Testimony of Grant D. Ashley, Assistant Director, Criminal
Investigation Division, FBI
Before the House
Ways and Means Committee, Subcommittee on Social Security
September 19, 2002
"Preserving the Integrity
of Social Security Numbers and Preventing their Misuse by
Terrorist and Identity Thieves"
Good afternoon Chairmen and
Members of the Subcommittees. On behalf of the Federal Bureau
of Investigation (FBI), I would like to express my gratitude
to the Subcommittees for affording us the opportunity to participate
in this forum and to provide comment regarding Preserving
the integrity of Social Security Numbers and Preventing their
misuse by terrorists and identity thieves.
As the Subcommittees are well
aware, the FBI, along with other federal law enforcement agencies,
investigates individuals who use the identities of others
to carry out violations of federal criminal law. These crimes
include bank fraud, credit card fraud, wire fraud, mail fraud,
money laundering, bankruptcy fraud, computer crimes, terrorism,
organized crime, and fugitive cases. These crimes, carried
out using a stolen identity, make the investigation of the
offenses much more complicated. The use of a stolen identity
enhances the chances of success in the commission of almost
all financial crimes. The stolen identity provides a cloak
of anonymity for the subject while the groundwork is laid
to carry out the crime. This includes the rental of mail drops,
post office boxes, apartments, office space, vehicles, and
storage lockers as well as the activation of pagers, cellular
telephones, and various utility services.
Identity theft is not new to
law enforcement. For decades fugitives have changed identities
to avoid capture, and check forgers have assumed the identity
of others to negotiate stolen or counterfeit checks. What
is new today is the pervasiveness of the problem. The FBI
does not view identity theft as a separate and distinct crime
problem. Rather, it sees identity theft as a component of
many types of crimes which we investigate.
The recent "sweep"
of identity theft prosecutions that the Attorney General announced
on May 2, 2002, reflects how widespread identity theft has
become and how it is associated with a wide range of criminal
activities. The sweep involved 73 criminal prosecutions against
135 individuals in 24 districts. The crimes charged in these
cases involving identity theft ranged from traditional fraud
to murder. In one indictment in the Northern District of Illinois,
for example, the defendant, who was facing federal counterfeiting
charges, allegedly murdered a homeless man and tried to fake
his own death by making it look as though the deceased victim
was the defendant. Other cases involved defendants who allegedly
located houses owned by elderly citizens and assumed their
identities in order to fraudulently sell or refinance the
properties; a defendant charged with selling Social Security
numbers on eBay; and a hospital employee allegedly stole the
identities of 393 hospital patients to obtain credit cards
using the false identities.
This sweep, it should be noted,
was the first part of a two-pronged strategy by federal law
enforcement to combat identity theft. The second prong involves
efforts to strengthen existing federal identity theft criminal
statutes. Under S. 2541, which the Administration strongly
supports, sentencing in a wide range of cases involving identification
document fraud would be subject to a mandatory two-year enhanced
penalty (over and above the sentence that would otherwise
apply in a particular case). S. 2541 also would amend 18 U.S.C.
1028(b)(2) to increase the maximum imprisonment for a section
1028(a)(3) offense from three to five years, and would otherwise
broaden the reach of the identity theft offense. In addition,
S. 2541 specifically would allow judges the discretion to
impose consecutive sentences in cases involving multiple counts
of aggravated identity theft, and it authorizes the Sentencing
Commission to issue guidelines and policy statements governing
the exercise of such discretion. We believe that these changes,
if enacted, would go a long way to strengthening the penalties
that could apply when defendants are dealing in multiple identification
documents.
Possession of someone else's
Social Security Number is key to laying the groundwork to
take over someone's identity and obtain a driver's license,
loans, credit cards, cars, and merchandise. It is also key
to taking over an individual's existing account and wiring
money from the account, charging expenses to an existing credit
line, writing checks on the account or simply withdrawing
money.
The FBI works closely with other
law enforcement agencies at the federal, state and local level
to address crimes which are carried out through the use of
stolen identities. This includes working closely with the
Social Security Administration's (SSA) Office of Inspector
General to confirm the authenticity (i.e., the existence or
non existence, of Social Security Numbers being utilized by
criminals). Our Detroit and St. Louis offices participate
in official task forces established specifically to investigate
crimes involving identity theft. In Memphis and Mobile, official
task forces are being created and our offices will be participating
in these task forces which will specifically investigate crimes
involving identity theft. Numerous field offices have task
forces that investigate various financial crimes which include
an element of identity theft. Other offices simply address
the crimes the FBI has always investigated, but now include
an element of identity theft.
A number of identity theft related
problems are being seen by law enforcement that are caused
by people in trusted positions within a business or government
office that misuse the personal identifying information to
which they have access. Additionally, people are improperly
obtaining Social Security Numbers without any legitimate access.
Increases in security features on Social Security cards, alone,
would not solve this problem as an actual card is seldom required
for verifying someone's Social Security Number. However, additional
security and safeguards of the actual Social Security Numbers
could have a substantial impact.
One case under investigation
by one of our offices in conjunction with the U.S. Postal
Inspection Service involves an individual who obtained personal
identifying information such as the names, and dates of birth
of attorneys in the Boston area from the Martindale-Hubbell
directory of attorneys. Using this information, his co-conspirator
visited the Massachusetts Bureau of Vital Records which has
an open records policy and was able to obtain copies of birth
certificates of his victims. According to interviews with
the defendants, using the combined information, they were
able to contact the Social Security Administration and obtain
the victims' Social Security Numbers. Once they obtained the
Social Security Numbers, they were able to order credit reports
and look at the credit scores for these victims to determine
their creditworthiness and where accounts already existed.
Using this information they were able to make pretext calls
to at least one bank and obtain the account number. This enabled
them to wire transfer $96,000 from one of the victim's bank
accounts, half of which went to a casino and the remainder
went to one of the subject's personal accounts. One of these
suspects also added authorized users to the victims' credit
card accounts and ordered emergency replacement cards which
were sent to them by overnight delivery. At the time of arrest,
this individual was found to be in possession of at least
12 different license or identification cards from three states
and at least four or five credit cards, all in the names of
the victims whose identity he had stolen. Although there are
a number of enabling flaws in the system including open records
policies in some states, there was also an apparent lack of
verification by the Social Security Administration as to whether
or not the person armed with the information and requesting
the Social Security Number was truly the person to whom the
Social Security Number belonged.
One of our field offices is
currently investigating a case whereby Social Security Numbers
for children of various ages have been sold to individuals
with bad credit for future use in obtaining credit. It is
unknown at this time as to how these numbers were obtained.
However, individuals who obtained these numbers acted as middlemen.
As part of the sale of the Social Security Numbers to the
actual users, they formed companies which they used to falsely
report positive credit information on these Social Security
Numbers to the credit reporting agencies. Such information
included loan payoffs and information on other fictitious
credit accounts which were paid off. This information boosted
the user of the number's credit history and thereby the user's
credit score. Next the users applied to legitimate credit
issuers, including mortgage companies and were able to obtain
credit. The users were instructed they could use their true
names with these Social Security Numbers, but not to use any
previous addresses or other information similar to their previous
credit record that could cause the credit reporting agencies
to possibly merge their old and new credit files. Since the
victims are children and are not applying for any credit,
they are not aware their Social Security Numbers were used
in this way. As a result, these victims are not filing any
complaints with law enforcement, the credit reporting agencies
or any of the defrauded creditors. When these victims later
become old enough to attempt to establish credit, they will
learn about this activity.
A case our New York office investigated
included the use of the personal identifying information of
six prominent executives, three of whom were deceased. Although
this information was not received directly from the Social
Security Administration, using the names of these deceased
executives, this individual, who was later convicted, paid
Internet information brokers to obtain these executives' Social
Security Numbers. After obtaining their Social Security Numbers,
he fraudulently obtained bank account and credit card numbers
as well as other personal identifying information for these
executives. He then impersonated these executives and purchased
diamonds and Rolex watches over the Internet, and either wire
transferred money from one of his victim's bank accounts or
used one of his victim's credit card numbers. This individual
had ordered approximately $730,000 in diamonds and Rolex watches
but was only able to take delivery on just over half of this
merchandise. There needs to be some serious review of the
availability of personal identifying information, including
the Social Security Number, over the internet, especially
through these types of information brokers who can provide
this information for a fee.
Like some other States, Hawaii
utilizes the drivers' Social Security Number as its drivers
license number. One significant case in our Honolulu field
office, operation CARD SHARKS, was a financial institution
fraud investigation that also targeted businesses dealing
in the production of false identifications. Several of the
subjects identified during the investigation utilized stolen
Hawaii driver's licenses, including real identities and Social
Security Numbers to make their false identifications. These
individuals then opened bank accounts under their assumed
names to commit financial institution fraud. Other aspects
of this investigation included subjects who utilized real
names and addresses, but would make up Social Security Numbers
to commit their crimes. This was a joint investigation with
federal and local law enforcement that resulted in seventeen
indictments. Search warrants were executed on six different
locations and all six sites had evidence of violations of
Title 18, United States Code, Section 1028.
As far as Terrorism matters
are concerned, since December 2001, The Social Security Administration
has provided prompt support to the FBI's Terrorist Financing
Operations Section's initiative of identifying misuse of Social
Security Numbers. The FBI has been taking Social Security
Numbers identified through past or ongoing terrorist investigations
and providing them to the Social Security Administration for
verification. This multi-phase project seeks to identify potential
terrorist related individuals through Social Security Number
misusage analysis.
Once the validity or non-validity
of a Social Security Number has been established, investigators
look for misuse of Social Security Numbers by checking immigration
records, Department of Motor Vehicle records, and other military,
government, and fee-based data sources. Incidents of Social
Security Number misusage are separated according to type and
forwarded to the appropriate investigative and prospective
entity for follow-up.
With assistance from the Social
Security Administration, approximately 150 instances of potential
Social Security Number misusage have been identified. Each
identified instance of potential Social Security Number misuse
must be resolved through field investigation. This process
is continuing with ongoing investigations.
The Social Security Administration's
information should have very stringent limitations placed
on its access and availability to the general public. However,
we must be careful not to make it more difficult for law enforcement
to conduct their investigations and access this information.
There appears to be a need for various businesses, including
the banking community, as well as government agencies to run
verifications of the legitimacy of Social Security Numbers
used by individuals when conducting business. However, this
could be accomplished without providing broad access to the
universe of Social Security Numbers.
In addition to these general
concerns, there are some other, more specific potential issues
involving access to Social Security Administration information
that I would prefer not to discuss in open session so as not
inadvertently to aid potential criminals.
Mr. Chairmen and Members of
the Subcommittees, that concludes my prepared remarks. I would
be happy to attempt to answer your questions at this time.
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