Fraud Files: Identity Theft Grips Entire Neighborhood

A new brand of identity theft could be coming to a neighborhood near you.

Friday, March 08, 2013

Tucked in a pocket of northeast Ohio, not far from Lake Erie, is a little piece of the American dream. Two-story homes of brick and stone stand in front of big backyards, surrounded by a community of neighbors who know one another, socialize and watch one another’s kids.

But just last week, a rash of identity theft rocked the quiet waters of this typical upper-middle-class suburb. Police have found 18 victims, some with tens of thousands of dollars fraudulently spent in their name. And this home development isn’t alone. At least one other Ohio community has been hit with mass identity theft. It has all the trappings of an ugly new trend.

Alison Smith* first heard the news from a neighbor. “We’re all pretty close-knit around here,” she said. “A friend reached out and said, ‘Hey, a couple of neighbors have had identity theft issues.’ ” Smith called her homeowners insurance company and found she was covered by CyberScout. She connected with fraud investigator Maria Valenzuela on the phone.

“Alison did exactly the right thing,” Valenzuela said. “She knew of five neighbors who all had multiple accounts opened around the same time. She had no fraud, but called us as a preventive measure.”

Valenzuela quickly set up a 90-day fraud alert on Smith’s credit accounts, then removed her from a national database of pre-approved credit applications. They applied the same measures to Smith’s husband’s accounts, but as it would turn out, all the victims in this case were women.

The next day Valenzuela’s phone rang again: another victim from the same northeast Ohio housing development. This one wasn’t nearly as lucky as Smith. Thirteen accounts were opened in this victim’s name: $5,000 charged at Best Buy, $4,000 at Sears, more than $700 at Victoria’s Secret. The crook bought cell phones, paid utility bills, set up cable and Internet accounts.

“First I got a letter from Victoria’s Secret thanking me for applying for a new card,” said victim No. 2, Mary Jo Sullivan*. “Then a letter came from Carson’s, then Macy’s, Sears and on and on and on.” Sullivan was traveling on business when the first few letters arrived. In those two days that the accounts went unchecked, thieves managed to rack up tens of thousands of dollars in charges.

“They got me pretty bad,” Sullivan said. “Most of the people in my development caught it in the first day, or before it started, but in my case they got away with it a lot longer.”

After a few days of frantically calling all the credit companies, utilities and cell phone companies that had opened fraudulent accounts, Sullivan realized her homeowners policy offered identity protection services. Valenzuela picked up the torch again, making calls on Sullivan’s behalf, and got her squared away with police reports and credit bureaus, and put a freeze on all new credit activity. 

“This information was compromised from one source,” Valenzuela said. While it might be quick to pinpoint stolen mail or home break-ins where documents are taken, that never happened in this community. And even if it did, Valenzuela said, thieves aren’t likely to get the volume of personally identifiable information that was clearly exposed here. “The damages wouldn’t have been this large-scale, this serious,” she said.

All clues point to the homebuilder, according to police. “Whenever you apply for a mortgage, that broker has all your information, so we’re probably looking at a breach or theft from the purchasing agent in that development,” Valenzuela said.

The local police told Alison Smith as much. Just a few days after calling CyberScout and having a fraud alert set up, the thieves struck. AT&T called on a Saturday, confirming that she was setting up new service. AT&T called again, from another store location, an hour later. Smith told the agent she’d been a victim of identity theft and asked for information on the purchaser, but was told they couldn’t release personal information. “That’s my information!” Smith said. “They tried to make me out to be a criminal, because I’m asking for information on the person stealing my life.”

The fraud alert worked. The two AT&T applications were denied. A T-Mobile and a Sprint application were denied. A Kohl’s card was denied. But Verizon let five iPhones slip through. “When I talked to Verizon customer service, she came right out and said they’re not as diligent with online orders as they should be,” Smith told me.

Cell phone and store charge cards are common targets for thieves, Valenzuela said. Retailers often prioritize moving merchandise out the door over security. Most of the purchases in Smith’s case were made in Tulsa, Okla. Though the investigation is still pending, police said it likely will trace back to a crooked employee at the homebuilders office, which handled the mortgages for the entire development.

Smith, for her part, dodged a bullet, getting her accounts protected before the criminals dialed in. An ounce of prevention is truly worth a pound of cure.

“I don’t know what I would have done without Maria,” Smith said. “She’s done everything. She put all the paperwork in place to get the freezes. She was on the line with AT&T and sent letters to all three credit bureaus. I would have been lost without her.”

* Names and identifying details have been changed to protect the victim’s privacy.

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