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Homeland Security

Prepared Witness Testimony
The Committee on Energy and Commerce
W.J. "Billy" Tauzin, Chairman

Identity Theft: Assessing the Problem and Efforts to Combat It.
Subcommittee on Oversight and Investigations
December 15, 2003
10:00 AM
Middletown Township Municipal Building, 3 Municipal Way, Langhorne, Pennsylvania

Mr. Kevin J. Burke
Deputy Chief Postal Inspector for Eastern Field Operations
United States Postal Service

Langhorne, PA,

Good morning, Mr. Chairman, members of the subcommittee. On behalf of the United States Postal Inspection Service, thank you for holding this hearing and giving me the opportunity to discuss the subject of identity crimes and the significant role Postal Inspectors play in combating it.

I'm Kevin Burke, Deputy Chief Inspector, Eastern Field Operations, for the Postal Inspection Service.

The responsibility for safeguarding 200 billion pieces of mail a year and ensuring America's trust in the postal system falls on the shoulders of U. S. Postal Inspectors.

As federal law enforcement officers, we enforce over 200 federal statutes; primary among those are the theft or possession of stolen mail statute and the oldest, and still the most effective consumer protection law, the mail fraud statute. Last year, Postal Inspectors made over 11,000 arrests. Three thousand of those arrests were for identity theft. Identity theft arrests have increased each year for the past three years.

I'm sure all of you have received pre-approved credit applications in the mail. In the past, those mailings were prime targets for an identity thief because they simply required the thief to sign the application and return it to the company. But times have changed, due to our efforts in raising awareness of the problem. For example, credit card companies have adopted recommendations we've made and have begun automatically discarding suspicious-looking applications for credit, especially when there are differences between where the "customer" claims they reside and what address their customer file indicates. In addition, credit card companies have changed another of their practices - credit offers sent through the mail now contain much less information.

Another favorite vehicle for thieves used to be the fraudulent change-of-address scheme, directing the Post Office to forward a victim's mail to an address the thief controlled. Not any more. A proactive effort by the Postal Service to prevent a false change-of-address is the Move Validation Letter. Now, whenever a change-of-address is filed, the Postal Service sends a letter to both the old and new addresses. The letter instructs the recipient to call an "800" number if they had not recently requested a change. This simple measure has virtually eliminated the placing of a false change of address with the Postal Service as an avenue for committing identity theft.

According to a report released by the FTC this past September, mail theft as a source for identity theft happened in only 4% of the cases surveyed. As we have made it more difficult for mail theft to be a component of identity theft, criminals have turned to other means, oftentimes recruiting the assistance of insiders, employees who have access to the personal information of clients or other employees.

Personal information contained in corporate and government records and computer databases is a fertile area for dishonest employees working in conjunction with identity thieves.

Three years ago, a Philadelphia resident reported to police that, after her father's death, she continued receiving credit card bills showing charges made in her father's name. The statements even reflected a request for a new account. US Postal Inspectors and detectives from the Philadelphia Police Department determined that her father's identity had been stolen when his body was processed through the Medical Examiner's Office. Sixteen suspects were ultimately identified, ten of them employees working within the Medical Examiner's Office. The employees used the credit cards to make purchases for themselves or passed the credit cards and other personal information they found to outsiders. The scheme went on for three years before they got caught. All sixteen defendants were caught and convicted. Postal Inspectors were called in to participate in the investigation as bills for illegally purchased items were sent through the mail as was financial information for newly - and fraudulently - opened accounts.

Just last month, in a separate investigation, Postal Inspectors in Philadelphia and other task force members arrested the ringleader of an identity theft gang. A search of his Chester residence found a commercial-grade credit card embossing machine that the suspect had purchased over the Internet. The suspect used a fictitious name and had his purchase delivered by private carrier to an abandoned Philadelphia area address, all without arousing suspicion. When searching his house, we also recovered over 2,500 blank credit cards, numerous counterfeited credit cards, valid credit cards that had been stolen from the mail, and counterfeit PA, VA, FL and DC drivers' licenses.

Postal Inspectors together with the FBI are also investigating the identity theft of about 30 Montgomery and Delaware County residents who donated blood to the American Red Cross in November or December of last year. Donors are required to supply their names, social security numbers and other identifying information before giving blood. As this is still an active investigation, I am not at liberty to offer any details other than the Red Cross has been very forthcoming in cooperating with authorities and the case is ongoing.

In addition to modifying industry practices and making financial mailings less attractive to a thief, our partnerships with regulatory, financial industry and other law enforcement groups have resulted in a number of initiatives.

In 2002, Patrick J. Meehan, U.S. Attorney for the Eastern District of PA, formed a regional working group to facilitate the sharing of intelligence and investigative resources in combating identity theft in and around the Philadelphia area. As a member of the Group, the Postal Inspection Service has taken the lead in developing a web-based database that tracks customer and financial industry reports of mail theft and identity theft. The database allows all Group members to track loss information and perform advanced searches on victims' names. The database also performs what is known as "link analysis," by automatically matching common addresses used by thieves.

One of the most insidious aspects of identity theft is the length of time the scheme can be carried out before it is even detected. It may be months before a victim realizes they've been targeted. It's not until a consumer gets turned down for credit, a car loan or a mortgage on a dream house because of a bad credit rating do they realize what has taken place. Damaged credit ratings may take years to restore. Victims run the gamut of society - they're wealthy, they're poor; they're old, they're young. No one is immune. Anyone is a potential victim.

Aggressive law enforcement efforts are a key component of our mission. But arrests are not the only solution. We have found that creating awareness and prevention programs for consumers can go a long way to lessen the impact of this crime on the public.

Over the past 10 years, the Postal Inspection Service has published and distributed a series of brochures, posters and newsletters to raise public awareness. Our publication "Identity Theft - Safeguard Your Personal Information," has been distributed to over two million consumers and businesses. "Detecting and Preventing Account Takeover Fraud," another of our publications, advises credit card companies on steps they can take to detect and prevent takeover schemes.

Just this past September, the Postal Inspection Service, along with our partners the FTC and the Postal Service launched a nationwide awareness campaign on identity theft. We used a two-pronged approach: providing prevention and awareness information to consumers, and informing businesses on the need to safeguard their files and databases containing customers' information. Actor Jerry Orbach, of television's Law and Order fame, who himself was a victim of identity theft, was the campaign's spokesman.

The Mullen agency of Pittsburgh provided support for this year's campaign on a pro bono basis. But what really makes this campaign unique is the funding source. We've all heard the saying, "crime doesn't pay." In the case of this awareness campaign, it does pay. This campaign was funded through a unique application of fines and forfeitures paid by criminals in a past fraud case. Sometimes the most effective vehicle for "getting out the message" is when the message comes directly from an authoritative source, the criminals themselves. Last year, Postal Inspectors in Pittsburgh caught a man who stole the identities of several celebrities, including the actor Will Smith. The thief, Carlos Lomax, was prosecuted by the U.S. Attorney's Office in the Western District of Pennsylvania and convicted. Lomax agreed to let us tape an interview of him describing what he did and how he did it. I would like to play a portion of that tape for you now.

Educating the public and working to reduce opportunities where the Postal Service and the mail can be used for illegal purposes are crucial elements in our fight against identity crimes. As always, we will do our part to remove criminals from society. We appreciate the subcommittee's recognition of the importance of this issue.

The Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515
(202) 225-2927


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