White Collar: Hacker Sentenced to 20 Years in Identity Theft Case

A federal court judge in Boston sentenced Albert Gonzalez to 20 years in prison for causing thefts of more than $200 million. Gonzalez had stolen more than 40 million debit and credit card numbers. Then, he used those stolen numbers to cause the theft and losses.

Gonzalez had pleaded guilty to breaking into accounts held by the customers of Barnes & Noble, OfficeMax, BJ's Wholesale Club, and other well known retail stores. He had been arrested in 2008 and has been in custody since.

The Gonzalez case shows the potential for serious harm that can result from identity thefts. Gonzalez was able to use sophisticated means to steal the ID numbers of the retailers' customers. In that regard the Gonzalez case is typical of large scale identity theft crimes. In such cases those committing the crimes hack into computers that store identifying information such as credit card numbers, social security numbers, or drivers license numbers. Then, using the identities of the victims, the hackers transact business in the names of the victims. The schemes can be for less sophisticated too. For instance violators may obtain ID numbers from stealing mail or obtaining credit card receipts.

For more about the Gonzalez case please see InformationWeek, "Card Hacker Draws 20 Year Sentence," March 25, 2010, http://www.informationweek.com/news/security/attacks/showArticle.jhtml?articleID=224200438&subSection=All+Stories.

White Collar and Healthcare: Feds Indict Two Doctors for Medicare Fraud

The United States Attorney in Seattle has obtained grand jury indictments of two Seattle area physicians on charges of defrauding the Medicare program. While the indictments do not allege a relationship between the defendants, the two schemes were allegedly identical.

The grand jury charged Dr. Garnik Karapetyan with bilking Medicare of $1.9 million and attempting to receive as much as $3.2 million from the federal health insurance program. The indictment alleges that Karapetyan set up a dummy company called Federal Way Medical Equipments, Inc. Then, using the stolen identities of real Medicare patients, Karapetyan billed Medicare through his shell company for services never rendered.

In a separate indictment the grand jury charged Dr. Iacob Razumnii with stealing $753,000 from Medicare. The indictment alleges that Razumnii created a front company called American Standard Medical Supply. Additionally, he used stolen Medicare identification numbers to submit claims to Medicare for services never provided. The grand jury alleges that Razumnii attempted to defraud Medicare of $2 million.

While the grand jury alleged unrelated schemes against the two defendants, it is noteworthy that the alleged schemes were identical. Most interesting is that both defendants were allegedly able to make large numbers of Medicare claims using valid Medicare identification numbers. This modus operandi has become an indicator of organized crime involvement in Medicare fraud.

The defendants are each charged with six counts of wire fraud, three counts of health care fraud, and four counts of aggravated identity theft.

For more about the charges, please see the Seattle Post-Intelligencer, February 11, 2010, http://www.seattlepi.com/local/415317_Medicare11.html.

White Collar: Local Law Enforcement Lack High Tech Investigative Capabilities

As crimes and the means of committing them have become more technologically advanced, so too have the skills necessary for investigation. While federal agencies such as the FBI have cutting edge computer technology skills, the same is not true for many local law enforcement agencies. Only those in the nation's largest cities and some states have the cyber skills necessary to facilitate criminal investigation of cyber crimes and other crimes in which cyber investigation would be helpful.

Increasingly, high tech investigation and evidence can be helpful in the investigation of almost any type of crime. However, most localities are not equipped to bring such resources into the investigation of local crimes. Considering that 90% of all the nation's felony crimes are local matters, the lack of technological skill and resources creates a yawning gap in effective crime fighting. Quite simply, most local law enforcement offices lack the budget to support the very expensive equipment and training necessary to employ high tech investigative measures.

Localities that do have such capability have used cyber investigation techniques in crimes such as identity theft, child pornography, and extortion. Much as traditional white collar investigation often involves following an audit or money trail to unlock the mystery of the crime, high tech investigation often involves following a cyber trail to the computer used by the high tech criminal. Once investigators are able to identify the computer used in the crime and seize it, they are able to extract significant evidence from the computer.

One of the potential means of extending cyber investigative capability to localities that would not otherwise have access to such resources is for state law enforcement agencies to function as cyber investigation resource centers. This would be a role similar to that played by these agencies in areas such as forensic laboratory or document analysis.

For more information please see the following Wall Street Journal, article discussing cyber investigation and providing anecdotal discussion of various successful cyber investigations, http://online.wsj.com/article/SB125487044221969127.html