Identity Theft

The Federal Trade Commission ranks Arizona the number one state in the nation for identity theft.

Transcript:

>> Michael Grant:
Tonight on "HORIZON," the Federal Trade Commission ranks Arizona the number one state in the nation for identity theft.

>>Sgt. Jason Davis/Phoenix Police:
People are victimized by it. They don't get physically hurt. It's not treated that seriously in the courts yet, but it has a far-reaching effect on people's lives.

>> Michael Grant:
As we continue our series on identity theft, we look at law enforcement's response and whether enough is being done to stop it.

>>Andrew Thomas/Maricopa County Attorney:
If we don't start really addressing this problem now, the problem is actually going to get worse. We're already number one in the nation.

>> Michael Grant:
Plus, a new report on classroom spending in Arizona shows more money is not going to classrooms. I'll talk to the state chool chief about that subject, various issues related to the aims test.

>> Michael Grant:
Good evening, I'm Michael Grant. Welcome to "HORIZON." If you are not a victim of ID theft, chances are you know someone who is. Arizona and the metro Phoenix area are number one in the country when it comes to ID theft complaints compiled by the Federal Trade Commission. Last night, we showed you the many ways that ID theft is committed. Tomorrow night we'll show you what you can do to protect yourself. Tonight we'll look at what law enforcement is doing about the growing problem.

>> Richard Atwood/U.S. Postal Inspector:
This is two houses down off of Campbell. It's actually a pretty decent neighborhood. It's kind of surprising, but -- so the Phoenix PD was out there all day and said there was a lot of activity going on.

>>Paul Atkinson:
Richard Atwood leads a search warrant briefing. The suspect is a trafficker in stolen identity. The United States postal inspection service will team up with the Phoenix police tactical unit to storm the house. It's the fourth search warrant they'll have served this week.

>> Richard Atwood:
People will probably go to jail tomorrow once we find out stuff.

>>Paul Atkinson:
Local law enforcement has not taken the increase in ID theft lightly. These postal inspectors are part of an ID theft taskforce created in the summer of 2004, involving federal, state and local law enforcement agencies.

>> Paul Charlton/U.S. Attorney, Arizona:
We have a number of different law enforcement agencies all housed under one roof and who are attacking this problem. We can bring together resources from state, local and federal venues to look at where this problem is now, and anticipate where the problem is going to go in the future.

>> Paul Atkinson:
The taskforce also helps resolve issues over jurisdiction. Oftentimes a victim lives in one city and their ID is fraudulently used in another.

>> Doug Hilburn/ID Theft Task Force Leader:
If you are in the City of Phoenix and the crime happens here, you call the Phoenix police. If you are in the City of Scottsdale, and a crime happens in Scottsdale and you are a resident there, you call Scottsdale police. When you are an identity theft victim and you live in one of those cities, and really all of the theft has actually occurred in another location, whether it be online or stuff is shipped to, say, a city like Avondale, Arizona, or something like that, well, who do you call? That's the problem. Because it's not as clear-cut on whose jurisdiction it is.

>> Matt Arntz/Phoenix Police Detective:
The suspect involved, the main suspect involved, got -- I just got the charging complaint on him today, and they charged him with fraud schemes.

>>Paul Atkinson:
Matt Arntz is one of several detectives assigned to the Phoenix police document crime bureau. The bureau handled more than 1700 ID theft cases, a 44% increase from the previous year.

>> Sgt. Jason Davis/Phoenix Police Document Crimes Bureau:
Here with the Phoenix Police Department, they previously had two squads that worked what we call document crimes here in Phoenix, and that was -- they worked embezzlement cases and forgeries and identity thefts. In January of 2004, we added a third squad. There are now three squads here in Phoenix working on those issues, those types of cases. I think we need probably two more squads.

>> Prosecuor:
Credit card numbers were obtained from a company that the defendant had worked for.

>>Paul Atkinson:
More than a half dozen prosecutors handle ID theft cases for the Maricopa County attorney's office. A special unit was created in August 2004.

>> Brad Astrowsky/Maricopa County Attorney's Office ID Theft Unit:
It allows us to be more proactive. It allows for specialization. When you have specialization, that's going to result in higher conviction rate and better service to victims, as well as we can see here and I can see here as well, because I manage all of the cases in the bureau, the trends. We can start seeing the trends, we can then develop strategies for prevention.

>>Paul Atkinson:
Brad Astrowsky heads the county attorney's ID theft bureau. Since the unit was created late last summer, it has seen a 60% increase in the number of ID theft cases prosecuted. The county attorney's office was also instrumental in creating an ID theft investigator's association.

>> Brad Astrowsky:
Identity thieves don't care about geographical lines or locations. They are going to commit identity theft in multiple cities. The City of Tempe may work an investigation that the City of Glendale may be working and they may not in the past have known that, because we have this group with the sharing of information of reports and investigations, hopefully that will lead to better investigations, better service for victims.

>>Paul Atkinson:
ID theft was not a specific crime until 1998. That year congress passed the identity theft and assumption deterrence act, which carries a maximum 15-year prison sentence. The same year, the Arizona legislature made identity theft a class 4 felony, punishable with up to three years in prison, although those convicted are typically eligible for probation. Soon after taking office, Maricopa County Attorney Andrew Thomas spoke to a gathering of judges asking for more than a slap on the wrist for convicted identity thieves.

>> Andrew Thomas:
Probation should only be a supplement to a stiffer punishment when serious felonies are involved. The most appropriate punishment based on our current criminal justice system is prison or jail, and to not use that when we have serious -- when they are finally caught and convicted, to not use that, I just think that's very wrong. It's sending a very bad message to these people.

>>Paul Atkinson:
Thomas and others in law enforcement would also like to see those who traffic in stolen identities face harsher penalties.

>> Andrew Thomas:
We do have laws on the books. What we don't have are the laws that really target the people who are using identity theft as a scheme, an enterprise, the people who are selling -- buying and selling identities and using it for criminal purposes.

>>Paul Atkinson:
This is evidence taken by the ID theft taskforce through a recent search warrant. The case can be prosecuted in superior court or in federal court where prosecutors can seek mandatory minimum sentences after Congress amended ID theft laws.

>> Paul Charlton:
One of the nice things about putting people under one roof is that you can look for the venue, the best spot to bring a case or to bring an investigation. We know, for example, in the federal system, we now have a two-year mandatory minimum sentence. Sometimes that means that the best place to bring a case will be in federal court.

>>Paul Atkinson:
Ultimately it may not be customers who lose money from ID theft, but their bank. Local banks like Bank One are fighting back by sharing information on ID theft.

>> Jim Huston/Western Region V.P for Fraud, Bank One:
We all get together, my peers. We're in competition for sales and stuff like that, but we're not really in competitions on losses. I don't brag about how much we lost to fraud. We share information and talk about different things we see. Hey, we've noticed an increase in this, like the ATM credit card scamming, that's been a big thing recently. We talk about that and share information. We have law enforcement that participate in these meetings. We talk to them, they ask us questions, have you had an issue like this at your bank, we go yes, we have and talk about that quite a bit.

>>Paul Atkinson:
The banks can also instantly share information with each other and police through a software program called Fraud-net.

>> Jim Huston:
Really what it is, it's a database. You can put alerts on there, you can put check information routing numbers, payee names, dollar amounts. What that will do, if we have a fraud here at the bank, I can go to Fraud-net and put in this name to see if it comes up, gee, this name came up all over the country. Because a lot of the time, these people are like gypsies. They go all over the country and cash checks all over and do identity theft.

>>Paul Atkinson:
Banks and law enforcement have responded to the surge in ID theft by dedicating more resources and working together. They are also pushing for tougher laws. But they know that alone won't stop the growing problem.

>> Andrew Thomas:
If we don't take steps now to get this problem under control that, means not only prosecutors seeking legislation, and police beefing up their identity theft patrols, we've done things in the Maricopa County attorney's office in creating an identity theft bureau to deal with this problem, but we also need to prevent the crime before it starts, that calls for more education of the public so that they can protect themselves. That calls for getting businesses to take safeguards so that they are protecting the identity of their customers better. If we don't do that now, if we don't start really addressing this problem now, the problem is actually going to get worse, and we're already number one in the nation.

>> Michael Grant:
Joining me now is Phoenix Police Lieutenant Lisa Messina. Lieutenant Messina heads the Document Crime Bureau. Also here is Assistant U.S. Attorney Daniel Drake. Mr. Drake is a member of the identity theft taskforce. Welcome to you both. Dan, let me go back to that quote at the top of the show. Identity theft is not treated that seriously by the courts. Has that been your experience or not?

>> Daniel Drake/Assistant U.S. Attorney, Arizona:
Well, the federal sentencing guidelines that were operational until last summer when some Supreme Court law came out and appeared to be advisory now, basically to give us a range to work with, and they look at the amount of loss. If you have an individual who has stolen a number of identities or has some stolen identity with him and hasn't used it to commit a loss, it puts you in a situation where the guideline range is fairly low because loss is one of the major determinants.

>> Michael Grant:
Right.

>> Daniel Drake:
If they haven't used it to do much, it also puts you in a bad spot. In July of last year, they did change the law, federally. They enacted the Aggravated Identity Theft Act or the Identity Theft Penalty Enhancement Act. And what it does, it makes possession of identity documents in relation to the commission of another crime a separate crime that's punishable by up to two years imprisonment.

>> Michael Grant: Regardless of their use, just the possession of the data?

>> Daniel Drake: I should say it's not up to, it's a mandatory two-year term. And it's nonprobation eligible. It must run consecutive to any other sentences imposed. So we have gotten some tougher legislation out of congress to help us with this problem. But it's a loss issue.

>> Michael Grant:
Lisa, there are a couple of bills proposed by the Arizona legislature that would increase the felony level of these kinds of crimes. Is that a good idea?

>> Lisa Messina/Lieutenant, Phoenix Police Document Crimes Bureau:
Yes. That's correct. It's a common misconception that identity theft-related crimes are nonviolent crimes and therefore don't need to be treated harshly. The loss to the victims and to our communities is astronomical and it needs to be recognized that these need to be treated seriously through the courts.

>> Michael Grant:
I know there is another piece of legislation out there that you are particularly interested in, and that would really go to businesses and how they handle potentially confidential and pilferable personal information.

>> Lisa Messina:
Correct. One of the issues we're constantly dealing with is the preferred method for obtaining information by the drug culture to facilitate identity theft is what we commonly refer to as dumpster diving. It's very fruitful, they can go behind a business and obtained hundreds of people's documents. We've had several incidents where medical records were found and whatnot. It's not deliberate, you know. The financial institutions or businesses or entities don't recognize the value of that information, and then they put it in the trashcan when they are finished, because they reconciled their records. They no longer need this, but they need to recognize that your personal identifying information is on that piece of paper and they have a responsibility to protect you.

>> Michael Grant:
This would require them to shred that kind of information, because you were making the point, rather than going house to house and dumpster diving, if you can dive into one of these business' dumpsters and get 30, 60, 100 people's names, IDs and more, that's far more lucrative.

>> Lisa Messina:
Right, and there is less chance of detection because they go to businesses after they are closed. We've interviewed several people and suspects that we've arrested, and they say well, know, if we get stopped by the police, I just say, oh, I was looking for something to eat, I'm a transient, so how do you prove what their intent was? We need to stop this information before it gets into the trashcan and people need to recognize that they need to shred this information, all of us.

>> Michael Grant:
On a more high-tech level, Choice Point has been in the news quite a bit here recently. That's the one where they were a collector of information and somehow, a lot of that information got out.

>> Daniel Drake:
As I understand it, and again, the facts are out there someplace else. Choice Point sells services to others for fees. One of the things it does, it collects information like a credit bureau, and apparently as I'm told, somebody either misrepresented themselves as a particular legitimate business or hacked in to the business, but it's a situation where they gathered the information. They have a customer that they were dealing with in some respect, and that customer did them wrong.

>> Michael Grant:
Right. That has elevated the notice issue. When something like that happens, what obligation should there be on a business to communicate to people whose databases were pilfered and say you ought to know, we think we've lost your Social Security number, your mother's maiden name, whatever the case may be? Should they be required to do that?

>> Daniel Drake:
I think it's a very good practice that they do that. I can't comment on what the Arizona legislation ought to require, but it helps the people who are going to be the victims or could be the victims, so that you can get out there in front of this thing and start to correct your situation, better protect yourself, be more alert so if it does happen to you, you can stop the loss.

>> Michael Grant:
Being blindsided by something like this, particularly if it's gone on for a while has got to be just --

>> Lisa Messina:
Most people don't realize that there is a problem until their statement comes in. That's 30 days worth of charges and loss, and the responsibility that we're addressing here is, again, being proactive. Let people know as soon as possible that their information may potentially be out there so that they can go get copies of their credit report, put fraud alerts on their credit and be proactive and take measures.

>> Michael Grant:
From an investigative standpoint, do these cases pose some particularly difficult problems for the police?

>> Lisa Messina:
Yes, it's a crime of the 21st century. It's a new crime. We're trying to figure out what best methodology to apply to combat it, but traditionally, law enforcement -- a crime is geographic specific. My car was stolen here or my house was burglarized here. Your information can be compromised in Phoenix and used in Scottsdale or Tempe. So the jurisdictional issues come into play here. Which agency is responsible for conducting the investigation, you know, where the person's information was compromised, or where the crime was facilitated. Often it's not known to the victim where their information was compromised.

>> Michael Grant:
Information adequately being shared? This was touched on in the taped piece that we saw. Is at least the information and indications of who is being investigated and those kinds of things, is that information being shared more adequately now among agencies?

>> Lisa Messina:
It is getting better but there is still need for improvement because just as I mentioned earlier, each -- if the victim's information is compromised in Phoenix but they find out themselves that a charge happened in Tempe, they may themselves call Phoenix and Tempe and each agency is not particularly aware that the other one is conducting an investigation. So now we're moving more towards enhanced communication and working together to exchange information and, you know, talk to each other to develop this.

>> Michael Grant:
What about the federal side of that? Obviously, you can pilfer it in San Diego and use it in New York. Are the various federal agencies, investigative, prosecutorial doing a better job of sharing?

>> Daniel Drake:
The federal agencies are good about that because they typically have an office in each jurisdiction. There is somebody in San Diego who knows about it and transfers it to somebody in Phoenix. There is no similar counterpart at the state level. What we've tried to do is through things like Postal Identity Theft Taskforce, or the County Attorney's Identity Theft Investigators Association, or the Fight Bureau or things like that, promote the sharing of information. You still have situations where people will do one thing in one town using one set of identities, go to another town and with a different set of identity, and you've got to connect those somehow to the same individual.

>> Michael Grant:
You know, the producer that put this segment together found a couple of victims who called police, but no report was taken. Is that an anecdotal development or does it happen frequently?

>> Lisa Messina:
Without knowing the specifics, I think a common misconception -- and this is an area, too, that law enforcement needs to get on the same page, but who is the victim? If your credit card information is compromised, you report it to your bank and you file an affidavit of forgery, that bank takes that loss. So, many law enforcement agencies say well, you're not the victim, you are the account holder. If that's the only harm that befell you, then the bank has their investigators who conduct the investigation and then there is a process in which they give this report to us in law enforcement and we continue the investigation. So it could be something as simple as that.

>> Michael Grant:
Okay. Lieutenant Lisa Messina of the Phoenix Police Department, we appreciate very much the information. Daniel Drake, thank you very much for being here again.

>>Daniel Drake:
Glad to be here.

>> Michael Grant:
More information on identity theft can be found on the Channel 8 web site at www.azpbs.org, under the ID theft graphic. You can click on the companion site. This is what you'll see. You can find the latest statistics on ID theft and the many ways it is committed. There is a checklist for preventing ID theft, as well as what you should do if you do become a victim. Plus, there are links to other ID theft web sites. Our report by the Auditor General shows statewide spending on classroom instruction remains the same as last year at 58.6% of all education spending in the state. That is 3% lower than the national average. The report finds that Arizona schools spend a higher percentage of money on school construction and maintenance and on student support than the national average. Joining me to talk about classroom spending, other education issues, is Tom Horne. He is, of course, Arizona's superintendent of public instruction. Hello, Tom.

>> Tom Horne:
Great to be with you, Mike.

>> Michael Grant:
I've got two major takeaway points, one is the one I just covered, that despite the Governor's encouragement to move five points up over time on classroom spending, it remained flat. Why aren't we making progress?

>> Tom Horne:
First of all, one of the things you mentioned was construction. You would expect Arizona to spend a lot more on construction than other states because we are growing fast.

>> Michael Grant:
Yeah.

>> Tom Horne:
Secondly, I think to make good progress, we're going to need to consolidate our school districts. I've been a strong advocate of unifying and consolidating districts. One of the problems Arizona has is we have too many districts that are much too small and then you lose economies of scale. So I've gone before the legislature and advocated unsuccessfully so far but hopefully well he have success this year or next year, that we need to unify our school districts. It has academic benefits. If you have elementary and high schools in the same districts you have a unified scope and sequence from K through 12, and you have one authority responsible for all of it. Now you've got high schools and elementary schools pointing fingers at each other as to whose fault it is if the student isn't well prepared. So I'm a strong advocate of unification and I think that would help solve the problem of some of our districts not having a good record on administrative costs. Some of our districts have excellent records. If you use the definition I use, which is the district office, rather than measuring what goes in or outside of the classroom.

>> Michael Grant:
Buses, cafeteria, various other student services, those kinds of things?

>> Tom Horne:
Air conditioning -- I separate out the district office. Our statewide average is about 5%. The district where I served on the school board, we were at 2.7%. So I think our state could do better if we have larger districts.

>> Michael Grant:
Here is another problem, though, that the auditor general report highlighted at least for me, is post the 6/10 of a cent sales tax that was passed what now, four years ago so?

>> Tom Horne:
2000.

>> Michael Grant:
Yes, to fund and specifically earmarked for classroom spending. If the districts had maintained their level of spending before then, actually, we would have moved another percent or so into the classroom, but they didn't. That would seem to indicate that actually we're backsliding?

>> Tom Horne:
I checked on figures just before driving down here, and our figures showed that if you look at the increase last year, based largely on student growth because we only get about 2% for inflation, but based on student growth, we're spending 9.7% more on teachers, and only 2.7% more on administrators, so that would indicate that the extra money that is being appropriated to account for our additional students is going mostly for teachers and only a small percentage for administrators. That's a good sign.

>> Michael Grant:
Well, that's a good sign, but the bottom line at least from the standpoint of the auditor general's report was that we weren't even walking in place, post -- I forget what the proposition number was, 301 or something.

>> Tom Horne:
301, that's right. Well, I don't think --

>> Michael Grant:
Tell me, how many hammers -- let's get back to the school district level. How many hammers, truly, does the state have on these kinds of decisions? These remain local decisions, do they not, and some would argue should remain.

>> Tom Horne:
They are local decisions. It's up to the school districts. As I mentioned, when I served on a school board, it has been a big issue for me. The money has not been in the classroom. The first year I had a majority on the school board. We cut our district office in half from 34 to 16 people and we survived, and there was more money for the classroom. So, I'm a strong advocate of that at the school district level. I think the best thing we could do at the state level would be to consolidate and unify our school districts.

>> Michael Grant:
Almost out of time, but I do want to touch on you're going before lawmakers to argue for next year's aims tutoring money. Do you like your chances or not?

>> Tom Horne:
The Governor and I were able to transfer money that had already been appropriated from one line to another and get $10 million quickly into tutoring, so we could have tutoring in time for students taking the test this spring, reading and writing in February, math in March -- in April, but that was a one-time transfer. And so for future years we need appropriations. I think the tutoring is very important. We need to have somebody focus on what weaknesses are of the students, and help them with those weaknesses so they develop the proficiencies necessary not only to pass the test, which is just an indicator, or to graduate, but to have the skills that they will need to succeed in today's economy, which requires the brainpower to get a decent job. What we're doing at the state level also to help is for the first time this spring, we're going to report the test results by concept, so that the teacher or tutor will know what the weaknesses are of each child and will be reporting them, instead of by early September as was done in the test, early June, so they have the summer to remediate.

>> Michael Grant:
Tom Horne, superintendent of public instruction, thank you very much.

>> Tom Horne:
Great to be with you, Mike.

>>Announcer:
Wednesday on "HORIZON," learn a few secrets that will keep your personal information safe from identity theft. We'll show you some simple precautions you can use to protect yourself. Join us for Identity Theft, Wednesday at 7:00 on Channel 8's "HORIZON."

>> Michael Grant:
Thursday is first Thursday of this month, and so it will be our monthly interview with Governor Napolitano. If you would like to ask the Governor a question, please email that to [email protected]. That address is [email protected]. You can provide any questions that you would like me to ask the Governor. On Friday, of course, our semi-learned panel of journalists will join me for the journalist's roundtable. We'll talk about the week's news events, including legislative developments. That's Friday on "HORIZON." Thank you very much for joining us this Tuesday evening. I'm Michael Grant. Have a great one. Goodnight.