Skip to comments.Afghan Crime Ring May Have Used ID Theft to Swindle Arizona Banks
Posted on 06/19/2002 3:16:25 PM PDT by grimalkin
Jun 16, 2002 (The Tribune - Knight Ridder/Tribune Business News via COMTEX) -- Floyd Lipps was homeless. A drug addict. Hungry.
So when two men approached him last fall and offered a place to live, plenty of food and an endless supply of drugs in exchange for his help, Lipps took the opportunity.
By November, according to the story Lipps later told the FBI, he had become an integral part of a sophisticated fraud ring run by three men who said they were from Afghanistan. Their scam was netting at least $40,000 a week in fraudulent loans from Valley banks using Social Security numbers and other information stolen mostly from New Mexico residents.
Lipps, interviewed by the FBI's Bank Fraud Task Force in November, said there may have been other workers like him, but he wasn't certain, according to a search warrant affidavit filed in Maricopa County Superior Court.
What he did know is that a man picked the money up weekly. It is unclear where the |money was taken or what it was used for, based on the few records on the case made public. It is unclear whether officials know.
The case is one of several suggesting organized identity theft and fraud rings are honing in on the Valley, overwhelming already-taxed law enforcement teams that specialize in such crimes. This recent surge comes at a time when federal officials and other experts are becoming increasingly concerned that such crimes are being used to fund terrorism.
Al-Qaida training manuals have encouraged the use of such fraud, according to news reports.
"We already know that many of the Sept. 11 hijackers were using false IDs," said Jay Foley, director of consumer and victim services for the Privacy Rights Clearinghouse.
Despite these fears, some fraud and identity theft cases in the Valley are not being investigated because police simply don't have the time or manpower, sources told the Tribune. Prosecution in other identity theft cases often ends up extensively delayed.
Since obtaining a warrant to search the possible Afghan ring's Phoenix headquarters last year and finding computers and documents consistent with bank fraud schemes, law agencies have done nothing publicly with the case except to seek permission to seize the group's assets.
The FBI, the U.S. Attorney's Office, Phoenix police and the Maricopa County Attorney's Office -- which has taken control of the matter -- will say nothing about the case, including whether the group has any suspected ties to terrorism.
No charges have been filed. The case is ongoing.
Although a rash of recent cases suggest identity thieves and bank fraud rings are taking an interest in the Valley, not all experts agree with that assessment. Some in the banking industry and law enforcement say the crime is simply being given more attention recently.
There are no accurate statistics from federal or state agencies on identity theft. The crime often goes hand in hand with bank fraud and other similar schemes.
The sums involved in several recent Valley fraud cases, however, have been staggering -- approaching $1million -- suggesting more organized criminal elements are taking an interest in the area.
The criminals are also specializing in their tasks. There are those who steal identities and related documents, said John Webb, a special assistant U.S. attorney, and criminals who buy the identities.
"You can't really buttonhole these guys into one form of identity theft," he said.
The vast majority of these local bank fraud and identity theft rings, officials said, are run by methamphetamine users who have organized to maximize scales of economy and efficiency.
Of the 46 federal grand jury indictments handed down in Phoenix during a two-week period in May, 16 were for crimes related to identity theft, including bank fraud or mail fraud. Many involved drugs, according to records and officials.
While meth users account for most of the fraud, there have been several recent cases, such as the case with the possible Afghan connection, that do not fit the mold.
"It is a more, probably, recent development," said Daniel Drake, an assistant U.S. attorney in Phoenix.
Records filed in area courts offer only sparse details.
A U.S. Secret Service agent arrested two Russians at Phoenix Sky Harbor International Airport this month, the Tribune has learned, after an America West Airlines investigator told police the two were traveling with false identification.
Police found Dzmitry Kruhlov and Vyacheslav Svechkarev carrying seven counterfeit California driver's licenses, according to papers filed in U.S. District Court. Svechkarev told an investigator they eventually planned to go to Austin, Texas, and commit credit card fraud.
Federal agents will not comment if the two have connections to the Russian Mafia, notorious for its identity theft and fraud schemes.
Two Romanians were also arrested at the airport last month, the Tribune has learned, and indicted on a charge of unauthorized possession of access devices -- a charge related to fraud schemes.
An arrest warrant also has been issued for Amanda Bossingham, a Scottsdale resident. Officials will not discuss her case, either.
The woman, who dressed to be noticed and often socialized at swanky Scottsdale clubs such as Sanctuary, obtained $10,000 to $25,000 in fraudulent loans from Arizona banks she targeted, according to records in U.S. District Court and Maricopa County Superior Court. Bossingham would apply for loans from more than one bank at a time to maximize her profit, according to a grand jury indictment for fraud and identity theft. The indictment does not spell out what she did with the money. Officials said she has gone into hiding.
The investigation into the case involving the possible Afghan group appears to have been slowed by a number of factors.
The lead investigator, Phoenix police detective Michael Sechez, recently retired. But, the case remains under investigation, according to the county attorney's office.
While the loss of the lead investigator may be causing delays, the case may also be plagued by a lack of credible witnesses. Lipps, the person who appears to be officials' top source of information, has a criminal history.
Police said they first observed Lipps attempting to obtain an $8,000 fraudulent loan from a Phoenix branch of M&I bank.
Lipps attempted to obtain the loan in early November using an Arizona identification card in the name of Larry Hawkins, according to court documents.
When arrested, Lipps had a Thunderbird Samaritan employee identification card and bank cards from four area banks, records show.
All were in the name of Hawkins, a New Mexico resident.
Hawkins would not comment on the case, saying he didn't want to jeopardize the investigation.
After his arrest, Lipps told police the following, according to court records:
He was working for a group of people who told him they were from Afghanistan and repeatedly committed bank fraud throughout the Valley. He was recruited by two people, "Anthony" and "Joseph," in September or October.
Another person named "Ali" appeared to be in charge. Lipps was homeless and a drug addict, and he said the men offered to clean him up and provide him with housing, food and any drugs he wanted in exchange for his services. The men bought Lipps clothes and helped him gain weight so he would look presentable.
Lipps' handlers also used computers to make birth certificates and employee identification cards in the names of people whose Social Security numbers and other information they had stolen.
They would then take Lipps to a Motor Vehicle Division office. He used the fake documents to get a state identification card.
Then, Lipps used the state identification card to open bank accounts into which he would deposit $600 to $1,000. He would then apply for a loan up to $10,000. Because the people whose identities the group had stolen had good credit, the loans would be approved.
He would hit a bank or two every day, and about once a week "Ali" would come and pick up the money in a silver briefcase.
By the time investigators first spoke to him, on Nov. 7, Lipps had obtained $30,000 in the past several days and $100,000 in the past month.
Every couple of weeks, his handlers would change his identity, giving him a new name and a new look.
He was told there were other runners, but he had only seen one once.
Investigators continued to observe Lipps from Nov. 7 until nearly the end of that month.
In late November, Sechez wrote in his search warrant request, police watched Emal Leyasi, who court records indicate was born in Afghanistan, and an unidentified man drive Lipps to a Chandler Motor Vehicle Division office.
There he obtained a state identification card in the name of Luis William Florez, Sechez wrote.
Over the next several weeks, Sechez wrote, investigators watched the group go to various banks and businesses.
In December, police received a search warrant for a north Phoenix home where group members were living and found checks, credit cards, counterfeit identifications, a notary seal, a variety of computer equipment, a large rifle scope and a .45 Glock pistol.
Lipps and Leyasi were arrested and released, according to court records. No charges have been filed.
Neither could be reached for comment.
The FBI established the Bank Fraud Task Force in 1992 to deal with fraud-related crimes. Several in the law enforcement community said the task force's activities have slowed substantially, largely because of a shortage of manpower, although an FBI spokesman disagreed.
"Everyone is facing limited resources," said Ellen Poole, head of the Arizona Bankers' Association, a group whose members are heavily affected by fraud. "Revenues are down for government. There are additional costs for protecting against terrorism."
The net result, according to three people who investigate these types of crimes and asked not to be identified, is that throughout the Valley, hundreds of identity theft or bank fraud cases essentially end up in the garbage.
With so few officers to investigate what may be the fastest-growing crime in the nation -- statistics indicate as many as one in every 312 Arizonans may be a victim of identity theft this year -- law enforcement can focus only on the most serious cases.
The majority of law agencies' resources must be dedicated to violent crimes.
As a result, law enforcement finds itself in a difficult position, well aware of the potential use of fraud and identity theft to fund terrorism, yet forced to concentrate on criminals who pose an immediate danger to the community.
Criminals have figured this out, some experts say.
The average bank robber gets about $3,500 from a bank. The average prison term for bank robbery is seven to 15 years. For each identity that is stolen, Foley said, financial institutions can lose about $17,000, but the average identity thief gets no more than a year in prison.
"Armed robberies are down, the muggings might be down. They're going to tell you burglaries are starting to drop down. The question is: Why?" Foley said. "These guys found a cheaper, faster, safer way to commit crime, and it's a heck of lot more profitable."