Speaking for Nevada - October 2007

Should Nevadans be threatened by modern-age bandits?

Protecting Nevadans Pockets

by Catherine Cortez Masto

Accomplished bank robber Willie Sutton is famously known for answering why he robbed banks by saying, “Because that’s where the money is.” Where is the money today? In early June of 2007, thieves were able to shift nearly $450,000 from a city’s general fund by using a spyware program to mimic the computer strokes made by the financial officer of a small California city. The thieves obtained bank passwords in this manner and first wired $90,000 to a bank account in North Carolina. The following day, emboldened by their success, they wired an additional $358,000 from the city’s bank account to a bank in Michigan.

A month later, in early July, a court in London sentenced three “cyber-jihadis” to sentences between six-and-a-half to 10 years for inciting Muslims to wage holy war on non-believers. According to washingtonpost.com, the men made more than $3.5 million in fraudulent charges using credit card accounts stolen online – some from the United States via the Internet black market for stolen identities. They then compiled shopping lists for items that fellow jihadists might need for their battle against the American and allied forces in Iraq, including GPS devices, night vision goggles, and survival gear. They purchased hundreds of prepaid cell phones and more than 250 airline tickets using 110 different credit cards at 46 airlines and travel agencies. They laundered money through online gambling sites using accounts set up with stolen credit card numbers and victim’s identities – some 350 transactions at 43 different online wagering sites, using more than 130 compromised credit card accounts. They lost some money, but withdrew “cleaner” winnings and transferred them to online bank accounts they controlled.

Often, money is indistinguishable from electronic information that provides the cyber-key to money transfers. Electronic monetary transactions are predicated on information-based credentials. Those credentials might (falsely) identify a city treasurer or an individual applying for a credit card. We have labeled crimes based on electronic lies identity theft, but we are really dealing with a variety of frauds based on impersonation – impersonation that has been made easier in an electronic world where nobody can see who you are.

As a society, we have tended to concentrate on making personal data harder to steal. We have become more educated about phishing attacks and the perils of disclosing personal information online. We now limit the use of our social security numbers and other personal identifiers. We appropriately condemn as scandalous personal information stolen from companies, banks, universities and government data bases.

We also focus on clean up and damage limitation. We have passed laws dealing with disclosing data compromises. A number of states, including Nevada, allow actual or potential victims of identity theft fraud to freeze their credit reports with the three major credit reporting agencies, thereby preventing anyone from opening any form of credit in the victim’s name. This is important because it does not take much personal information to apply for a credit card in someone else’s name. Also, Nevada and a few other states have some type of identity theft passport – programs that officially recognize victims of identity theft frauds in order to assist them in re-establishing credit and in defending against the claims of merchants who have been swindled by the identity thief. The key step in obtaining an identity theft passport is for the victim to produce documentation to government officials to prove that person’s identity.

Fraudulent transactions threaten us all, not only financially, but physically, if they are used to fund terrorist schemes. We not only need to continue what we are doing to combat financial crimes, but we also need to think hard about additional steps that will fundamentally alter the incentives and opportunities relating to fraudulent transactions.

Money is no longer just a physical commodity. We have not yet identified the complete set of strategies necessary for its safekeeping.