KENT COUNTY -- It started as a traffic stop, a Kent County sheriff's deputy pulling over a car with a burned-out headlight, and occupants -- reeking of burned marijuana -- providing fake names and addresses.
On the back seat was a stash of Meijer bags.
Police were suspicious and asked the car owner for consent to search.
Inside the car? Multiple credit and debit cards, along with nearly $13,000 in stored-value Meijer cards, more commonly known as gift cards.
The extent of the criminal enterprise wasn't known at the time of the Oct. 2 traffic stop. But after sheriff's detectives and federal authorities got involved, investigators soon determined the three suspects in the car were allegedly linked to an Internet crime ring in St. Petersburg, Russia.
Investigators say the suspects used the information to put thousands of dollars onto fraudulent credit cards and store cards -- and obtain $200,000 in fraudulent student loans.
The cases fuel concern that technology, particularly the Internet, gives criminals an avenue to steal and share information from virtually anywhere. Law enforcement officials at the local, state and federal level in West Michigan are working toward an eventual task force on identity theft.
"There is no single silver bullet to solve it," said Hagen Frank, an assistant in the Grand Rapids U.S. Attorney's office. "It is a priority of the Justice Department to get a handle on identify theft. It really is a growing problem on a national level. Everyone is at risk for it."
Frank urged residents to closely guard personal information, including correspondence put in the mailbox. Police and prosecutors have to hit identity-theft suspects hard, he said.
He is prosecuting a case that originated in Oakland, Calif., and wound up here when four suspects, using information from a Bank of America worker, racked up $17,000 in charges early last year in Grand Rapids and Holland. As the investigation unfolded, another dozen people were arrested, with losses of at least $750,000. Alonzo Holloway was sentenced to 11 years in prison, while those convicted so far received lesser prison terms.
In the most-recent case, the scam essentially works like this: Cyber criminals, often originating in Eastern European countries, sell stolen credit-card numbers in the United States over the Internet. In return, they receive payment via Western Union.
Once a thief has stolen credit-card numbers, he can use a machine to re-encode the magnetic strip of a credit card or gift card with that account information.
"(T)he technique allows the perpetrator to use a card for payment which appears to belong to them or appears to be a stored-value card; however, the account number of another person is actually charged for the transaction," David Dobb, a U.S. Secret Service special agent, wrote in court papers.
Such thieves often target stores like Meijer, which have self-checkout lanes. In this case, the suspects, all Detroit-area residents, hit Meijer stores in Michigan, Illinois, Indiana and Ohio over the course of months, records filed in U.S. District Court said.
In just two days ending with the Oct. 2 traffic stop, they allegedly bought $12,900 in gift cards at Meijer stores in Grand Rapids, Charlotte, Lansing and other areas using cards that had been fraudulently re-encoded with account numbers and expiration dates, records showed.
Jeff Frost, the Secret Service's resident agent in charge in Grand Rapids, said such cases require resources at all levels, from the street cop -- responsible for arrests in both of these local cases -- to federal investigators with few boundary limitations.
The cases are part of a troubling trend because the process is so simple: "People are able to go out on the Internet and purchase people's identification."
After sheriff's deputies stopped three suspects in the car, detectives contacted a Meijer investigative analyst who provided a list of purchases using the stolen information. Security surveillance showed that Derrick Phillip Ingram, Leon Clifford Stevens-Moman and Earnest Raymond Lewis Jr. had used re-encoded cards to buy pre-paid gift cards, wrote Dobb, the Secret Service agent.
He said that while the suspects were held at the Kent County Jail, Stevens-Moman and a man later identified as Gerrod Marquis Johnson talked on the telephone about a "sewing machine," and that Johnson "put it away but can still get at it" to "make new outfits."
Several days after the arrest, Stevens-Moman allegedly told a bondsman about the scheme and put him in contact with Johnson.
"Johnson told the bondsman that he was the person who could supply him with the fraudulent credit cards, and that the bondsman could realize a $15,000 return for every $2,000 that he 'invested' in the scheme," Dobb wrote.
Dobb, in a request for a search warrant, said encoders can be bought over the Internet, and that "I have learned that it is very easy to conduct this type of access device fraud."
During the investigation, he said, investigators determined that the suspects also applied for students loans. Ingram received $162,000 from Sallie Mae, although his request for $40,000 was denied by the College Loan Corp. Another man, Ameer Spinks, obtained a fraudulent Sallie Mae loan for $40,000 but was denied by the other company, records said.
Based on information obtained from Western Union, Lewis had sent $12,107 to someone in Russia over three months, while Johnson sent four wires to Russia, the last a $990 payment in early November. Spinks also sent money to the same person the same day.
"The Secret Service has learned that a large amount of this fraudulently obtained information is obtained from sources in Eastern Europe, including Russia," Dobb wrote. "In these transactions, individuals in the United States pay for the information obtained using a few different methods. One of the common methods is a Western Union money transfer."
In all, five young men await trial, but attorneys have requested a delay to consider plea options.
James McQuaid, a Lansing resident whose Web site, securehomenetwork.blogspot.com, warns of security threats from around the world, said credit-card numbers and other personal information are easily stolen, whether business accounts are compromised or viruses attack computers, logging key strokes and isolating credit-card numbers.
It can take weeks for the virus to be detected, if at all.
People are not running into trouble by going onto "bad sites," rather, criminal groups buy banner ads on legitimate sites that bounce visitors to such sites. Criminals also hack into legitimate sites.
"The whole thing is automated," McQuaid said. "One of the things we're finding is there is such a glut of stolen credit cards that they can't monetize -- they just don't have the ability to use them and are selling them for a penny a piece in some of the forums.
"In this particular scheme, where they're getting the stolen cards, eventually, they had to figure out how to get something out of them. What probably happens is, they try to use the cards in Russia, but the credit card companies will not allow that transaction."
He said that using credit cards that have been re-encoded with stolen numbers is simple. To a store clerk, the card appears to belong to the person named on the front.
The victim has no idea.
"The person who owns (the account) actually has the card in their wallet," McQuaid said. "They would never get the sense that the transfer was made until after the fact. Yeah, it's that easy. It's kind of concerning if you think about the people in Russia breaking into local connections here."
mlive.com
