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October 7, 2007

Identity Theft — Episode 2: The Wealthy as Targets

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Yesterday I remarked that T. C. Boyle's novel "Talk Talk" was instructive along with being hugely entertaining.

Of particular interest to me was how his fictional criminals, as the story evolved, decided to focus on the rich, reasoning they offered far better targets of opportunity than hoi polloi.

As Willie Sutton replied when asked why he robbed banks, "Because that's where the money is."

The identity thieves performed in-depth online research on public library computers, making their activities untraceable to them as individuals.

Boyle's book was published in 2006, which means he most likely finished writing it that year or in 2005.

He did his homework.

On August 17, 2007, Cassell Bryan-Low's story headlined "'ID-Theft Gang' Targeting Wealthy People is Exposed" appeared in the Wall Street Journal; it follows.

    'ID-Theft Gang' Targeting Wealthy People is Exposed

    Case Shows Amount of Data Available to Public Online, Pursuit of Deeper Pockets

    U.S. law-enforcement authorities arrested what they called an online identity-theft gang that they allege sought to steal millions of dollars by targeting wealthy individuals, including Michaels Stores Inc. co-founder Charles Wyly and a member of the Pritzker family.

    The case underscores how cybercriminals are pursuing deeper pockets, and it highlights a coming of age for cybercriminals: Some who started out with credit-card fraud have progressed to bigger targets like brokerage and mortgage accounts, which have higher limits. It also sheds light on the amount of information that is publicly accessible, even to suspected criminals halfway around the world.

    The ringleader in this case was a 24-year-old Russian named Igor Klopov, according to an indictment returned by a New York county grand jury that was unsealed yesterday. He stole $1.5 million and attempted to steal an additional $10.7 million from about 15 victims, many of whom he found through the Forbes 400 richest list, according to the indictment and prosecutors. Besides the individuals targeted, financial-services firms where his victims held accounts included Merrill Lynch & Co., J.P. Morgan Chase & Co. and Fidelity Investments, says the indictment.

    The victim list also included a Silicon Valley couple, the head of a major credit-reporting agency and a wealthy Texas businessman, according to prosecutors. Many of the victims lived in states — like Texas and California — where deed information about properties is available online.

    Mr. Klopov allegedly focused on people with a home-equity line of credit account, a way for homeowners to borrow against the value of a home as needed. By mining publicly available deed information online, Mr. Klopov was able to readily gain information about the value of property, size of outstanding mortgages, and existing lines of credit, prosecutors allege.

    Mr. Klopov created dossiers on his victims and hired private investigators to provide him with additional information, prosecutors say. They say he also used online job-hunting Web sites to recruit accomplices to withdraw money from banks, providing them with fake identification and information on his targets. Mr. Klopov made travel arrangements for his collaborators, including reservations at five-star hotels and limo services, which he paid for with stolen credit-card numbers, prosecutors say.

    U.S. authorities yesterday also said they had arrested four other individuals — in Michigan, Texas, Florida and Kentucky. The defendants have been charged with theft, identity theft, money laundering and forgery, among other charges.

    Another victim was Anthony Pritzker, a member of the Pritzker family that owns the Hyatt hotel chain. An assistant for Mr. Pritzker said he wasn't reachable.

    A spokesman for Fidelity said the incident involved one account in late 2005 and the company had reimbursed the customer. Spokesmen for Merrill and J.P. Morgan Chase declined to comment beyond saying the firms work with law enforcement.

    The yearlong investigation was conducted by the U.S. Secret Service, the New York City Police Department and the Manhattan District Attorney's office.

    In one instance, Mr. Klopov allegedly tried to steal $7 million from craft-store chain co-founder Mr. Wyly, who was a J.P. Morgan Chase customer. According to the indictment, Mr. Klopov, posing as Mr. Wyly, contacted the bank and asked that a new checkbook linked to a home-equity line of credit be sent to a Houston address associated with one of his cohorts. The cohort drafted a check for $7 million and sent it to a gold dealer in Westchester, N.Y. To authenticate the check, the gold dealer called its bank, which also happened to be J.P. Morgan Chase, the indictment continues. The bank contacted Mr. Wyly, who informed them that he had never signed that check. J.P. Morgan Chase alerted authorities, who already were investigating Mr. Klopov.

    William Brewer, a lawyer for Mr. Wyly, said Mr. Wyly "is grateful for the good work... done by law enforcement officials."

    Using an undercover agent, who already had developed an online relationship with Mr. Klopov, authorities led the defendant to believe the gold had been purchased and began arranging with Mr. Klopov plans for him to come to the U.S. to retrieve it, according to prosecutors. Authorities arrested Mr. Klopov under the Brooklyn Bridge.

    The Manhattan District Attorney's office said Mr. Klopov, who is from Moscow and is in custody, has denied the charges. An effort to reach an attorney for Mr. Klopov was unsuccessful.

October 7, 2007 at 10:01 AM | Permalink


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