Identity-Theft Ring Broken Up in Irvine

Federal and local law enforcement officials say they have broken up one of the Southland’s biggest identity-theft rings--a gang that mined the Internet for details about victims and recruited accomplices among losing gamblers to drain bank accounts and run up fraudulent credit card bills.

The investigation, which is expected to be announced today by Irvine police, included a December raid on the ringleader’s apartment that uncovered a high-tech identity-production line, including computers, scanners, printers and machines to produce bogus checks and credit cards.

“It was the most sophisticated, cleanest operation” Irvine authorities had ever seen, said Damon Tucker, an investigator with the Irvine Police Department.

And investigators say they are working on cases involving even more sophisticated identity-theft rings, including one that paid off a bank insider to provide data such as mothers’ maiden names on hundreds of bank customers and then used the information to set up online accounts designed to conduct fraudulent wire transfers of funds.

Identity theft has become the biggest source of consumer fraud complaints logged by the Federal Trade Commission. The FTC recorded 86,000 complaints last year--42% of all fraud complaints it received, with Internet auction scams a distant second at 10%.

Identity thieves use personal information to assume someone’s identity and then loot their bank accounts, run up credit card bills--even buy houses.

“It’s become enormously popular among criminals who used to commit more violent crimes, like armed robbery or crimes where they had more exposure, like organized shoplifting,” said Joanna Crain, the FTC’s identity-theft program manager. “They’ve all concluded identity theft is lower risk in terms of being detected and in terms of penalties if they are caught.”

So far this year, the L.A. County Sheriff’s Department has received about 6,000 identity-theft complaints, said Jonathan Fairlough, a high-tech and identity-theft prosecutor with the Los Angeles district attorney’s office. In Southern California, losses to individuals in identity-theft cases usually run in the $2,000-to-$3,000 range, he said.

One headache has been a gang operating in the downtown L.A., Pasadena-Glendale and Long Beach areas that pays for stolen documents with high-quality amphetamines, he said. In another case, a ringleader who worked at a health insurance company stole the identities of out-of-state doctors, using them to set up fake cell phone accounts. He placed ads for nonexistent apartments, listing the cell phone numbers as the contact. He collected deposits from low-income renters and disappeared.

“When the complaints came in, we couldn’t even identify them with anyone living in California,” Fairlough said. Losses in that scam were in the $100,000 range--quite high by identity-theft standards, although he’s working another case in which stolen identities were used to rent half a million dollars in commercial cameras.

Losses are estimated at $500,000 in the Irvine case, which was investigated by the FBI and the Secret Service as well as local authorities. Ringleader Jeremy Cushing pleaded guilty Tuesday to 10 felony charges carrying a 10-year prison term, and several alleged accomplices are in custody, said Orange County Deputy Dist. Atty. Mark Sevigny.

Investigators said Cushing used lieutenants to recruit losing gamblers and other people who were in financial trouble to act as “mules,” or runners. The runners would cash checks at banks using phony IDs based on someone else’s identity. The runners were given personal information to memorize in case the teller became suspicious and asked questions.

If a teller called police, the lieutenant, watching outside the bank, would simply flee. If the checks were cashed, the runner would keep about a third of the money and Cushing’s outfit would keep the rest, investigators say.

But Cushing had other, more sophisticated scams, investigators say. Phil Cadenhead, an economic crimes investigator for the Irvine police, said that when a lucky break led them to the luxury apartment Cushing had rented under a false name, “there was a ton of documents, probably 20 boxes from various sources with names and every imaginable kind of personal information.”

The FBI turned up more than $400,000 in losses at banks and brokerage houses attributable to Cushing’s operation, and the ring also used stolen identities to purchase a $40,000 sports car, high-end electronics gear and other items, Cadenhead said.

By pretending to be a legitimate business, Cushing set up accounts at several Internet database companies that provide personal information to businesses and government agencies, investigators said. Once Cushing was in the system, he could use a legitimate name and Social Security number to get birth dates, address confirmations and even criminal records, officials said--everything needed to take on a false identity.