US Faces Epidemic of Phony Debt Collectors: Prosecutor

The United States is facing an epidemic of unscrupulous debt collectors who pose as law enforcement, threatening their victims with jail time unless they pay bills for things they never bought, Manhattan U.S. Attorney Preet Bharara said as he announced the arrests of seven people who worked for a Georgia-based company.

A criminal complaint was filed Tuesday against employees at Williams Scott & Associates LLC, based in Norcross, Georgia. The alleged thieves posed as debt collectors and local law enforcement, conning 6,000 people of out more than $4 million in recent years, authorities said.

Victims were tricked into believing they’d committed a crime such as fraud — then bullied into paying up bogus debts or going to jail, authorities said. According to the criminal complaint, the employees used aliases such as “Investigator Ace Rogers.”

“I don’t care if you’re nine months pregnant, I have a job to do here,” a phony collector said on one of the calls, which was recorded.

In another recorded call, a person was threatened with legal backlash.

“I will have no choice but to forward it to Los Angeles County, However, Los Angeles County will issue you a warrant for your arrest,” a recorded caller said.

Experts warned that more fraudsters are on the loose — and that federal authorities are cracking down.

“There are lots of companies that do this and victimized not just 6,000 people, but I think tens of thousands, if not hundreds of thousands of people all over the country,” Bharara said.

Actual debt collectors won’t aggressively harass consumers, said Christopher Koegel, the assistant director of the Division of Financial Practices for the Federal Trade Commission.

“A legitimate debt collector will not lie or deceive the consumer, try to abuse the consumer, or call at inappropriate times, or use other high-pressure tactics,” Koegel said.

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Secrets of an Identity Thief

Driving around Seattle with “Alice,” a convicted ID thief who didn’t want her own identity revealed, was an education.

“She knew where all the places where to go … the easiest cars to break into,” Shadel said.

Driving around a parking lot, Alice pointed out the cars she would likely target.

“Out-of-state plate, so we are probably going to hit that car because it’s parked over in the corner,” she said. “It’s easy to get into without somebody seeing.”

The out-of-state license plate signaled to Alice that the driver had probably traveled with lots of personal information.

She also pointed out seemingly unlikely targets, like work vans. “They usually had like full on credit cards to bill companies,” she said.

And cars with backpacks that are sitting out in the open. “It’s just full of goodies. It always is.”

In just a few months Alice and her colleagues stole $900,000, Shadel said, noting that “she had a little group.”

“One guy who could make IDs. Another who knew how to swipe all the laptops and put them up in the cloud. It was quite a little posse of identity thieves,” Shadel said.

Identity theft affects more than 16 million Americans each year to the tune of $24.7 billion, according to the Bureau of Justice Statistics. It is the single largest type of property crime.

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NY recovers $18 million using warrants for Facebook accounts

(Reuters) – New York prosecutors have secured more than $18 million in a series of fraud cases using warrants to access hundreds of Facebook accounts, a move the social medial firm says was unconstitutional and is still fighting.

The information obtained from Facebook Inc also helped lead to 130 indictments of civil servants, including police officers and firefighters, for Social Security fraud, according to a court document filed by the Manhattan District Attorney’s office in a state appeals court on Wednesday.

More than 90 defendants have pleaded guilty and agreed to pay more than $18 million in restitution, the brief said.

The prosecutors said the numbers undermine Facebook’s claim that the warrants, which applied to 381 users’ photos, private messages and other account information, were too broad and violated the constitutional ban on unreasonable searches.

Facebook has drawn support in its challenge to the warrants from other technology and civil liberties groups, including Google Inc, Microsoft Corp, Twitter Inc, and the American Civil Liberties Union.

A five-judge panel will hear the case in December. Facebook complied with the warrants last year after a state judge approved them.

A victory for Facebook would not directly impact the pending fraud cases, but could lead to judges throwing out evidence taken from the site in some cases.

The district attorney in Wednesday’s filing said Facebook does not have the legal standing to assert its users’ constitutional rights on their behalf.

Prosecutors also urged the court to reject Facebook’s claim that all its customers have an expectation of privacy when using the site.

“Some customers treat their accounts as ‘digital homes,’ and maintain some degree of privacy,” the brief said. “Others treat their accounts more as digital billboards, broadcasting material to dozens or even hundreds of others, thus abandoning any claim of privacy.”

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Kansas City Woman Pleads Guilty in $3 Million Fraud

KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., woman pleaded guilty in federal court today to a nearly $3 million fraud scheme that forced her employer out of business.

Irene Marie Brooner, 52, of Kansas City, pleaded guilty before U.S. District Judge Beth Phillips to bank fraud.

Brooner, a certified public accountant, worked at Galvmet, Inc., a sheet metal fabrication facility and steel service center located in Kansas City, from 2001 until her termination in February 2014. At its peak in 2008, the company had 26 employees and $14 million in annual sales. Galvmet filed for bankruptcy and ceased operations in 2014. At the time of closing, the company had 18 to 20 employees and $10 million in annual sales.

Brooner’s duties as controller included managing payroll, accounts receivable and payable, and maintaining the ledger at Galvmet.

Brooner admitted that, over a period of more than 10 years (January 2004 until February 2014), she created a total of 389 unauthorized Automated Clearing House (ACH) transactions from Galvmet’s bank account to her personal bank accounts. (An ACH is a batch-oriented funds transfer system that includes direct deposits of payroll from companies.) Those unauthorized ACH transactions included 148 payments to her checking account and 133 payments to her savings account. Brooner also defrauded Galvmet by inflating her salary. From March 2004 to December 2011, Brooner manipulated the payroll account to increase her net pay on approximately 108 payroll checks.

Brooner’s fraud scheme resulted in a loss of at least $1,863,914 to Galvmet. As a result, Galvmet ceased operations. While reviewing bank records during the filing of Galvmet’s Chapter 13 bankruptcy in February 2014, the company’s president noticed unauthorized transfers from Galvmet’s payroll account to Brooner’s personal account. He reported the apparent embezzlement to the FBI.

To keep the scheme going, Brooner also falsified documents to support Galvmet’s operating loan with Missouri Bank & Trust, causing an additional loss to the bank of $1.1 million. The total loss from Brooner’s fraud scheme was at least $2,963,914.

Brooner spent the embezzled funds on personal items. According to today’s plea agreement, Brooner spent some of the proceeds to remodel, stock, furnish and decorate the ornately-finished bar in the basement of her new home. The bar, which she called “the Dirty Duck,” includes seating for approximately 15, a granite bar top, four or five tap lines, a refrigeration system, three flat-screen televisions, a smoke machine at the entrance, two couches and stained wainscoting around the room approximately eight feet tall. Mannequins, positioned throughout the bar, are outfitted with authentic U.S. and German uniforms and weaponry from the World War II era, including a Thompson sub-machine gun and multiple M-1 Garands with attached bayonets. Brooner told FBI agents that her husband, a carpenter, remodeled the bar in 2003 and 2004. From 2004 to 2014, Brooner spent $18,383 on alcohol.

Brooner’s spending included paying off her mortgage for $289,290, buying $81,686 in jewelry, and spending at least $400,392 on clothing and other retail, $97,180 on restaurants, $78,439 on vehicles, $169,389 on furniture and home decor, $62,003 on travel, $38,317 on electronics, $21,346 in ATM withdrawals, $59,571 on spa visits and beauty items, $68,745 on tuition for her children, $18,383 on alcohol, $104,060 to her children, $216,377 in assorted checks under $500, $64,557 in donations, $254,168 in other credit cards, and by purchasing other items.

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Facebook helps catch Phoenix woman for insurance fraud

PHOENIX (CBS5)-A Phoenix woman tried to get away with $26,500 after claiming she lost her wedding rings.

But her lie was uncovered when Facebook photos surfaced of her wearing the distinctive rings, according to the Arizona Department of Insurance.

In June 2013, Maria Apodaca Simmons made a claim on her policy through Travelers Insurance Company for rings she said she lost while swimming in the Pacific Ocean a few days after her wedding in May.

She also filed a $14,000 claim on her husband’s wedding band in October 2013, claiming it was lost while he was swimming on vacation.

A State Farm employee thought something was fishy after she interviewed Simmons about her husband’s ring.

Simmons was wearing the rings that matched the photos from the appraisal she used for the Travelers policy, and the state Department of Insurance investigators were called in. They discovered a Facebook page with a photo of her wearing the same rings.

A search warrant was issued and the rings were found.

Simmons first said the rings were duplicates, but the jeweler told investigators that he had only made the one set.

On Tuesday, Simmons pleaded guilty to two counts of insurance fraud, and as part of a plea deal, she’ll be put on probation and pay $26,953.60 to Travelers Insurance and $1,005.11 to the Department of Insurance for investigative costs.

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56 Million Credit Cards Affected in Security Breach

NEW YORK (AP) — Home Depot said Thursday that a data breach that lasted for months at its stores in the U.S. and Canada affected 56 million debit and credit cards, far more than a pre-Christmas 2013 attack on Target customers.

The size of the theft at Home Depot trails only that of TJX Companies’ heist of 90 million records disclosed in 2007. Target’s breach compromised 40 million credit and debit cards.

Home Depot, the nation’s largest home improvement retailer, said that the malware used in the data breach that took place between April and September has been eliminated.

It said there was no evidence that debit PIN numbers were compromised or that the breach affected stores in Mexico or customers who shopped online at Homedepot.com. It said it has also completed a “major” payment security project that provides enhanced encryption of customers’ payment data in the company’s U.S. stores.

But unlike Target’s breach, which sent the retailer’s sales and profits falling as wary shoppers went elsewhere, customers seem to have stuck with Atlanta-based Home Depot. Still, the breach’s ultimate cost to the company remains unknown. Greg Melich, an analyst at International Strategy & Investment Group LLC, estimates the costs will run in the several hundred million dollars, similar to Target’s breach.

“This is a massive breach, and a lot of people are affected,” said John Kindervag, vice president and principal analyst at Forrester Research. But he added, “Home Depot is very lucky that Target happened because there is this numbness factor.”
Customers appear to be growing used to breaches, following a string of them this past year, including at Michaels, SuperValu and Neiman Marcus. Home Depot might have also benefited from the disclosure of the breach coming in September, months after the spring season, which is the busiest time of year for home improvement.

And unlike Target, which has a myriad of competitors, analysts note that home-improvement shoppers don’t have many options. Moreover, Home Depot’s customer base is different from Target’s. Nearly 40 percent of Home Depot’s sales come from professional and contractor services. Those buyers tend to be fiercely loyal and shop a couple of times a week for supplies.

Home Depot on Thursday confirmed its sales-growth estimates for the fiscal year and said it expects to earn $4.54 per share in fiscal 2014, up 2 cents from its prior guidance. The company’s fiscal 2014 outlook includes estimates for the cost to investigate the data breach, providing credit monitoring services to its customers, increasing call center staffing and paying legal and professional services.

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Fourteen Indicted in Identity Theft Crackdown in Puerto Rico

Washington, DC Aug 14 2014 Fourteen individuals were charged in three indictments in Puerto Rico with conspiracy to commit identification fraud, money laundering, aggravated identity theft and passport fraud in connection with their alleged roles in a scheme to traffic the identities and corresponding identity documents of Puerto Rican U.S. citizens.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodriguez-Velez for the District of Puerto Rico, Principal Deputy Assistant Secretary Thomas Winkowski of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI), Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS), Chief Richard Weber of the Internal Revenue Criminal Investigation Division (IRSCID) and Director Bill Miller of the State Department’s Diplomatic Security Service (DSS) made the announcement.

The multi-count indictments were returned by a federal grand jury on Aug. 6, 2014. Since that time, five of the defendants have been found and arrested (four in Puerto Rico and one in Florida). They will be arraigned in federal court this week. Arrest warrants have been issued for the remaining defendants, who will make their initial appearances in federal court in the districts in which they are arrested.

According to the indictments, from at least July 2008 through April 2014, conspirators in the mainland United States and in Puerto Rico sold the identities and corresponding Social Security cards, Puerto Rico birth certificates and other identification documents of Puerto Rican U.S. citizens to undocumented aliens and others residing in the mainland United States.

Specifically, the indictments allege that individuals located in the Caguas, Rio Piedras and San Juan areas of Puerto Rico (suppliers) obtained Puerto Rican identities and corresponding identity documents, and conspirators in various locations in the United States (identity brokers) solicited customers for those identities and documents. The identity brokers allegedly sold the identities and documents to the customers for prices ranging from $700 to $2,500 per set of Social Security cards and corresponding Puerto Rico birth certificates.

According to the indictment, the identity brokers ordered the identity documents from the suppliers by making coded telephone calls, including using terms such as “shirts,” “uniforms” or “clothes” to refer to identity documents. The suppliers generally requested that the identity brokers send payment for the documents through a money transfer service to names provided by the suppliers.

The conspirators frequently confirmed payee names and addresses, money transfer control numbers and trafficked identities via text messaging. The suppliers allegedly retrieved the payments from the money transfer service and sent the identity documents to the brokers using express, priority or regular U.S. Mail.

According to the indictments, once the identity brokers received the identity documents, they delivered the documents to the customers and obtained the remaining payment from the customers. The brokers generally kept the second payment for themselves as profit. Some identity brokers allegedly assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation.

As alleged in the indictments, the customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and obtain additional identification documents, such as state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and others attempted to obtain U.S. passports.

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Wannabe Beauty Queen’s High-Heel Video Brings Insurance Fraud Bust

A beauty contestant from Riverside, California, has been arrested for workers’ compensation fraud after authorities discovered her featured in an online video competing in high heels – all while she allegedly was collecting disability over a foot injury claim.

Shawna Lynn Palmer, 22, who participated in this year’s Miss Toyota Long Beach Grand Prix Beauty Pageant in April, was arrested Friday and booked into Robert Presley Detention Center on three felony counts of defrauding an insurance company, center records showed. Jail records showed that she was released the same day on $5,000 bail.

“Palmer worked as a clerk at Stater Brothers [market], and on March 10, 2014 she reported to her employer that she fractured a toe on her left foot at work,” California Department of Insurance Commissioner Dave Jones said in an official statement. “During multiple doctor visits, Palmer claimed that she could not place any weight on her foot, could not move it in any direction, or wear a shoe for any length of time. Palmer stated that she was not able to work due to her foot injury and continued to collect workers’ compensation benefits.”

Palmer’s doctor provided an orthopedic shoe and crutches and issued orders for her to refrain from working and elevate the foot whenever possible, according to a California Department of Insurance statement.

California insurance officials added that while collecting workers’ comp benefits, Palmer participated in at least two beauty contests wearing high heels and walking without any signs of discomfort.

“You can’t post things to social media while claiming that you’re legitimately injured, taking a check from the state for worker’s compensation benefits and expect not to get caught,” Byron Tucker, deputy commissioner at the California Department of Insurance, told ABC News station KABC.

“This suspect made the job of our departments’ detectives easier by openly participating in high-profile events,” Jones said.

ABC News’ efforts to reach Palmer have been unsuccessful, but her father told KABC he rejected the charges.

“All we’re going to say is that it’s absolute crap,” he told one of KABC’s reporters.

Palmer’s former manager at Stater Brothers, who did not want to reveal his name, told ABC News he had no comment beyond saying Palmer no longer was employed there.

Jail records showed that Palmer was expected to appear for a court hearing at Riverside Hall of Justice on Oct. 3.

If convicted, Palmer faces up to one year in county jail, three years of probation, and restitution of $24,000, state officials said.

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Guy brags about gift card tinkering at new job, gets house raided by feds

Three years ago, Muneeb Akhter and his twin brother Sohaib, then 19 years old, were featured in the Washington Post in a story headlined “George Mason’s youngest grads.”

They had graduated from George Mason University, in Washington, DC, with degrees in electrical engineering – “arguably the school’s toughest program”, the Post noted – after three years.

They reportedly liked to invent robots.

“I think we’ll be hearing more about these guys”, the Post’s Tom Jackman wrote.

Yes, indeed, starting now.

Muneeb Akhter is under investigation after admitting that he inflated the value of gift cards for companies including K-Mart, Shell Gas, Whole Foods, Starbucks and Dunkin Donuts, all without spending any money to do it.

He admitted, in a sworn, signed statement referenced by the Department of Homeland Security in an affidavit, that he had illegally accessed the companies’ e-commerce sites to pump up the cards.

From the affidavit, via NBC Washington:

Subject admitted to creating computer codes on his personal notebook computer to gain unlawful access to multiple e-commerce sites, including Shell Gas, Whole Foods, [K-Mart], Starbucks and Dunkin Donuts. Akhter has used his codes to trick the e-commerce systems into adding funds to gifts cards he has possession of without actually expending any money to do so. He admitted to using his program to add funds to other individuals’ gift cards without the need to actually expend funds.

Akhter said he loaded a Sears card with at least $500, a K-Mart card with $495, a Whole Foods card with $300 and a Starbucks card with $100.

Akhter reportedly landed a cyber security job last month and began work in late June.

At his new job, he couldn’t resist boasting to a colleague about the code he’d cooked up that enabled him to take an ordinary $25 pre-paid gift card and add value to it.

NBC quotes him:

I told my co-worker I used to own my own company and we were doing attacks against smart cards, gift cards and those things. I had a few gift cards with me and I showed him the gift cards and said ‘I know how to reload them for free.’

Well, helloooooo, Homeland Security agents!

Akhter’s co-worker went straight to his manager to tell him about the new hire’s skills – credentials that he apparently had neglected to put on his resume.

A Homeland Security agent questioned him. His badge and parking pass were quickly revoked, but the agent initially told him he was being considered for a higher position.

He said the agent told him:

We’re interested in your skill set. We need you for this high level position but I need to know exactly what you did.

Homeland Security and Secret Service agents paid a visit to Akhter at his home, again asking about his code.

He was, in fact, oblivious to the fact that he was under investigation until 24 July, when a team of 11 agents ransacked his house, seizing computers, phones and other electronics.

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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