Criminal Identity Theft: Even More Damaging

Many of us are aware of the issues with financial identity theft; which occurs when someone misappropriates your personal information to open new accounts, or uses your existing accounts to make purchases. A new type of identity theft is spreading across the country and it can be even more damaging than having a criminal destroy your credit rating. This new type of identity theft is known as criminal identity theft.

The typical pattern for criminal identity theft is for the criminal to first misappropriate your Social Security Number and personal information. There are various ways to do this including data breaches, mail fraud, phishing, vishing, etc. Once they have your personal information they use your name and Social Security Number to set up a shell company, usually an LLC because it is the easiest to set up. A shell company is a company in name only. The paper work for the shell company will be filed with the state but there are no operations nor is there any real business being conducted. After they have the shell company approved they open a bank account, with you as the principal, again using your Social Security Number, as the sole proprietor of the LLC. The address will for the shell company will usually be a box at a mailbox store which was rented in the victim’s name usually paid with cash in advance.

In setting up the shell company and bank accounts it is sometimes necessary to have documents notarized. To accomplish this the criminal orders fake notary seals because they know the notary’s credentials will rarely be challenged. Just to prove how easy it is to get a fake notary seal I ordered one for “I’m A Crook” which cost me $25, and expires in 2020  so if  was a criminal I could use that to notarize documents. As long as the criminals are willing to pay the fees they can get as many notary stamps as they want.

Once the shell company and bank accounts are set up the fraudsters get to work cashing stolen checks and processing transactions from stolen credit cards in the shell company’s bank accounts. In one case in Houston, TX the fraudster was able to cash over $5 million in stolen checks in this type of a fraud scheme. Once the funds are available in the accounts the criminals immediately wire the money out of the accounts, usually on the very same day the funds were released. The funds are usually sent to overseas bank accounts to make it more difficult to trace. The money is then laundered and put back into the economy.

This situation works well for the thieves because when law enforcement is advised of the fraudulent and stolen checks, and the multiple transactions being processed on stolen credit cards they launch an investigation into the accounts where these funds were deposited and this leads them to the shell company. Since the identity theft victim’s name and Social Security Number are listed on the shell company and bank account that person becomes the prime suspect for law enforcement investigating the stolen funds. Usually the victims of criminal identity theft don/t know they have a problem until law enforcement officers show up at their home or place of business with an arrest warrant and a search warrant. This puts you in a difficult position because you get to do a perp walk and spend time being interrogated by law enforcement who usually don’t believe it when you tell them you are innocent. You have to give them proof you didn’t do it.

As you can see criminal identity theft can cause a person serious embarrassment, and cost a significant amount in legal fees to clear their name. Unfortunately, using a credit monitoring service usually won’t alert you that you are a victim of criminal identity theft. In addition to reviewing your credit report on a regular basis it is also necessary to run a background check on yourself to find out if you are listed as an owner or statutory agent on any businesses you don’t recognize, and to find out if there are any warrants out for you or if any litigation has been started listing you as a plaintiff. Running a regular google or other search on your name can also be helpful in detecting criminal identity theft. Unfortunately, just like with financial identity theft, there is no way to guarantee you won’t be a victim so you need to take proactive steps to protect your personal information and carry identity theft insurance to cover the expenses of clearing your name.


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