Investigators Bust Nationwide Synthetic ID Fraud Operation Involving Several CUs

Federal and New York police investigators charged 13 persons and three businesses in connection to a nationwide scheme that created synthetic identities to fraudulently obtain more than $1 million in loans and credit cards from 10 credit unions and nine banks.

Investigators publicly released a 108-count indictment last week after a two-year investigation that involved law enforcement from New York, California, the Secret Service and other agencies such as the U.S. Postal Inspection Service, the Social Security Administration and all three credit bureaus.

Persons involved in the scheme allegedly created synthetic identities by associating a stolen Social Security number with a different name, address and date of birth. The stolen Social Security numbers belonged to individuals with no existing credit history or those who were unlikely to be monitoring their credit history, such as children, recent immigrants, deceased individuals, elderly persons and incarcerated individuals.

The fraud ring allegedly took steps to then make the synthetic identities appear legitimate, including applying for phone accounts, email accounts, rewards card accounts, library cards and other accounts with minimal verification requirements. One of the perpetrators of this scheme would also allegedly insert the synthetic identities into public databases that are used by financial institutions to verify identity information to further legitimize the synthetic identities, according to police investigators.

The co-conspirators then allegedly took numerous steps to fraudulently build credit for the synthetic identities, including adding the fake identities as authorized credit card users.

Some of the people involved in this scheme had strong financial backgrounds and recruited individuals who were down on their luck offering them cash for assistance in this scheme.

One of the persons involved in the fraud ring was Adam D. Arena, 43, of Corona, Calif., who is alleged to have created shell corporations that were used to falsely report the synthetic identities to credit reporting agencies as though they were customers of the corporations, which provided the phony identities with corporate tradelines that boosted their credit ratings. Police investigators said Arena is also alleged to have fraudulently backdated the information to make it appear as though the synthetic identities had good credit histories over several years.

Once the synthetic identities accumulated positive credit reports, participants in the scheme are alleged to have fraudulently obtained loans and credit card accounts from the following credit unions: Navy Federal Credit Union, Pentagon Federal Credit Union, Nassau Financial Federal Credit Union, Bethpage Federal Credit Union, Peoples Alliance Federal Credit Union, Members Members 1st Federal Credit Union, AmeriCU Credit Union, Suffolk Federal Credit Union, Teachers Federal Credit Union and the formerly named Nassau Educators Federal Credit Union, which changed its name to Jovia Financial Federal Credit Union last year. The fraud ring also targeted State Farm Bank, USAA Bank, Key Bank, Synchrony Bank, Webster Bank, Santander Bank, First National Bank of Omaha and Roadrunner Financial Inc.

Arena also allegedly used three businesses to launder funds.

Most of the suspects who allegedly participated in the scheme were from New York’s Long Island and have been charged with various crimes that include grand larceny, falsifying business records and conspiracy.