"POINT-AND-CLICK" CRIME ...

Excerpted from ENN EMERGENCY SERVICES REPORT-Friday, June 13, 1997 Vol. 1 - 164

"POINT-AND-CLICK" CRIME ...
By Steve Macko, ERRI Crime Analyst

The United States Secret Service and the FBI says that billions of dollars a year are being stolen by phony checks from a fast-growing group of "point- and-click" criminals. The crimes are being committed by lone computer buffs to international organized crime groups.

Recently, experts from the Secret Service and the FBI warned Congress about the thriving new kind of fraud from conterfeit checks. Kevin T. Foley, the deputy assistant director of the Secret Service, recently told the House Banking monetary policy subcommittee, "The Secret Service has seen a dramatic increase in the number of investigations specifically relating to the counterfeiting of checks. The motivation behind these schemes is greed. The goal is always money. It's a point-and-click crime."

Estimates vary widely about the magnitude of the problem. The Federal Reserve put the cost of check fraud to banks at $615 million in 1995. That is more than ten times the $59 million that is attributed to bank robbery. The FBI says that data compiled from banks, businesses and individuals showed losses of $5 billion in 1993.

Chuck Owens, the financial crimes section chief of the FBI, said, "It's not a crime committed only by non-violent white-collar criminals." He added that the counterfeit checks finance gangs that traffic in narcotics, commit extortion, and run auto and jewelry theft rings.

Lone individuals are, of course, involved in these check fraud schemes, but the FBI says that a sizable portion of the crimes are being committed by international organized crime enterprises that include Nigerians (Who are very, very active in all types of fraud schemes.), Vietnamese, Russians (Who are very involved in all types of computer crime), Armenians, and Mexicans.

One of the biggest schemes uncovered was 33 members of a Vietnamese gangs who were indicted in October of last year in Orange County, California, after a two-year FBI undercover operation that was codenamed "Operation Paper Caper."

Owens told the House subcommittee, "Over 1.2 million worthless checks are accepted for payment every day." That number is less than one percent of the 180 million checks written daily in the United States, but it is enough to add up to a very expensive problem.

The rapid spread in this type of crime can be attributed to the rising use of personal computers and desk-top publishing programs. Ten years ago, producing quality counterfeit checks required expensive offset printing equipment and a fair degree of skill. Today, all that is needed is a laser scanner to capture the image of an original check, a personal computer to alter the data and a quality laser printer. Total cost is less than $5,000 and a 12-year-old could probably be able to do the work.

To offset this problem, banks are attempting to use technology to fight technology. Current research is focusing on a variety of sophisticated and expensive equipment that will try to verify identification by using voice patterns, and/or iris, retina eye, hand and face patterns.

Until those types of identification systems can be put into use, some of the nation's biggest banks are demanding that all non-customers affix thumb prints to checks presented for cashing. Clear, non-toxic ink is generally used instead of the heavy black ink that is used by police.

Since First Union Corp. of Charlotte, North Carolina, has required thumb prints from non-customers, they report a 40 percent drop in monthly check fraud losses from its branches in Florida, Georgia and South Carolina. In April, the bank expanded the program to its branches from Virginia to Connecticut.

The ENN EMERGENCY SERVICES REPORT is a subscription publication of the EmergencyNet NEWS Service, which is a part of the Chicago-based Emergency Response and Research Institute. This publication specializes in Law Enforcement/Fire/EMS/Disaster and Medical Issues.

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