Fraudulent Identification

A past issue of The Abagnale Advisor was a verbatim reprint of the notes taken from an inmate in California's Tehachapi State Prison. The inmate was holding in-house seminars on check fraud schemes with other inmates. One of the schemes described creating a new personal identity. This was being accomplished after obtaining an official birth certificate through a county's department of vital statistics by using the birth information taken from the death certificate of an infant or young child. This scheme is easy, effective, and big.

The demand by illegal immigrants, ex-convicts and others seeking to hide their true identity has grown exponentially over the past few years. Enforcement of employment requirements and new laws allowing public notification of predators' identities and addresses have fueled the demand for false identification. The best identification is a legitimate driver's license and a Social Security card. Both can be had after first obtaining a legitimate birth certificate.

In many states, birth certificates and death records are part of the public record and are readily available for the asking. In other states, only the next of kin or an attorney can request the birth certificate. One need not go to law school to become an attorney. A visit to a quick print shop for business cards and letterhead can instantly provide a criminal with the credibility of a law degree and offices sufficient to gain access to public records.

The State of California, which leads the nation in all types of financial fraud, is a bellwether predictor of illegal activities that will soon befall other states. Steve Torres, Manager of Investigations in the Los Angeles area for the Department of Motor Vehicles, has spent hundreds of hours researching illegally obtained driver's licenses. Mr. Torres believes the current policies of the Department of Vital Statistics facilitate the fraudulent driver's license trade by allowing virtually anyone to obtain a copy of a birth certificate. The Department of Vital Statistics is charged with providing a public service that, for the vast majority of the time, is used by law-abiding citizens for legitimate purposes. They do admit that there are some persons who have requested and received half a dozen different birth certificates at a time.

Fraudulent identification is a major problem for financial institutions. A check forger, armed with a driver's license and social security number, will open accounts at several different banks. The sophisticated forger will often let these accounts season for 90 days to a year. By maintaining the account properly, he will lull the bank into thinking the account is okay. Then, he will deposit fraudulent checks through an ATM, and after waiting through the two-day hold period, will withdraw the funds. The forger is long gone from the scene of the crime when the deposited checks are returned unpaid to the bank, or when the company or persons that suffered the loss reconciles their account and discovers the loss.

So, how can a person in a position of responsibility (e.g. notary public, airline ticket agent, loan or title insurance officer, new accounts representative) know with some level of confidence that the person before them with a legitimate driver's license is actually that person? It is difficult, but there are solutions and new tools on the market. (Please refer to the Software section, and the discussion of Fraudetect.)

Solutions

1.	Know your customer. To the degree possible, confirm all pertinent information.
2.	When verifying information, never call the telephone number given you without corroborating its legitimacy through an external directory. If it is a scam, an accomplice will answer the telephone in the name of the entity you are expecting to hear.
3.	Implement a reward policy for the employees that catch a fraudulent transaction.