Dow Jones Newswire – NEW YORK, NY – More than 30,000 ordinary American consumers were ripped off in what is believed to be the largest identity-theft case in U.S. history, federal authorities announced Monday.
The scheme began in early 2000 when a help-desk employee at Teledata Communications Inc., a Long Island, N.Y., company that provides credit reports to banks and other lenders, was allegedly recruited to download credit reports with stolen passwords and sell them to street criminals for $60 each.
The reports – which list a person’s bank accounts, credit cards, mortgages and other financial information – were “exploited in every way imaginable,” reaping millions of dollars for the criminals and victimizing people in all 50 states, Manhattan U.S. Attorney James B. Comey said at a press conference.
“This case is every American’s worst financial nightmare, multiplied tens of thousands of times,” Mr. Comey said. “A lot of people – and their credit – were ruined financially from this scheme.”
With the credit-report information in hand, the street criminals would request new ATM cards or checkbooks and deplete people’s bank accounts, or apply for credit cards in the victims’ names and then quickly max them out, he said.
“With a few keystrokes, these men essentially picked the pockets of tens of thousands of Americans,” he said, “and in the process, took their identities, stole their money and swiped their security.”
Three men have been arrested in the scheme, including Philip Cummings, who worked on Teledata’s help desk from mid-1999 to March 2000. Mr. Cummings faces up to 30 years in prison if convicted of wire fraud.
The person who recruited Mr. Cummings to allegedly sell the credit reports is now a cooperating witness in the investigation and hasn’t been publicly identified, Mr. Comey said.
Two others, Linus Baptiste and Hakeem Mohammed, were arrested earlier this year in connection with the fraud. Mr. Mohammed pleaded guilty to charges that he opened accounts in the name of two victims. He is scheduled to be sentenced in January.
Marshall Mintz, an attorney for Mr. Baptiste, declined to comment.
According to the complaint, phone numbers registered to Mr. Baptiste’s home were used to dial into Equifax Inc.’s databases and download 400 to 600 credit reports.
According to the criminal complaint, Mr. Cummings stole the password and codes of Teledata clients such as Ford Motor Credit Corp. and Washington Mutual Bank in order to download credit reports.
The reports were generally run from a “wish list” of victims’ names provided by 20 or more street criminals from the Bronx and Brooklyn, N.Y., Mr. Comey said.
The street criminals already had victims’ names, addresses and sometimes Social Security numbers, but wanted more information from the credit reports that would make it easier to access bank accounts or apply for credit cards, Mr. Comey said.
The reports were stolen from the three major credit-reporting agencies, Experian, Equifax, and closely held TransUnion, he said.
The password and code for Ford Motor Credit’s Grand Rapids, Mich., branch were used for about 10 months to download about 15,000 credit reports from Experian, according to the complaint. Ford discovered the alleged scheme and complained to authorities.
More than $2.7 million in financial losses have been confirmed, although that number is growing, Mr. Comey said. He declined to estimate the total amount of damages but urged people who suspect fraud to call 1-877-IDTHEFT or file their complaint online at www.ftc.gov.
At a bail hearing later Monday, U.S. Magistrate Judge Ronald Ellis in Manhattan said Mr. Cummings could be released after posting a $500,000 bond backed by five co-signers and secured by property with at least $100,000 in cash value.
The judge refused prosecutors’ request to have Mr. Cummings jailed pending trial. Assistant U.S. Attorney Katherine Choo argued that Mr. Cummings, a foreign national from the United Kingdom, was a flight risk because he could be deported if convicted.
Mr. Cummings said little during the hearing. His lawyer, Nicole Armenta, a public defender, told the judge he “voluntarily surrendered on a moment’s notice” after learning of the charges and is a legal resident of the U.S.
Mr. Cummings, 33 years old, who lived in the New York City area before moving to Cartersville, Ga., in 2000, was charged earlier this month with stealing about 600 credit reports. The government expanded its case significantly in the complaint announced Monday.
Mr. Cummings’ former employer, Teledata, of Bay Shore, N.Y., issued a statement saying it had been aware of the probe for the past eight months. ” During that time, we cooperated fully in that investigation and we are pleased to learn that it has apparently come to a successful conclusion,” the company said.
The company, which refers to itself as TCI, was founded in 1982 and has a staff of about 65 people, including a 30-person technical-support staff, according to its Web site.
The company supplies clients with password-protected software that allows them to download consumer credit reports for legitimate business reasons. TCI has about 25,000 customers, according to its site.
The company declined to comment on the pending prosecution against Mr. Cummings, saying, “it would, in our view, be inappropriate for us.”
Besides Ford Motor Credit and Washington Mutual, other TCI clients whose passwords were allegedly stolen by the defendants include: Dollar Bank in Cleveland; Sarah Bush Lincoln Health Center in Illinois; the Personal Finance Co. in Frankfort, Ind.; the Medical Bureau in Clearwater, Fla.; Vintage Apartments in Houston; and Community Bank of Chaska in Chaska, Minn.