personnel, a potentially dangerous breach in security was identified.”

Prosecutors identified the JetBlue employees as: Rupert Crossley, 25, of Lynn; Alvin Leacock, 27, of Hollywood, Florida; Eric Vick, 24, of Boston; and Anthony Trotman, 24, of Boston. The Delta employee was identified as Dino Dunkley, 31, of Boston. Vick and Dunkley are accused of taking the smuggled cash aboard airline flights from Boston to Florida.

Trotman’s attorney, Keith Halpern, said his client will plead not guilty.

“This is a case where the government created a crime, where they sent someone who was working for the government out with huge amounts of cash to see if they could entice people to do illegal activities,” Halpern said.

Vick’s attorney Ed Hayden said his client also is pleading not guilty. “We intend to investigate the government’s role in instigating the offenses,” Hayden said.

Attorneys for the other men did not immediately return messages seeking comment.

They made their initial court appearance Thursday and were ordered held until a detention hearing next week. If convicted, each faces up to 20 years in prison.

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Fraud Scheme Dismantled

The leader of a large-scale fraud ring who profited by helping people establish fake identities—enabling them to charge millions of dollars on credit cards they had no intention of paying off—was recently sentenced to 12 years in prison after pleading guilty to the charges against him.

The fraud carried out by New Jersey resident Sang-Hyun “Jimmy” Park was sophisticated and also brazen. He actively recruited scores of participants by placing ads that promised easy credit and easy money in Korean-language newspapers.

The scam hinged on Social Security cards that had 586 in the prefix. These were legitimate documents issued in the 1990s mostly to Chinese nationals hired to work in American territories such as Guam and American Samoa. When the workers returned to China, criminals there bought the so-called 586 cards, knowing they might illegally profit from them.

The criminals gathered more than 20,000 of the second-hand cards and then found buyers for them throughout the United States. In the New Jersey area, Jimmy Park was buying all the 586 cards he could get.

“He realized he had a clean slate with perfectly valid Social Security numbers,” said Special Agent Barbara Woodruff, one of a team of investigators who worked the case out of our Newark Division. “Park understood the potential for financial gain and took it to the next level.”

Here’s how the scam worked:

Park and his conspirators sold 586 cards for a fee, promising to help customers use the cards to get other forms of identification, including driver’s licenses.

With new identities in place, Park helped customers establish credit through a lengthy process. One of the methods was temporarily adding a new identity to an existing credit card account whose owner had excellent credit. The owners of the legitimate accounts were paid a fee for this service.

After building the credit scores associated with the new identities—and detaching them from the legitimate accounts—Park helped customers obtain credit cards and open bank accounts.

“With valid credentials and high credit scores, the 586 card owners could open credit accounts everywhere—banks, retail stores, car dealerships,” said Special Agent Theresa Fanelli, another member of the investigative team. “The sky was the limit.”

The scammers then proceeded to “bust out” their credit cards, charging as much as $30,000 per month. “With an impeccable credit history,” Woodruff explained, “none of the financial institutions batted an eye. Why would they?”

When it came time to pay monthly bills, the scammers made online or telephone payments using accounts that had no money behind them—knowing that the banks and retail outlets could take several days to figure out that the payments were bogus. During that period, they charged even more items.

“They were able to steal millions of dollars in a short amount of time,” Fanelli said.

Park and his conspirators also paid merchants to charge sums on the fraudulent credit cards when no actual transactions took place. After receiving money from the fake sales in their accounts, the merchants gave the proceeds to Park, minus their cut.

Our investigation began at the end of 2008 after clues about the fraud were discovered during a homicide investigation (see sidebar). Arrests were made in September 2010. In all, 54 individuals were charged with various felony frauds, and most have pled guilty. Park admitted to defrauding numerous companies out of millions and was sentenced in February. After his prison term, he will be deported to South Korea.

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Identity Theft Victim?

Have you just become one of the more than 10 million Americans who fall victim to identity theft every year? Are you wondering what to do now that your identity has been stolen?

If so, don’t panic. You’re going to have to do several things right away, but each will help you put your life back in order, and not taking these steps will only prolong your ordeal.

1. Don’t talk about your identity being stolen.
The first thing you might want to do if you find out your identity has been stolen is to tell all your friends about it. But before you post your misfortune on Facebook or Twitter, keep in mind that letting the world know you’re a victim could make you even more vulnerable to exploitation by identity thieves.

“Advertising that you’re a victim lets other people know that a lot of your information is out there,” said Neil Chase, an expert with the Tempe, Arizona-based identity-protection service LifeLock. “You want to be careful about that.”

Chase said people who have had their identities stolen are more susceptible to online frauds, such as email phishing scams and credit-monitoring scams. Broadcasting that your identity has been stolen might increase your risk of attracting these kinds of fraudulent solicitations.

2. Place a fraud alert on your credit file.
To get your life — and your credit — back in order, you’ll need to take charge in the days and weeks following an identity theft. The first thing to do is to call one of the three major credit reporting agencies — Equifax, Experian, or TransUnion — and request that it place a fraud alert on your credit file. Whichever company you contact will notify the other two credit bureaus about the alert.

If you place a fraud alert on your file, businesses must then verify your identity before issuing credit in your name. This means you’ll get a call if a criminal uses your name to open a fraudulent account.

While you have the credit bureau on the phone, make sure the contact information on your credit file is up to date. You can renew the initial fraud alert on your account for free after 90 days.

There’s also a fourth, lesser-known credit bureau that you may want to contact when placing a fraud alert on your file — Innovis. This company keeps track of credit information that the big three don’t bother with, such as utility bills and cellphone payments. Issuing an alert with Innovis could prevent a lot of headaches for identity-theft victims.

3. Request a credit freeze.
If you’re truly worried about your credit or have a lot of assets to protect, consider placing a freeze on your credit file. Freezing your credit will make it even more difficult for identity thieves to open up new accounts or access credit in your name. You will still be able to open legitimate lines of credit even when your credit file is frozen.

To freeze your credit, you’ll need to contact each of the three major credit bureaus individually. Report that your identity has been stolen and that you’d like to freeze your credit. You’ll likely need to pay a fee to each bureau, which is determined by state law but typically costs between $3 and $11.

While fraud alerts need to be renewed every 90 days, credit freezes make your credit report inaccessible to creditors (and criminals) for much longer — usually until you decide to lift the freeze on your file.

4. Request your credit reports.
Now is the time to assess the damage done to your credit by identity thieves. To begin the process, request a free credit report from each of the three major credit bureaus. Placing a fraud alert on your file entitles you to a free report, but in fact every U.S. resident is allowed one free annual report from each credit agency.

Once you have your credit report in hand, you can begin setting things to rights. To dispute any errors you find on your credit reports (such as accounts you didn’t open or erroneous personal information), first create an identity-theft report (see the next step) and then write to each of the three credit reporting companies explaining the errors.

You’ll also need to contact the fraud departments of each business that reported a fraudulent transaction on your existing account, as well as each business that reported a new account opened fraudulently in your name.

For an in-depth guide on how to dispute fraudulent charges on your accounts, see the FTC’s online tutorial on dealing with identity theft.

5. Create an identity-theft report.
Disputing fraudulent charges and accounts will be much easier if you’ve put together an identity-theft report. To create an identity-theft report, you’ll first need to submit a formal complaint to the FTC detailing the theft.

With your FTC identity-theft affidavit in hand, you can next file a police report in the municipality where you reside, or where the theft took place. The police report and affidavit together comprise your identity-theft report and will aid in the battles that may come. Having a theft report will also enable you to place an extended fraud alert on your credit, which will last for seven years instead of the requisite 90 days.

6. Make sure it doesn’t happen again.
Anyone who has had her identity stolen won’t want to repeat the experience. Luckily, there are several steps you can take to prevent your identity from being stolen again. Chase said one of the easiest ways to do this is to cut back on paper documentation of your personal information.

Chase’s advice? Stop receiving paper account statements in the mail and instead opt to view information about your various accounts online. If you do receive paper statements, shred them before throwing them in the trash.

Also keep in mind that going over your bank statements and credit reports with a fine-toothed comb isn’t an effective way to keep track of your financial accounts in real time. To get a better sense of what’s happening with your accounts, you’ll need to monitor them more frequently than once a billing cycle.

“Watch your accounts online,” Chase advises. “That way if something happens that the bank doesn’t catch, you’re going to catch it sooner than if you wait for a statement or credit report.”

While you’re online, you should also consider strengthening the passwords for your various accounts, particularly online bank accounts and email accounts, where personal and financial information might be stored.

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Understanding School Impersonation Fraud

The operator at the office supply store call center answers the phone, and the person on the other end claims to be a school purchasing officer with questions about his account. But the caller is actually a criminal, and the information the operator may unwittingly divulge could cost the retailer hundreds of thousands of dollars.

It’s called the school impersonation scheme, and it has been carried out in nine states across the country—mostly by Nigerian criminal groups using the Internet and social engineering techniques.

“Most retailers have been pretty good about catching the scam,” said Special Agent Alla Lipetsker, “but it’s an alarming trend, and the fraudsters have had success.”

Here’s how the scam works:

A member of the criminal group poses as a school official on the telephone or by e-mail and uses social engineering—actions that deceive individuals into revealing otherwise secure information—to learn about a school’s purchasing account with large office supply stores.

Using account information obtained from the original call—and sometimes the school’s website—the fraudster makes a second call and bills the school’s line of credit for a large order of laptops, hard drives, printer ink, and other items that can total more than $200,000.

A U.S. shipping address is provided belonging to a third-party—someone who has been fooled into thinking they are working from home, for example, but is another victim of the group’s social engineering tactics (see sidebar). The purchase will later be re-shipped to Nigeria. In some cases, the order is directed to the actual school, whereupon the scammer—posing as a representative of the retail store—contacts the school and says the shipment was sent in error. The school, believing it is returning the order to the store, reships the items to a domestic address provided by the fraudster.

Either way, once the fraud is discovered, it’s too late, and the retailer absorbs the loss.

Those who perpetrate school impersonation schemes are members of an African Cyber Criminal Enterprise (ACCE), said Lipetsker, who has been investigating these groups for the past year as part of a new initiative in our Criminal Investigative Division.

ACCE refers to a network of predominantly Nigerian criminal actors who are engaged in computer-assisted frauds. The schemes are heavy on deception instead of hard-core intrusions, Lipetsker said. “The Africans don’t do a lot of hacking,” she explained. “They deceive their targets through phishing schemes and social engineering.”

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Couple Sentenced for Stealing Hundreds of Identities

ATLANTA—Justin Cody, and his wife, Aeshia Wilmore, have been sentenced for their roles in a fraudulent income tax refund scheme.

“Stealing identities of innocent people has become all too common,” said United States Attorney Sally Quillian Yates. “The sentence these two received makes it clear that we are committed to exposing and bringing to justice anyone who engages in this conduct.”

“IRS-Criminal Investigation will remain proactive in the investigation of individuals and groups who engage in stealing the identities of innocent people,” said Veronica F. Hyman-Pillot, Special Agent in Charge. “We will utilize every tool available to investigate those who conspire with each other to victimize members of our community for their own personal gain.”

J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated, “The FBI is pleased with the role it played in bringing these defendants to justice. The FBI will continue to provide its investigative resources and assets in protecting individuals’ identities and their use in these growing schemes involving false tax returns.”

According to United States Attorney Yates, the charges, and other information presented in court: from as early as February 2013 to May 2013, Justin Cody and his wife, Aeshia Wilmore, participated in a scheme to defraud the Department of the Treasury by filing hundreds of fraudulent income tax returns using stolen identities. This type of scheme is commonly called stolen identity refund fraud. Cody used stolen personal identification information of hundreds of victims, along with fake wage and withholding information, to prepare numerous fraudulent tax returns, claiming over $600,000 in tax refunds. After the refunds were processed, Cody had the refunds applied to blank prepaid debit cards that he and Wilmore used at various ATMs throughout the Atlanta area.

Justin Cody, 33, of Atlanta, Georgia, was sentenced to serve seven years and three months in federal prison. Aeshia Wilmore, 25, also of Atlanta, was sentenced to two years in federal prison by United States District Judge Steve C. Jones. On November 22, 2013, Cody and Wilmore each pleaded guilty to count three of the indictment, which is a substantive count of theft of public funds. Cody also pleaded guilty to aggravated identity fraud.

This case was investigated by special agents of the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation.

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Fraud Scheme Uncovered

They are our nation’s heroes—often risking their lives abroad to protect us at home. Which makes what one Virginia con man did all the more despicable…defrauding military personnel and their dependents in an investment fraud scheme.

But one of his victims came forward and filed a complaint. And after a joint investigation conducted by the Richmond offices of the FBI and the U.S. Postal Inspection Service (USPIS)—under the auspices of the Virginia Financial and Securities Fraud Task Force—Vernon Matthews was charged in the scheme, pled guilty, and was recently sentenced to a federal prison term.

Matthews operated a company called First Capital Group (FCG), located in Virginia Beach. He had a license to sell insurance, not to give investment advice or handle securities—but that didn’t stop him from doing so. Starting in 2010 and continuing until early 2013, Matthews solicited members of the military and their families to make investments with FCG.

Often times, he set up booths at establishments known to be frequented by the military—like restaurants located near military bases—and offered promotions, like a free night at a hotel. And when potential victims came to his office to claim the prizes, Matthews would pitch them on an investment.

And he lied through his teeth while doing it. Among Matthews’ misrepresentations:

He received compensation from the U.S. government for his investment advice and services (he did not);
He would invest his clients’ funds in certificates of deposits, mutual funds, or something similar (Matthews misappropriated all the funds for his own personal or business use);
FCG was affiliated with several reputable investment companies and funds (it was not);
The investment provided a good return—anywhere from 4 to 300 percent—and was low-risk or no-risk (it did not and was not).

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Woman charged with using fake credit card

A Chicago woman was charged with three felonies after she allegedly used a fake credit card with another person’s account information on it to buy clothes and other goods in River Forest and Oak Park, police said.

Shirley Cameron, 47, of the 200 block of North Keeler Avenue, shopped at GAP Clothing in Oak Park and Jewel Osco and Walgreens in River Forest on March 4, River Forest Police Department Justin Labriola said. She also possessed a fake Indiana driver’s license, police said.

An investigation showed Cameron regularly bought bundles of re-encoded credit cards on Chicago’s West Side and used the cards until they no longer worked, according to a River Forest Police Department news release. Police suspect Cameron has been using the re-encoded cards since at least 2013, Lavriola said.

Her March purchases included spending about $33 at GAP, about $340 at Jewel Osco and about $312 at Walgreens, including a Hallmark gift card, Labriola said. The Jewel Osco and Walgreens purchases included $300 gift cards, he said.

River Forest police arrested Cameron April 11 after a traffic stop in Chicago, according to the Tuesday release.

The victim, who lives downstate, reported she had not lost or had her credit card stolen. One of Cameron’s re-encoded cards matched the victim’s credit account, police said in the release.

Police are investigating the source of the re-encoded card with help from federal agencies, the release states.

Cameron was charged with two counts of felony use of a forged credit card and felony possession of a fraudulent identification card. River Forest detectives alerted Oak Park police about Cameron’s suspected activities at Oak Park stores, the release states.

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