TheWeekInCongress.com

Week Ending June 25, 2004

HR 1731 Identity Theft Penalty Enhancement Act

BRIEF

   The bill establishes a two year prison sentence for whoever is convicted of knowingly transferring, possessing, or using, without permission, another person's identification. The two years is in addition to any charges for the crime committed when using the stolen ID.

   Whoever in the course of terrorist activity knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person or a false identification document shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 5 years.

   The courts may not place on probation any person convicted of such a violation and no term of imprisonment imposed on a person under this section shall run concurrently with any other sentence for any other crime including he crime in which the stolen identity was used. Courts cannot reduce the term of imprisonment.

   The bill essentially creates mandatory sentencing for a crime that often has sentenced the convicted with little more than probation.

Sponsor: Representative John R. Carter (R-IN)

Vote: Passed House by voice vote. Passed Senate by Unanimous Consent.

Cost to the taxpayers: To the Department of Justice for identity theft investigations, $2 million yearly through 2009. The theft is reported to cost business $47 billion yearly and individuals $5 billion yearly.

MORE INFORMATION

   The bill’s committee report referred to “`identity theft' and `identity fraud' as to all types of crimes in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic or other gain, including immigration benefits.”

   The report explained that the Federal Trade Commission (`FTC') received 161,819 victim complaints of someone using another's information in 2002. Of these, 22% involved more than one type of identity crime. For 2002, the FTC breakdown of types of identity theft shows that 42% of complaints involved credit card fraud, 22% involved the activation of a utility in the victim's name, 17% involved bank accounts opened in the victim's name, 9% involved employment fraud, 8% involved government documents or benefits fraud, 6% involved consumer loans or mortgages obtained in the victim's name, and 16% involved medical, bankruptcy, securities and other miscellaneous fraud.

   In 2003, the FTC randomly sampled households. A total of 4.6 % of survey participants indicated that they had discovered they were victims of some type of identity theft in the past year. This result suggests that almost 10 million Americans were the victims of some form of identity theft within the last year, which means despite all the attention to this type of crime since September 11, 2001 the incidence of this crime is increasing.

   As international cooperation increases to combat terrorism, al-Qaida and other terrorist organizations increasingly turn to stolen identities to hide themselves from law enforcement. For example, according to testimony by Jim Huse, Inspector General of the Social Security Administration before a 2002 joint hearing of two Subcommittees of this Committee, 'five Social Security numbers associated with some of the terrorists appeared to be counterfeit and were never issued by the Social Security Administration, one was assigned to a child, and four of the terrorists were associated with multiple Social Security numbers. An FBI agent testified at the same hearing, `terrorists have long utilized identity theft as well as Social Security number fraud to enable them to obtain such things as cover employment and access to secure locations. These and similar means can be utilized by terrorists to obtain driver's licenses, and bank and credit card accounts, through which terrorism is facilitated.'

   Since September 11, 2001, Federal and State officials have taken notice of this crime because of the potential threat to security, but the cost to the consumer and corporations is equally alarming. The FTC estimates the loss to businesses and financial institutions from identity theft to be $47.6 billion. The costs to individual consumers are estimated to be approximately $5.0 billion.

   'As this crime increases,' the report continued, 'we must try to find new ways to combat it. Websites developed by the FTC and consumer groups encourage consumers to protect themselves by shredding mail and keeping a close watch over their credit reports; yet, the FTC's statistics suggest that identity thieves are obtaining individuals' personal information for misuse not only through `dumpster diving,' but also through accessing information that was originally collected for an authorized purpose. The information is accessed either by employees of the company or of a third party that is authorized to access the accounts in the normal course of business, or by outside individuals who hack into computers or steal paperwork likely to contain personal information.  In one such case, the Justice Department charged a 33-year-old customer service representative from Long Island, New York, with identity theft and fraud for using his position at a company that provided computer software and hardware to banks and lending companies to access personal consumer credit information from three credit reporting agencies. The scheme allowed him to access the personal information of over 30,000 victims.'

   'The insider threat from identity theft and identity fraud is a threat to personal security as well as national security. The United States Attorney in Atlanta charged 28 people with participating in a fraud ring that supplied over 1,900 individuals with fraudulent Social Security cards. The cards were supplied by a Social Security Administration clerk in exchange for $70,000 in payoffs.'

OPPOSITION TO THE BILL

  There was some opposition to HR 1731. Representative Robert C. Scott (D-VA) said, “Mr. Speaker, I rise in opposition to H.R. 1731. Although I agree with the purpose of the bill, my position is based on the reliance in the bill of mandatory minimum sentencing. By adding mandatory minimum sentencing and denying probation and concurrent sentences, the bill imposes unnecessary and unproductive restrictions on the ability of the Sentencing Commission and judges, in individual cases, to assure a rational and just system of sentencing as a whole and for individuals. The notion that Congress is in a better position to determine at the front end what the sentence has to be for an individual case than the judge who has heard the case and applies guidelines established by the sentencing professionals not only defeats the rational sentencing system that Congress adopted but also makes no sense in our separation of powers scheme of governance. Moreover, the notion of mandating a 2-year or 5-year sentence to someone who is already willing to risk a 15-year sentence is not likely to add any deterrence."

   "Mandatory sentences do not work. They have been studied extensively and have been shown to be ineffective in preventing crime. They distort the sentencing process. They discriminate against minorities in their application, and they waste money.”  

SENTENCING EXAMPLES

The committee report gave the following examples of sentencing for the crime:

   'Under current law, many perpetrators of identity theft receive little or no prison time. That has become a tacit encouragement to those arrested to continue to pursue such crimes. The following are examples of instances in which persons involved in identity theft received little or no prison time:

   U. S. v. Amry. On October 15, 2003, Mohamed Amry, a former employee of a Bally's Health Club in Cambridge, Massachusetts, pleaded guilty to a multi-count indictment charging him with conspiracy to commit bank fraud (18 U.S.C. Sec. 371), bank fraud (18 U.S.C. 1344), conspiracy to commit access device fraud and access device fraud (18 U.S.C. 1029), and conspiracy to commit identity theft (18 U.S.C. 1028). Amry, using a skimmer to obtain credit-card data from members of the health club, provided stolen names, Social Security numbers, and credit-card information of at least 30 people to Abdelghani Meskini, who pleaded guilty to conspiracy in connection with the plot to blow up Los Angeles International Airport in 1999. Using victims' names, Amry reportedly assisted Meskini in creating false green cards and Social Security cards. Meskini used the information to open bank accounts in New York, where he deposited counterfeit checks. Amry was not charged with knowledge of the terrorists' intentions in obtaining and using the stolen identities. On January 17, 2003, Amry was sentenced to 15 months imprisonment.

   U. S. v. Scheller. Suzanne M. Scheller was a financial institution employee. Scheller accessed the financial institution's computer system and searched for potential customers for a friend who was starting a real estate business. After identifying prospects, Scheller then provided the friend with the customer account information. Scheller admitted that she knew her unauthorized access was against the policy of the financial institution. The investigation established that some of the information provided by Scheller was actually used by another individual unknown to her as part of an identity theft scheme. Imposters used the customer account information to steal the identity of the customers and conduct transactions at the financial institution. Scheller pleaded guilty to one count of obtaining unauthorized computer access to customer account information from a financial institution, in violation of 18 U.S.C. Sec. 2, 1030(a)(2)(A), 1030(c)(2)(B)(i), 1030(c)(2)(B)(iii). On November 30, 2001, Scheller was sentenced to 36 months probation.

   U. S. v. Opara. On February 7, 2002, Chuck Opara, after having pleaded guilty to multiple counts of submitting false claims and identity theft, was sentenced to 15 months imprisonment. According to court documents filed in this case, Opara engaged in a multi-million dollar fraud scheme. As part of the scheme, Opara stole the identities of 24 people, and he submitted bogus Federal income tax returns for those people that sought average refunds of $50,000. The fraudulent tax returns asked that refunds be mailed to two dozen mail-drops that Opara had acquired.

   U. S. v. Maxfield. On five separate occasions between 1996 and 1998, William K. Maxfield used the Social Security number of a William E. Maxfield (no relation) to obtain loans and lines of credit. He was able to obtain the false Social Security number through his employment at an auto dealership. Maxfield defaulted on some of the loans but was timely on others. Ultimately, most of the lenders were paid; however, the more significant injury was to William E. Maxfield, who suffered harm to his credit rating and had great difficulty in clearing what appeared to be delinquent accounts. On January 9, 2003, William K. Maxfield was sentenced to 10 months imprisonment.

   U. S. v. Rodriguez. While receiving Title II disability benefits, Dolores Rodriguez worked as a science teacher at a school under her husband's Social Security number. She received over $80,000 in disability benefits. She pled guilty to a violation of 18 U.S.C. Sec. 641. She was sentenced to 12 months home confinement, 5 years probation, and restitution.

   U. S. v. Fergerson. Diana Fergerson had stolen the identity of another person years earlier. She used the stolen identity to apply for and receive Social Security benefits. She also used the stolen identity to establish credit. She received over $45,000 in Social Security disability benefits. She pled guilty to several charges including violations of 18 U.S.C. Sec. 641 and 18 U.S.C. 1028(a)(7). She was sentenced to 5 years probation and restitution.

   U. S. v. Benavides-Holguin. Porfirio Benavides-Holguin, a resident of Chihuahua, Mexico, received Title XVI benefits under the name and Social Security number of his former brother-in-law, a U.S. citizen. He pled guilty to both counts of a 2 count indictment alleging violations of 42 U.S.C. Sec. 1383(a)(2). He was sentenced to 10 months confinement, 3 years of non-reporting supervised release, and restitution.

   U. S. v. Green-Jones. Arnetta Green-Jones received SSI benefits under her actual Social Security number while working as a seasonal temporary worker employed by the IRS using the Social Security number of another individual. She pled guilty to a violation of 42 U.S.C. Sec. 408(a)(7)(B), 42 U.S.C. 1383a(a)(3)(A) and 18 U.S.C. 1028(a)(4). She was ordered to serve 5 years probation and pay restitution. ## All Rights Reserved. Nor reproduction or distribution without written permission from TheWeekInCongress.com.