There was a tinge of awe in Newport Beach Police Detective Mark Fisher's voice when he spoke of two new scams on the block in the tony town where he has made his living investigating fraud for nearly half a dozen years.
"It's pretty brilliant," he said. "Kinda risky, but pretty unique." High praise, indeed, from a man who has seen the tops in telemarketing schemes and other assorted fraud.
The two schemes were perpetrated with byzantine complexity, he said, and blew gaping holes through most normal credit-card safeguards. The first one went like this:
Three men between the ages 23 and 35 would steal mail from unsuspecting homes in upscale beach towns, so they could gain access to MasterCard and Visa statements, Fisher said. Then they would tap into telephone lines of those same homes with lengths of wire and hook up a mobile phone that would, therefore, have the same telephone number.
Then they would sit in a red BMW parked nearby, call Western Union and arrange money orders of $700 to $1,500. The money orders would be sent to destinations ranging from their own homes to the Las Vegas hotels where they would stay on their ill-gotten gains, according to court documents and interviews with law enforcement officials.
They would tap into the phones, Fisher said, because they believed Western Union verified credit card ownership with a call to the card-owner's home.
"And they were looking for beach towns because most of the people there had high limits on their MasterCard and Visa," Fisher said. The towns of choice: Newport Beach, Redondo Beach and Manhattan Beach.
While the phone taps may have added authenticity to the scheme, a Western Union spokesman said Tuesday, they were an unnecessary frill in an already intricate operation.
"Western Union verifies only to make sure that you have the credit, that you haven't overdrawn and that the (card's) expiration date is in order," said company spokesman Donn Dutcher. "Why these guys tapped into a home phone I have no idea," because requests for money can be made from an office telephone or a phone booth.
And those telephone taps were what eventually led to the arrests of Mark D. Zubick, 23, and John Welty, 35, who were charged in U.S. District Court in Santa Ana on Monday with possession of stolen mail.
According to police records, on Jan. 2 a Newport Beach man reported that an unknown suspect had called Western Union and tried to transfer $700 from the man's MasterCard account to a Western Union office in Santa Barbara. The man found out about the scheme when he intercepted a call verifying his MasterCard ownership and money order request.
In addition, one of the man's neighbors reported that she had seen two strange men tapping into the Ocean Front apartment's outside phone box. Police took a report but were dubious, Fisher said, because they had never before seen anything like the crime that was described.
Eight days later, however, those same officers were driving down a nearby alley when they saw a coil of white wire snaking from an apartment telephone box into a red BMW. Inside the car were Zubick, Welty, a pile of stolen mail and a telephone, according to an arrest report.
Fisher said police believe the two men and an unknown third suspect used this scheme for quick money, mere spare change.
During their investigation, Newport Beach police and federal postal inspectors uncovered yet another scheme, Fisher said, one that allegedly netted the same men up to $1 million over two years, a crime that banking officials called "elaborate" and "amazing."
First, Fisher said, the men would cruise wealthy neighborhoods such as Bel-Air and Newport Beach, breaking into mail boxes and stealing credit-card statements--preferably those with limits of $10,000.
"Anything less," he said, "was too small for them to worry about. . . . They would put it back or throw it away."
They would steam open the envelope, photocopy the statement, reseal the document and return it to the mailbox. The next step, Fisher said, would be to call up the credit card company, report the card as lost and ask for a replacement. When the replacement card arrived, the men would allegedly steal it.
"By doing it that way, the cardholder would be unaware a replacement card existed," Fisher said. "A card company would be unaware that a replacement had essentially been sent to the crooks."
The scam would be good for about a month on each stolen card, Fisher said. By that time, either the card's real owner would have tried to use his own card and found out that it had been reported lost, or a statement detailing the thieves' Las Vegas charges would have reached the real owner.
After receiving the replacement card, the men would pay off the balance on the account with checks taken from yet another victim. That way, Fisher said, they would have access to the card's full credit limit.
Next Stop: Las Vegas
The men would allegedly forge a phony birth certificate and head to New Mexico, where a photo identification card can be had in a day, Fisher said. The photo identification was necessary in order to get cash advances at the next stop: the casinos of Las Vegas.
"Normally, if they were working a $10,000 credit limit card, they'd get $9,000 cash," Fisher said. "They'd leave a 10% to 20% margin in the credit line in order to make sure the true cardholder would not make a large charge, have credit declined and then find out that there were fraudulent charges coming in from Vegas."
If the process was repeated three or four times without a hitch, he said, each card could bring in nearly $40,000.
Miguel D. Mirano, Welty's attorney, said his client is out on bail and has been charged--along with Zubick--with just a single count of possession of stolen mail, on which he should be indicted within two weeks.
Other than that, Mirano said, he could not comment because the case is still pending. Zubick's attorney could not be reached for comment.
"It's a new twist on things," Fisher said. "Credit cards are stolen out of the mail all the time. They're usually used by people to go on buying sprees. It's somewhat frightening the way they (the three men) were able to do this and bypass normal verification procedures."
Banking experts contacted by The Times said they had never heard of such a scheme before and had a few suggestions for concerned cardholders.
"The conniptions people will go through to do something dishonest is amazing," said Curtiss Olsen, a spokesman for Bank of America. "The first thing I'd suggest is to guard your mailbox, work out some kind of arrangement with a post office or get a post office box. If you have a lot of assets to protect, you may want to consider doing it."
Banking industry consultant Kenneth Slezak suggested that consumers could pick up their statements and checks at bank branch offices, which some small business owners and consumers are already doing because of fear of theft.
"When they're going to that extreme," Slezak said, "where there's a will there's a way. You have to protect your money at all times."