The Criminal Use of False Identification 0915179059, 9780915179053

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The Criminal Use

of

False Identification

Loompanics Unlimited Port Townsend, Washington

Published by: Loompanics Unlimited PO Box 1197 Port Townsend, WA 98368 Printed

in U.S.A.

ISBN: 0-915179-05-9

THE CRIMINAL

USE OF FALSE

IDENTIFICATION A Summary Report on the Nature, Scope, and Impact of False ID Use in the United States with Recommendations to Combat the Problem

NOVEMBER

1976

The Report of the Federal Advisory Committee on False Identification UNITED

STATES DEPARTMENT OF JUSTICE

ACKNOWLEDGEMENTS The Committee Chairman gratefully acknowledges all those who have contributed to this Report, particularly Deputy Attorney General Harold R. Tyler, Jr., Assistant Attorney General Richard L. Thornburgh, Deputy Assistant Attorney General John C. Keeney, General Crimes Section Chief Alfred L. Hantman,

Former

Section

Chief Carl W. Belcher; Douglas H. Westbrook of the Criminal Division, Emil Schroeder, FBI who originally presented the false identification problem to the Criminal Division; Deputy Director William F. Duggan of the Passport Office who spent hundreds of hours working on this project; Staff Director Dr. Thomas P. Kabaservice of the MITRE Corporation whose professionalism produced the final work product; Joseph Kochanski of the Law Enforcement Assistance Administration who coordinated LEAA’s contribution to the Committee; and the Committee’s 80 members and friends who contributed 18 months of their time and effort as volunteers.

ABSTRACT The criminal with

use of false identification

a multi-billion

dollar

impact

the general public. In November

on

is a national problem

government,

business,

and

1974 the U.S. Attorney General

established the Federal Advisory Committee on False Identification (FACFI) to assess the problem and recommend solutions. With MITRE support, the FACFI conducted surveys and examined the extent of false ID use in six major problem areas: drug smuggling, illegal immigration, fugitives from justice, fraud against business, fraud against government, and other criminal activity. The Committee ranked potential solutions in these areas by criteria that included not only an assessment of effectiveness but also an evaluation of possible impact on public convenience and privacy. This report contains the findings, background

material, recommendations,

and

plans for implementation of the proposed solutions of the FACFI, and the appendices offer a comprehensive archive of current information available on the problem.

July

Mr. David Muchow, Chairman, Federal Advisory Committee on Department of Justice, Washington, D.C.

Dear

Mr.

25,

False

1976

Identification,

Muchow:

I was very interested in your work on false identification. the (deleted) Department of Motor Vehicles we issue drivers and I.D. cards all day. You have no idea what goes on.

Here at licenses

Birth certificates are accepted without anything to connect them with the bearer. If he says it is his, that is final. Uncertified photostats are accepted as conclusive, and you know what can be done with any document in a photostat machine. In the case of a female, only the first name need match, as she says she is married. We see the same faces getting licenses and I.D. names all the time; for the purposes of welfare alien fraud. Why

do we

do

complaints.

nothing?

The

Because

attitude

of

all

employees

supervision

cards in different fraud, and illegal

are

is,

terrified

"Don't

rock

of

the

courtesy

boat;

your job is to issue." Employees who expose fraud in identity face real, and I mean real trouble. Avoiding courtesy complaints is the most aim of the Department, and always was. We are keeping our fingers crossed for you interest but seeing this farce corrected. If

it

were

known

who

wrote

this

to

you,

the

and

your

group.

Department

would

We

have

try

bring dismissal charges against me, civil service notwithstanding; therefore I cannot sign this letter. Please believe we are almost fed up with what is happening.

Sincerely

(Signed

and

with

best

an

X)

wishes,

for-

no

to

and all

CONTENTS Background PART

and

Membership

of the FACFI...

1

airs. Deans

5

I: A Look at the Problem

Pritt

oeask COtce

Meports. 6.2... 25.68 eon

GOVEniImMentaraymMentsino.

Gomimercial

sc ws. ccnanoe 5

Pansactions ..% ... ocd... «sae 79

SCANS Serer ican

Federal

49

ces ogi ote tc, kt

Identification

RC

Documents

OSS ee

109

........

127

State and Local Identification Documents.

.171

BACKGROUND AND MEMBERSHIP OF THE FACFI The Federal Advisory Committee on False Identification (FACFI) was formed in 1974. Its creation was a product of several converging trends:

Federal, state and local law enforcement agencies were being deluged with a host of new false identification techniques. Criminals and fugitives were using these techniques to perpetrate crimes and avoid arrest. Underground pamphlets such as the Paper Trip detailed steps for defrauding the public, while printing presses cranked out counterfeit “official” documents such as birth certificates and driver’s licenses and advertised them for sale in interstate commerce. There was a growing concern on the part of citizens and public interest groups that false identification could be used for unauthorized access to confidential

information,

and that pri-

vacy was being invaded when criminals used innocent persons’ names to commit crimes. The growing mobility of Americans required a more secure system of identifying strangers in commercial transactions such as cashing checks and using credit cards. The public was becoming more concerned over disclosures that millions of illegal aliens were entering the country, rampant fraud in government social welfare programs was coming to light, and innumerable

other crimes

involving false iden-

tification were increasing in number. On

September

15,

1973

and

October

3, 1973,

Miss

Frances

Knight, Director, and Mr. William Duggan, Deputy Director of the Passport Office, U.S. Department of State, testified on false identifi-

cation before the Internal Security Subcommittee of the Senate Judiciary Committee.* Their testimony called attention to passport *Hearing Before the Subcommittee to Investigate the Administration of the Internal Security Act of the Committee on the Judiciary, United States Senate, September 15,

1972, 92nd Congress 2d Session.

frauds and forgeries related to illegal narcotics trafficking and other crimes. In the Fall of 1973, the Passport Office and the Federal Bureau

of Investigation exchanged information concerning the increasing problem of false identification. These discussions led to an informal meeting among interested Federal agencies and others concerning the use of false identification.

On

May

10, 1974, a one-day confer-

ence of forty-four representatives from more than ment agencies and other organizations was held at emy, Quantico, Virginia. This meeting concluded imous recommendation that an interagency task identification be formed to combat the problem. In the Fall of 1974, the Criminal

fifteen governthe FBI Acadwith the unanforce on false

Division of the Department

of|

Justice prepared the necessary charter documents to establish a Federal Advisory Committee on False Identification. On October 14, 1974, Attorney General William B. Saxbe officially announced its creation. In his address, the Attorney General made the following statement: ; False identification is a common denominator in a wide range of serious crimes. Let me cite a few examples. The Weatherman organization has taken credit for a number of terrorist bombings. False identification has been found on some of its members taken into custody. It appears that false identification may be a factor in the success of 23 others who have successfully eluded capture thus far. But false credentials can touch virtually every aspect of crime. They are frequently used by narcotics peddlers and by persons passing counterfeit checks and securities, by those who take part in bank swindles, and in Social Security and welfare frauds.

Car thieves often use false identification, not only to thwart police, but to rent or lease cars which are then driven off and

sold. The list of offenses could go on and on. They include widespread and costly frauds through the use of credit cards. And another growing problem is the use of false identification by

illegal aliens who insulate themselves from authorities as they settle into new jobs and new lives . . .* The announcement of the formation of the Federal Advisory Committee on False Identification and its charter were published in the Federal Register of October 22, 1974.**The charter states the nature and purpose of this Committee are: 1.

‘Yo identify, with

the assistance

of Federal,

state, and

local

agencies, as well as representatives from the private sector and the public:

(a) the various criminal techniques used to obtain false identification; (b) the types of persons committing such crimes; and (c) the nature and extent of such crimes including their impact upon the criminal justice system and commercial transactions such as check passing, credit card fraud, and the obtaining

of fraudulent

loans, securities,

and other

commercial paper.

2. To develop a coordinated Federal plan for meeting the threat which Executive Branch Agencies face from false identification. Such plan will include a discussion of closing any loopholes in existing Federal laws, regulations or procedures, and

strengthening the enforcement of such laws, regulations and procedures. 3. To assist state and local law enforcement agencies and bureaus of vital statistics in developing effective measures to prevent the obtaining of false identification and its criminal use. 4.

To provide Federal, state and local agencies a forum and mechanism for the exchange of information on false identification.

In its deliberations, the Committee sought not only to aid law enforcement agencies but also to protect personal privacy. As Deputy Attorney General Harold R. Tyler, Jr. stated to the Committee: *Address by William

B. Saxbe, Columbus, Ohio, October

14, 1974.

**The Committee was chartered pursuant to the Federal Advisory Committee Act of

1972 (P.L. 92-463, Oct. 6, 1972) .

_.. this is the very purpose of your Committee: to recommend law enforcement methods which are compatible with every citizen’s vital right to reasonable privacy and fair treatment.* The first meeting of the FACFI was held on November 14, in the Department of Justice, and monthly meetings were thereafter. All of its meetings were open to the general public all voting in the Committee was done by a consensus of those sent, including members of the public. Because

of the extensive

scope of the problem,

the FACFI

1974 held and prewas

divided into five Task Forces, each dealing with a different phase of the false identification problem: ‘Task Force I—Government Payments Task Force [I—Commercial Transactions

Task Force I1I—Fugitives Task Force I[V—Federal Identification Documents Task Force V—State and Local Identification Documents.

FACFI

membership

consisted of representatives of government

agencies at Federal, state and local levels, law enforcement

officials,

business groups such as the American Bankers Association, and members of the general public. All were volunteers and received no travel funds or remuneration for their assistance. Many independent business firms provided voluntary support to the Committee by sending observers to meetings and by contributing valuable technical background information. In October 1975, The MITRE Corporation was retained under contract with the Department of Justice to act as technical and editorial staff to the FACFI. MITRE support included: assisting us in gathering additional data covering gaps in the initial FACFI surveys to determine the nature and scope of the false identification problem; surveying the state of the art in technology areas that dealt

with potential solutions to the false identification problem; compiling a set of potential solutions to be voted upon and revised by the FACFI;

conducting

other

technical

research;

and

drafting

the

FACFI final report. *Address

by Harold

R. Tyler,

Jr., to the

Identification, May 8, 1975.

4

Federal

Advisory

Committee

on

False

PART A Look

I:

at the Problem

CONTENTS SECTION:

|-=tINTRODUCTIONM

SECTION-Il

—

THE

SCOPE

ce

OF THE

tine acs eee ene

ne é

PROBLEM.....77.

12

ESfeGl Oni SOCIOLY) Sse ares ye ea gr do eee 13 DetinitiONS: 5 228:. 2 oes oweet pe caletec tA ota ioc she aes icaera ahs)

SECTION Ill — COMMON IDENTIFICATION DOCUMENT Sra. .o. net wa ears Be ete ea ee a eral

eee

Birth "GernliiCater.ner. > scmanerarette tee oe. ka dine cake sce DFIVEr Sh ICIS ec eore tsore ese ia olayces or veo,ages aragate U.S. FRaSsspom eer ay ak: tees eee Oa oe ~ «Bre 20" U.S. Visa-ande Alien We ati. esas. 5evs cee SOClal SCCULIY RC ONG a weecreerr at oh cas 50a ssa oncra ee Selective Services Drafts Gard x; Joon. ce ceee panwen sane VotermRegistrationy Gardin ote cassie. «0k de eee Credit: CAS ray one, Marae Genes Ala ck? fhv.5 et nee Non-Government ID.........: a a re ee

SEC FIONAY

=a FRAUDULENT

AID tWSEsse ee sertee

sii LWA 20 21 Zoo Zo 24 24 25 26

27

Drug- Smeg glinGries tne tans ee 29 Hhegal- tmMONgQKnatlotr sa. it aramid ati ee ee 30 FUGIUIVES: [FORT FIUS UC Cues tre see. upsets vs Mace eee 32 Fraud Againists Business. spec. > cciacsas us ohn Meee 33 Check: Porgenya ans RiaUCsrwi:s.:.+..5:4en Wes ere eee 33 Credit. Carer ra eae. ee a clane ais 5 Salen s 2s een Ue 36 SOCUIIUICS RRAUClrere ote dcr.caterers axe = octal aha ream eee ane 38 EMDOZZICMION Carer nae etc cn cine oc mtn ees nae 40 Fraud AgainsteGoverniment.17...4. .. eee ee 41 Welfare Frauds or etree sre et on oe er, SR 42 SocialsSecurity* Fraud). saouretse.e ceos oe ee 46 Other CriminalwACuvityae wi e.2 oe ee Jae es 47

SECTION

AN

Around animals,

he

5,000

rings

and axes

goods

he had

issued

banking

and

Today, symbol

for

for

Chinese

of

years

paper

In the past in

than

when

and

five

and money

is

strong

twenty-five

his

gave

goods

safeguards

or

domesticate such

as

what

later,

the

years

ago

in Europe.

a sophisticated

in

process

on

an

international

1975

--

participates

system

years

"goods

against

hundred

transactions

million

to

he bartered years

further

socio-economic

even

for

two

thousand

developed

215

a person

exchange on

--

began

possessions

Previously,

computerized

complex

man

using

Four

money,

were

in

society

different

extent

of

exchangeof goods

manipulation

increasingly

large

primitive

goods.

paper

currency

American

currency

when

concept

he wanted.

first

in

markedly

INTRODUCTION

"exchange"

the

the

the

those

scale. this

ago,

introduced

1

in ways

that

are

ago.

for goods"

services,

he

criminal

or accepted

depended

incursion

to

in

a

these

transactions:

e

Personal acted,

e

In rupted

knowledge

today's

on

the

person

legitimacy

society, of

with

whom

he

trans-

both

Transient

nature

e

Necessity

of

checks,

of

of the medium

these

safeguards

of exchange.

have

been

the:

e

whose

the

and

Reliance

because

of

of the

relying

credit

cards,

legitimacy

on

population,

paper

substitutes

signature

is not

and

on

guaranteed.

(e.g.,

application)

dis-

The

modern

businessman

or

government

with whom he deals. (who

personally

gold

coin,

stitute,

or

1968

Members

of

that

--

less this

was

in the papers

This

eluded who

we

find

carry

counterfeited

at

startling, However,

both the

into

use

city

an

not

usually

in earlier

purchase,

tender)

with

the

he

its

accepts he

The

city

an

rate,

equal the

economy in

the

country,

and

each

must

of

If

Everywhere has

to

who

the and

in

of

shelter

the

false

from

own

would

paper

be

ID

to

of

fraud,

were

one

goes, the

to prove

he's

appropriate

goods,

is much

'somebody',

document

or

he

card

says he actually is that person. His 'identification’, or ID makes him that person. Amazing,

right?

Well

longer

not

really.

a people

society,

....American but

a PAPER

society

pro-

being and

confidence.

Trip:

present

An

entitled

obvious

"buy"

not

identities

public

prosecution

same

societies,

ends.

currency

general

the

identity

has

all

manual

currency

dollar

impact to

the

count-

are.

transacting

how much the

in

our

we

present

1967

(not

which

no

a sub-

of residence."

other

systemto their

our

March

carry

a do-it-yourself

become

use

place

"prove"

manner

confirms have

know we

element,

published

rate.

Paper

the

has

Americans

detect.

From

know

days

bit

bearer

"Between

their

not

that

in our

advice

that

36,600,000

move,

prevailing

has

to

states --

do

criminal

alarming

to

legal

along

we

accumulated

increase

the

When

the

whose

at

animal

changed

population

shift

of

to

from

year)

common.

press

Trip

liferating

to

year

mobile

notice

ways

Paper

entry

Shock

we have

"underground" The

in Future

significant

the

the

in a single

than one

once

counterpart

of his

of which

does

verify.

Toffler

March

ing children

way

to

his

teeth

examined

authenticity

ability

Alvin and

the

carefully

the

limited

Unlike

checked

employee

is

society....

services,

harder

The paper says who you are, not you. Actually, of course, you do know who you are, but you don't want the paper telling you who you are. The solution? The Paper Trip!

— HOW a D WHYS

Figure

The

1.

manual

step

by step,

for

fraudulent

readers

Cover

that

of Underground

continues

how

one

may

purposes.

with

a

with

such

obtain For

false

Publication

rhetoric

many

false

example,

the

The

and

Paper

then

outlines,

identities authors

Trip

and

inform

use

them

their

ID:

You can rent a car, never fee, and drive it all the

pay more than the initial way across the country and back without paying for more than gas and oil. Use good ID and simply leave the car somewhere after the trip. You disappear. This is not car theft, either.

Such

techniques

called

"Gemini

appear

Completely

Advertisements

were

Gallery" and

such

as

presented

in which Start this

a New also

an

in

another

article

Life appear:

with

underground

proposed a Brand

"How New

paper

to Dis-

Identity."

Figure

Such David

and

2.

disappearing

Black

tried

documented

munity

show

under

out

the

posed

on

a false

complete

set

The

a crime. tion

as

of

means

become

sampled

the

state

government,

order

to

We cation

define

have

a New

not

the methods

so

ID

fantastic.

proposed

February

fraud

on

the

1, 1976,

successfully

Paper

himself

in

CBS

Trip

a com-

television

provided

is perpetrated.

who

Journalist

by The

he established Interviews

on

Identity

further

A CBS

obtained

researcher

and

used

a

IDs.

out

to

just

law

create

clear

commonly

false

the

been

scope

of

evidence used

in

10

and

the

identity

problem

the

experience

enforcement,

full

a

how big has

accumulated

the

indeed,

which

imposter

nationwide

found

documents

of

with

false

an

exist

Finding

has

Securing

identity.

false

do

many

on

are,

broadcast

of how

camera

acts

ease

"60 Minutes,'"'

documentation

has

Advertisement

task

of

of

in

order

false

the

to

identifica-

FACFI.

The

of officials

in

the

community

business

commit

Federal

FACFI and

in

problem.

of widespread

abuses

our

These

society.

in

identifi-

abuses

not

only fraud upon

subject

the

committed, which

our

public they

to

also

commercial

a grievous undermine and

and the

governmental

14

illegal trust

"tax"

among

"

through

individuals

institutions

depend.

the

SECTION

THE

The illegal

work use

therefore,

as

criminal further

the as

the

were

abuse

delicate

reveal

the

and

to

The

and

the

economic,

with

an

open

affected

in

to

as

this

Federal

the

much

and

study

breadth

of

the

of have,

and

depth

problem

in

legal

effects

on

society

from

for

safeguards

undertaking

and

state

was

to

against

dealing

with

as

well

of maintaining

find

answers

to

such

as:

e

Who

is

e

How

big

e

Where

are

false

identification?

e

Which

are

e@

Are

is

To what

the

most

of

ID use?

problem?

losses

incurred

significant

violence

nature

aided

as

as

a

problem

well

by false

as

result

of

areas?

those

of

an

identification?

extent?

e

What

state

e

What

state,

false

false

financial

crimes

economic

the

by

and

ID use

Federal

Federal,

already

laws

or

technical

exist?

2

now

How

exist

the

the

jurisdictions

principle

We wished

the

We

protecting

underlying

society.

serious

documents.

impact

social

in

of

and

of

first

recommendations

Committee

Acts

the

full

a view

making

PROBLEM

counterfeit

investigation

to

relationship

freedoms

questions

of

OF THE

represents

fide

our

addressed

abuse.

Privacy

FACFI bona

in order

Questions

populace

the

both

extended

possible

U.S.

of

of

SCOPE

2

regarding

safeguards

effective

ID use?

against

are

they?

-

In

e

What

@

Which

finding

are

possible

solutions

answers

a serious

problem

EFFECT

SOCIETY

ON

The

criminal

multibillion tion

of

is

this

cant

of

the

American

related

extent

of

but

should

pays

for

the

creased the

also

to

cost

goods

and

The

of

a false

use

import

or

illegal

levels. and

addition the

The

in

to

the

exceeded

or

of

per

year.

on

The

small

the

Most

signifi-

fraud

Our

and

estimates best

available

individual

business,

they

but

card

based

citizen

primarily

businesses

encounter

a

identifica-

fail

the

in

in-

because

consumer

choice.

welfare

maintain

such

to

credit

are

When

a devastating

costs

of

against

obtain

to

uncover

represents

False

$1 billion

complete.

losses

of

to

to

or

one's

dollar

but

status

impact

activities

taxpayers

other

not also

social as

on

an

benefits,

illegal

government

only

results

undermines

at

in

public

government.

findings

form

as

documents

instruments.

business

fraud

ID

begun

counterfeiting,

areas

crime

loss

success

indirect

his of

committing

example,

has

over

and

the

on

has

States.

well

services.

of

drugs,

fugitive

United

negotiable

ID

severe

terms

Our

has

false

FACFI

fraud

considered

in

confidence

IDs

of

of

particularly

direct

in

cost

in

effects be

suffers

alien all

the not

the

check

other

the

identification

in

occur

problem?

import.

business

and

the

recommend?

false

to

losses

securities

data

of

of

to

questions,

problem

loss

of

we

these

costing

is

do

considerable

use

dollar

additional

theft

to of

solutions

indicate

legal

tax

fraudulent fraud

cost the

of

that

burden,

individual

pays

payments

against

and

an

welfare

available

13

in

In New

benefits from

our

society,

additional

services

government.

providing

resources

an

to

illegal users

York

and

taxpayers.

of

City,

tax false for

municipal The

in

services

Immigration

and

Naturalization

population

Through aliens they

--

the are

are

of

the

we

would

emphasize

The

recently as

illegal

Passport

the

the

have

has

While of

that

we

these

the

time,

already

--

over

are

it

cannot

yet on

of

of New

illegal

that

accurate

of

these

to which estimates

individual

type

York's

aliens.

benefits

make

the

this

10%

is probable

or welfare

crimes

burden

it

is

taxpayer,

crime

is

felt

by

into

sees She

the

and

false

identification

1973,

March

1975

carried

in

U.S.

that

the

of

"The

to

blatant

be

point

to

been

in

expensive

for

an

growing

extensive

and

Office

fraud

has

on

scope,

estimated in

at cash

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Investigators probing Chicago welfare frauds uncovered one case which must be near the top in sheer gall and ingenuity: a thirty-one count fraud indictment charged a welfare recipient with the receipt of illegal welfare benefits, medical assistance, food stamps, in addition to Social Security and Veterans benefits from four non-existent spouses.... The recipient of all these benefits used 80 different names; 30 different addresses and 15 different telephone numbers. The total annual benefits received by this one person annually

ID

and

benefits

the

continues:

was

1974,

43 years."

abuse.

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DRIVER'S

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obtained

card,

neither

evidence

of

SSN. or

library

mail

of

by the

more

Congress,

listed

an

crossing

area

subject

into

is widely

is

1974,

other

citizenship

are

entry

identification

Security

have

submission any

other

it

people

cards

border

border

document

number

number,

The

issue

identification,

important

Security

million

use

alien.

U.S.

intended

personal

become

Social

ID

might

CARD

has

license

U.S.

also the

illegal

never

an

the

resident

to visit

Although to

legal

officers

Mexicans

alteration

in

of his

SSN;

of SSNs

available

however,

provided

by are

the

by their

customers,

so

the

unofficial

cards

can

be used

to

support

a false

identity.

SELECTIVE

It

SERVICE

is estimated

issued

before

issued

only

tion

or

cards

the

as

prove

designed.

The

application tains

no

draft is

and

limited

from

dence

of

not

and

usually

used

and

that under to

can

be demanded

any

other

the

of his

used

for

rarely,

as

which

unsecure:

background it

cards

were

they

were

Although

been

uses

is notoriously

its

1975.

they have

for

uses

classificaidentification

they

it

were

is merely

information

is

easily

if ever,

not

at

forged;

cause

it

a

the it

to

con-

be

J

cards

the

are

by their

as

cards

as

example,

support

into

issued

holders

For

Mexico.

their

part

by local The

entitling

U.S.

are

for

registration

very

easy

and

ability data

24

is

not

of

the

for

as

passport,

re-

eviand

application.

under

by FACFI false

staff

pre-

jurisdictions,

the the

is a verbal local

typically

citizen-

accepted

license

of

and

frequently

procedures

is required,

officials

age

of

residence

in many

identity

Boards

are

a U.S.

to obtain

is permitted

of

cards

of

they

applying

appearance

residence,

evidence

of a driver's

voter are

by local

these

claim

However, when

by mail

of perjury. of

as

and

a personal

citizenship,

penalty

check

these

where

number,

unverified;

accepted

investigation that

even

individual

citizenship

Registration

age,

in

the

largely

to

tenses.

of

out

draft

CARD

suggests

and

million

sent

purposes.

Canada

age

thirty

issuer.

by persons

entry

Limited

are

was

as

informing

well

registration

ship

presented

of

card

is

REGISTRATION

for

one

unserialized;

by the

Election

are

as

photograph;

Voter

as many

Service

stage

scrutinized

VOTER

last

age

postcard;

CARD

that

a means

Selective

to

typed

DRAFT

very

only

evidence

registrant

declaration Board

of

limited.

given

Election

Since tion

of

the

the

voter

registration

legitimate

imposters.

Voter

attempting

illegal

aliens

for

this

CREDIT

CARDS

Although

bearer,

registration

entry

a credit

card

information

which,

firm

validity

the

of

authentication

is

is

charge

required

outlets the

to

unless

the

Charge

and

Bank

Credit requests

credit

cards

arises

Cards

in a false

theft

of

can

can

be

cards

be

not

then

at

the

of

an

or

no

other

the

as

or

about

form

that

identity;

the

a

card.

application

or by

cardholders.

One

reported:

of

it for

i.e., Although the

card

Master

Credit card thieves sometimes use the cards they steal but more often they peddle them in underworld circles. When the black market was at its height in New York, a thief would sell a card to dealer for $25; the dealer in turn would dispose

be

ID

retail

cash.

issuing

from

con-

of

application

by false

mail

may

of

such

obtain

before

illegal

and

variety

validity cards

to

to

cardholder

Normally

information

made

by aliens

sold

printed

a wide

the

by

$350.

means

used

obtained

from

used

been

to

card.

to

ease

by a merchant,

by mailing

but

is

up

Bank

even

obtained

check

name

legitimate

as

cardholder.

descrip-

relative

have

primary the

physical

certain

checked

services

no

with

commonly

and

ranging

on

or

information,

reference

used

are

U.S.

the

signature

the

are

when

goods

Americard

credit

and

article

of

contains be

contains

card,

a question

authenticity

the

at prices

embossed the

can

cards

into

purpose

card

it

most

identities

account obtained

use

is an

of

1,000

form

equally

a credit credit

as

$150

if the

card were

'clean'

--

a signature.

by an

common

told

as much

without

a

imposter of

abuse,

serious

card

cards

of

abuse.

fraud

using

25

a stolen

obtaining

One

committed

300

credit credit

card

appears

cards

in many

recent

newspaper

by one

different

to

false

person

who

identities.

had

NON-GOVERNMENT

When

IDs

a person

applies

purposes,

for

other

tion

to

reinforce

other

include

baptismal

certificates,

business cates lish

cards

are

uses

student

ID cards,

of all

lieu

of birth Such

obtained

or

constructed

fraudulently.

are

made

order

to

This

printers,

sometimes

be obtained

used

and and

unofficial

in the

Commercial

membership many ID

unofficial

cards

employee

can

be

can

ID was

usually

badges,

easily

in every

26

large

courtesy

or IDs

to be

from

cards,

estabare

stationery can

be

city.

the

type

most

the mails.

be obtained

counterfeited.

to

baptismal

photo

found

stolen

certifi-

however,

religious-goods

of checks

badges,

Baptismal

Blank

at

cashing

documents

certificates

available

studios

identifica-

documents,

by mail.

by photographic

non-government,

frequently Business

can

identity

employee

types.

child.

or

in

establishing

Privately-issued

a dependent

certificates

accepted

is

privately-issued

documentation.

cards

or

of

stores,

of

sometimes

and membership

sometimes

benefits

e.g.,

age,

easily

he

for

from

and

job

other

types

SECTION

4

FRAUDULENT

Crimes

assisted

a significant

blem

affects

ment

benefits

that

is

every

from

Possession someone

intent

appear

almost

to profile As

in

the

false

to

of

at

case

they

typical

the

yielded

false

typical

check

also

of

types

a large

only

is

who

not

does

business. holders, by

One

involved

travel

Since the

further

false

IDs

means

pro-

of

govern-

business

health

and

a request using

as

is

in

occurs

well.

to

group

exists

of

type

distinguishing

or only

review

Zt

fraud;

woman

the

male,

of

typical

which

users.

of

Here

18

to

false

the

40 years

of

typical

age,

government-related

40%

of

the

passport

of passport

characteristic

identification

a profile

a description

fraud.

decreasing in

of

the

"invisibility"

on

surveys

identification

check

traveler,

fits

from

Similarly,

the

in passport

a family

FACFI

unemployed fact

has

suspects

or

dis-

unsuccessful.

for

false

legitimate

found

and

perpetrators

of

we have

in

largely

unmarried,

which

mother

a criminal,

appear

Attempts

were

Thus,

area,

gives

percentage

user

cost

against

to

successful

fraud

description

for

represent

this

indistinguishable

international

possibility

IDs

public

a middle-aged

with

this

screening

in

an

to

as

suspects

usually

the

described

exception

identification

offender

degree

welfare

describes

threat

trace.

a young,

a metropolitan

of

fraud

documents

fraud,

represent.

be

of

quite

of welfare

of

a

of

are

to

can

terms

the

false

suspect

legitimate

in

the

false

indirectly,

cost

a crime,

of

fraud

several

or

fugitives.

without

user

many

or

identification

and

forger

The

the and

and

typical

description

of

household

committing will

one

Directly

consumers,

pretend

the

resident

of

imposters,

identification

groups

use

smugglers

on

the

of

a

to

on

drug

the

problem.

American

paid

passed

safety

by

national

ID USE

passport fraud

emerged

are

to

some

applications.

more

of

those

likely

to

be

For

repeat

example,

offenders 76%

1971

had

this

compares

of

those

previously

The

than

of the

A random

was

being

sought

fugitive

was

known

to

the

fugitives

more

aliases,

than

30 different

from

justice,

the

checks,

Security

the

scope

welfare

of

The

of almost

6,000

25%

use

of

supported

state

that

more

checks

ID other

ID,

than

the

in

fraud

involving

provide

firm

stolen

from

of

losses

Social

in

figures

the

state

are

during

to

mails

and

the

1974

and

local

order

of

over

the

check

itself

of

a stolen

cashing

most

commonly

inspectors

checks.

determined

When

$22

A sampling

by postal

cash

forged

of

received

cashed.

definitely

frequency

FY

value

undertaken

the

one

face

subsequently

was

forgery).

followed

assists

used

by a stolen

was

to

involve

(which becheck the

welfare

was

com-

ID

and

license.

section of

used

fugitives

cannot

a total

and

ID used

driver's

nationally

with

were

ID,

or

and

and

Service

false

by another

these

five

have

welfare

such

cases

upon

the

annually.

of

photo

This

dollars

type

ID

to

a

75 of

immigration

experience

sampled

a false

is known

crime.

case

under

and

checks

the

the

a false

mercial

we

the

of

every

In

in

once;

is un-

in which

alias.

materially

benefit

the mails these

least

overall

in

identified

illegal

Although

checks

of

for

cases that

one

been

subject

IDs

by forgery,

from

least

at

IDs by criminals

500

securities,

suggests

140,864

determine

the

false

Inspection

stolen

comes

of

U.S. of

at

apprehended.

counterfeiting

crime

68%

showed

smuggling,

cards,

Postal

FBI

the

of

reports

to

case

of millions

million

of

used

government

cashed

false

and

same

only

criminals

identities.

checks.

departments

hundreds

About

use

of

previously

drug

credit

benefit

subsequently

have had

false

aiding

of

the

for

forgery the

rate

use

by

in one

Besides

stolen

on

and

for for

sampling

fugitive

cases,

average

arrested

a recidivism

universality

questionable.

the

arrested

been

with

is

presents

false

IDs.

data These

on

the

significant

findings

28

are

fraudulent

probably

uses

conservative

because

our

studies

tion

that

have

much

more

difficult

access

to

of

problem

the

below,

false

and

are

been

based

only

detected.

The

to

commit

if

identification in

lists

the

six

the

on

Summary National

Problem Drug

Arca

of

and

Impact

Extent of False 8O';

be

such

easy

2 summarizes

for

Identification

> $1 billion/yr.

identifica-

would

in more

this

of Problem

ID Use

of hard drugs

Sources

smugeled

Illegal Immigration

> $12 billion/yr. *

Unknown, used in entry, employment, welfare application

Fugitives

> 300,000

~ 100',

From

Justice

=

=a

Fraud

Against Government

Other > *

Customs

Service,

of Data Drug

Criminal

Activity

of Federal

| Unknown

Office

bnmigration & Naturalization Service, independent studies

cases

FBI,

a

Unknown

sheriffs

and police survey

-

> $1 billion/yr.

American Bankers Assoc., independent studies

Unknown

Surveys

Very common

FBI,

of Welfare officials, published studics

sheriffs and police survey

SMUGGLING

False smuggling U.S.

and

rings

Drug

drugs such

studied 1973, hashish

identification that

addicts.

the

hard One

t

Enforcement

Passport

More than Estimated U.S. tax burden Includes out-of-pocket losses and cost of collection attempts

DRUG

to

fugitives/yr.

ye

$3 billion/yr.

extent

estimate.

Administration,

Fraud Against Business

the

detail

2

Scope

Scope of Problem

Smuggling

false

have

discussed

information

False

not

Table

areas,

Table

of

illustrate

did

documents.

of

cases

we

criminals

problem

sources

those

crimes

are

is the

imported whose

in

the

indispensable the

bulk

compiled

of

to

by rings

smuggling

alone

is

U.S.

The

the

the

by the

Administration

Brotherhood

group

into

carry

Statistics

Enforcement

group

this

is

hard U.S.

show

making

extensive

activities

have

of Eternal estimated principal

PAE)

love. to

have

means

well-organized drugs

supplied

Customs that use

been

of

by which

of

all

false

IDs.

carefully

Between smuggled

Service

80%

24 this

1968 tons

and of

group

avoided

detection false

was

by securing

The

activities of

of October

1973,

to members

of

with

25

FY

drugs

four

Service 1973,

$100

U.S.

passports,

under

is more

of

seizures

not

as

conclude

illegal

as

The

to

be

separate

on

small

each

such

drugs,

the

through

occasion

bonds

before

time of

these

groups

was

estimates

not

by the

1967

of

at

members

an

cost the

years

value"

that

the

drugs

rings

his

using

From value

the

estimated

drugs

smuggled

false

IDs.

of

$1 billion

does

of

goods

of programs

criminal

to

justice

its

made

not

treat

increase each

the

addicts,

year through

indirect

by addicts

the

by

Assuming

available

include

stolen

of

$1 billion

of

a minimum

estimate

as

using

narcotics

IDs

rings,

fact,

value

1973. false

seizure).

in

of

U.S.

through

(though,

purchases

Such

ILLEGAL

four

identities;

fiscal

constant

to

the

accomplished

obtained

considered

on

the As

attributed

were

well-organized

include

identification.

movement

group.

were

relatively

or by individuals

costs

their

was

dangerous

by these

false

purchase

of

for

captured

does

we

society,

false

("street

by

smuggling

in

who

indicate

been

frauds

arrested

forfeiting

smuggled

which

lost

had

these

Indictments

was

involving

million

likely),

Love

smuggling

frauds

of

individual

obtained

individuals

being

and

were

successfully

of

The

operation

Eternal

discovered.

obtained

level

of

passport

fifty-one

different

seizures

in FY 1973,

to

or

system.

IMMIGRATION

most

presently

are

as

a solitary

certificates.

by posting

records

for

separate

LSD

Accurate

unknown

is

the

Brotherhood use

group;

was

totalled

ID

birth

under

statements

the

130

this

identity

Customs In

of

escaped

true

the

individuals.

leader

occasions

of

false

counterfeit

against

he

such

names.

extensiveness

the

documents,

adults.

recent

living

The

in

U.S.

estimate the

U.S.

of is

about

Immigration

30

and

the

number

8 million,

of

illegal

6 million

Naturalization

aliens of whom

Service

believes

that

the

more

than

adult

number

illegal

$2,000

per

alien

services

and paid

estimated

tax

at

The

the

use be

U.S.

$12

extent

of

from sent

tax

presence

for

1976.

this

and

(border-crossing

countered

by INS

at

purchased

a total

seized

aliens.

seizures

of

price

such

of

of

1976,

on

the

least

with

fraudulent

border

the Southwest

times

alien

border account

by the

citizenship

use

the

by INS.

the

of

for

falsely

least

fraudulent

31

but

esti-

to

believed INS

were

en-

documents

smuggling

had rings

documents

those

in

use

the

that

total

thus

fact

black

Entrants

being This

by

large

market

least

study

documents

indicated

entered

U.S.

that

through

the

is

during in

of aliens South-

routinely

citizenship

along

admission.

Together,

of a million or

which

by INS

number

10 times

in gaining

a quarter

Study,

undertaken

detected

claiming

successful at

is

by occasional

successfully

at

The

attributed

illicit of

does

steadily.

routinely

documents

were

fraction

the

Study

of

job

of payments

cards)

these

public

burden

illicit

and

as

supported

Fraudulent

Alien

Additionally,

of aliens

to

and

be

unknown

1975;

number

been

declining

completed

14

entries U.S.

forms

is

can

15,000

vendors

a small

has

subject,

ports.

number

groups

only

Illegal

recently

at

be

aliens

is

each

the

tax

or balance

burden

of

for

supported

to

of

fiscal

The

not

The

registration

document

million.

belief

documents

west

detected

to

This

the Major

was

1975

these

$1.7

alien

are

illegal

rate

to be

aliens.

Over

during from

counterfeit

A study

FY

of

is believed

illegal

part

personnel

in Mexico

cost

and

such

aliens.

aliens

increasing.

costs

by illegal

staggering

by illegal

the U.S.

related

by aliens

U.S.

the

documents

substantial

the

from

documents

been

of

they

costs

by illegal

at the

study

extent

billion

to which

false

the

on

direct

indirect

evasion

out

increasing burden

in a recent

and

citizens

is tax

considers to

aliens

burden

over

net

estimate

benefits

the

funds

aliens

The

is estimated

losses

from

mated

to

of

include

losses

by

illegal

year.

This

welfare

displacement

not

such per

year.

by

taxes

of

250,000

false

verbal

illegal claims

It

is

reasonable

citizenship

are

welfare

benefits

heavily

to

false of

the

recent

in

restricting

applying

FROM

Escaped obtain

and

to

false

They

not

aliens

entitled,

is

which

of age, number,

benefits

legal

use

increasing

and

fication.

Figure IDI

included

and

have

new

of

because

and

state

illegal

been

as

Liberation

Army,

activities, to

time

that

citizenlegisla-

aliens.

previously

in

public's

ID

who

strip

for

and

have

common

capture. Weather

gone

use

of

violent

crimes

false

including is

always

Army,

extensive

effective

use,

mentioned,

comic

detection

arrest of

almost

Liberation

.make

escape

because

false

method the

avoid

Black

able

of

to

fugitives

the

their

4 shows

dangerous

documents such

Symbionese

on

other

the

identi-

specific

enough

knowledge

lexicon.

ROPER & MIKE NOMAD

Saunders & Overgard { TO ME 2-- NONE, LANK/---BUT, TO A CERTAIN GIRL WHO WANTS TO CHANGE HER IDENTITY, IT'S WORTH 4200/

(fue DECEASED Ast}

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ACCIDENT BIA

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VICTIM / Mi \

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L

STEVE

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ROPER

RANGEL? WHAT GOOD I5 A STRANGER'S BIRTH CERTIFICATE ¢

by Allen Saunders and William Overgard,

Figure

or

and

contributes The

identity,

to

status

employment

cited.

probably

evidence Security

to

obtaining

previously

of welfare

periods

use

STEVE

Social

groups

carry

considerable

be

a

claims

in

JUSTICE

underground

the

are

burden

for

identification

Underground,

of

for

payment

of militant

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they tax

false

aliens

by illegal

prisoners

false

Members

to

which

requirements

tion

for

to

that

illegal

estimated

ship

FUGITIVES

assume

by

documentation

the

to

used

4,

Dangerous

Courtesy of Field Newspaper

Fugitives:

32

Customers

for

Syndicate.

False

IDs

-

The

1973

number

and

1975

records

an

each

Center

are

(NCIC),

1974

or

crimes

The

dollar

but

not

in

all

of

fugitives

pose

cannot

and

to

estimate

undetected

police

on

in

society

AGAINST

BUSINESS

Check

Forgery

and

In

cashing

accounts of

loss

false

to

of

usual

fugitive

of

warrants

Investigation

on

Federal

in

offenses

identification

in

more by

the

in

the

have

the

found

use

of

number

that

of public notorious

in

the

their

false

false

IDs

threat

to

success

by

such

is

While

we

fugitives,

to move public

or

con-

danger

IDs.

criminals

serious

by criminal

offenders

of

and

of

of

loss

success

status

dangerous a

IDs.

banks,

or

working

artist.

See

possession obtained accounts,

false

checks

equipment

5.

30 different

15 driver's 4 credit

of

have

the

birth

licenses, and

from

as

we

freely

safety

and

arrested

certificates 17 Social

to

IDs

33

and

the

or

Security IDs.

of

criminal

financial

burglary

part

check

forger

with which

drawn

com-

successful

are

check

or

common

cause

that

forger

10 miscellaneous

mails

the most

robbery

measure

false

departments

the

a major

from

experienced

A recently

cards,

become

loss

of

sheriff's

cited

in great sets

and

stolen

was

the

is due

complete

Figure

either

names,

exceeding

loss

more

of police

checks,

Bad

far

This one

survey of

bearing

bined. use

is

Information

Fraud

a nationwide

fraudulent

use

under

false

covert

the of

"criminal Crime

morale.

FRAUD

on

of

wanted"

Bureau

availability

ability

160,000

indicted

of

felt

We

the

Between

travel.

caused

their

cost

the

use

is

society.

the

that

sought

be measured

impact

in maintaining

emphasize

the

is considerable.

National

Federal

fugitives

enforcement

dependent

the

interstate

fugitives

critically

The

however, Its

law

into

persons

37,891

impact

cannot,

justice

of approximately entered

involving

losses.

fidence

from

the NCIC.

located

major

fugitives

were

into

fiscal

fugitives

average

year

entered

for

of

of

fraud

had

he had

cards,

the

in his

already

11 checking

34

Robbery" "Bank a Be Scene

Aided

CashingCheck

"Disguise" ID False A By Really Could Common A 5. Figure

In

1973,

States;

clear

of

about

these,

and were

amounted which

to

counterfeit

cost

of

must to

if

The

typical

for

food

of

single

average

food

per week,

check

uncollectible losses

the

According

tion,

losses rate

bad

of

85%

check

these

of

of Food

sales

cases.

and

total

reported

the

Super

therefore, volume

appear

to

We do not

a

of

in the hands

involve

while

1974.

and

been

per year

counterfeiting),

returned

of its

Chains

sales;

$12,500

losses

in

to cash payroll have

and that

million

to 90%

in-

not.

estimates

$450

losses

estimated

and

number

Commerce

for

or

to

40%

count

false

are

as

checks

on which

collection

Small

Business

Administra-

made.

to

a study

checks

35

conducted

accounted

for

in 1967-1968.

(in percentage

and

60%

(forgery

larger

to business

in general

an

"not-sufficient-funds"

much

ultimately

with

is increas-

expected

food

that

approximately

stores

retail

about

estimate

at

of total

$240 per week

About

fraud

0.04%

be

The

does

of

Association

from

counterfeiting

as a "bank" Bad

we

written

exceeded

checks

acts

about

store,

puts

thieves.

identification

Department

customers.

at

hard

transactions

the National

Institute

$60,000

for

and

identi-

checks

averages

totalled

may

of

million.

Thus,

losses

false

losses

which

checks

items"

of all bad

$750

of checks

these

receives

over

total.

forgery

often

amount

checks,

to

25 million

representing

forged

the number

U.S.

store

by members Market

this

and

of

food

to

United

failed

"return

1973,

out-of-pocket

these

particularly

and in addition checks

is

rate

The

losses

government

to

to year,

hits

businesses.

check

added

Since

the

fraud

bad

sales

be

on

in the

of 150)

These in

dollar

amounts

counterfeit

out

forged,

total

collect

from year

even

$30,

checks

to

or

average

around

in 1973.

Check

the

forged

due

rapidly

crease,

of

counterfeit

to be

check,

$1 billion

small

returned

Since

or

losses

ing

depositor.

checks

attempting

$10 per the

to the

to be

written

(one

million

fraud.

is estimated

0.65%

returned

169

proved

fication

25 bitiion checks were

approximately

of

times

profits)

that

by the

about

The over

reported

35

13%

small 3 times

for

of

all

business the

large

crime-related

suffers

average

of

businesses.

a loss business

Banks

however,

take

the

in other

of

stolen

significantly

the

losses direct

than

the

the

result

revealed

loss

is

suffered

conducted

presenting

checks

hit

by the

savings

accounts;

average

an

mitted

with

often

Division

"has

of

false

Credit

Card

phony

card

identification

$643.

IDs

licenses,

driver's

used

$216,

new

the The

form

the

banks

while

banks

the

were

much

were

$3,734,521

crimes

were

com-

of identification and

believes

and

the

activities

to

and/or

Insurance

are

defraud

in-

checking

of these

of bankers

licenses

to

IDs

Association

belief

bank loss

as

incidents.

from

average was

rather

losses

resulting

in this-activity

transactions.

Bankers

indirect

However,

Most

though

check

investigating

in opening

lost

driver's

the

two

can

fraud

imposter,

a card

by a person the

issuer

using

with of

Charge)

occur

use

the

have

largest

and Master

either on

false

$6,586.

transactions

of

to business

by an

of

of was

is

estimates

the

for various

The

banks

Even

of

suffer

to banks

crime. use

Association

of

than

contributing

acceptor

cost

checks;

higher

Protection

this

survey

law enforcement

most

prevalent

means

banks."

Fraud

(Bank Americard

card

the

bonds

the long-held

billings

Losses

per

funds

in bank

first

bad

affecting

$50 million.

losses

false

the American

that

as

the

crime

identification

Credit

gross

total

falsified

verified

officials

of

of

fraud

Bankers

at

of all

checks

identification

savings

use

of

depositors

1974

through

per

used

by the

such

false

cashing

American

their

of

form

7%

considerably

counterfeit

in 1974

losses

cashed

for

with

most

and

checks,

5% to

average

principal

The

banks

about

to

with

forgeries

significant

average harder

The

to

of bad

only

tend

checks,

also.

bank,

dividuals

on

losses

due

A survey

from

loss

businesses.

forgery

bank

the

dollar

as

continued

bank

reached

a result

such

cards:

card

or

circumstances.

36

intent.

grow

card

$17.6

of

in volume;

types

or

These

losses

in 1974. of

of a lost

card,

the merchant

the

associations

billion

three

misuse

of a counterfeit criminal

to

credit

or

false

stolen

application

accepting

may it,

for

affect depending

bank

A 1974

U.S.

credit

cards

year.

from

Sources

have in

Department

been

the

of

limited,

States

of

the

area

at

publication

the

on

has

Fraud

Association's

devoted

tions

exclusively

in

G.

the

Pat

numerous with

unit

ties

Bland,

other

be

the

Application

only

identifying

card

fraud

losses

information

Section

of

the

in January

investigative

and

combatting

one

1975,

of

its

fraudulent

kind

applica-

industry.

Agent

well-organized to

card

helpful

on

per

Association.

may

to

credit

losses

$500 million

credit

receive

Formed the

placed

approximately

estimates

Committee

from

Bankcard

Commerce

sources

specific

but

application

Western

all

in Charge groups

they

of

the

found

Section,

describes

operating

in

the

California

states

These organizations are involved in the establishment of phoney credit files, loan fraud of all types and phoney businesses, some of which go so far as to file articles of incorporation to further their devious ends. Most of the better organized groups utilize fraudulent identification to insure success in their ventures. One such business averaged in excess of $5,000 per month in deposits on Master Charge Cards that were all obtained in fraud applications.

Individual

included

and

months

tion

one

another with

seem

cases

suspect,

who

investigated

wanted

victimized

only two

cards.

to be only

a part

for

by

murder,

a California The

the

Fraud

Application

who

had

used

bank

for

$26,000

examples

uncovered

of a much larger

37

identities,

in

by the

incidence

four Associa-

level.

continues:

Our statistics show an increase in caseload during this first year of 673% over 1974. Initially, our average loss per case was approximately $2,800. After our first year of operation, we had reduced this average loss to $405 per identified fraud application.

37

Section

Bland

He

total

participation

The

experience

verifies

yet

to

where

the

especially

in areas

in

no

feels

reliable

that

California

in every

major

fraud

fraud

much

crime.

to

"there

alone,

has

are

and

accumulated

vast

amounts

such

been

their

as

group that

card

until

thousands the

this

fraud

credit

opinion,

area

by

of

forthcoming

literally

in

metropolitan

identification

securities losses,

data

the

fraud, now.

of fraud same

have

The

appli-

situation

in the nation."

Fraud

potential

used

being

be uncovered,

False

of

information of

Securities

or

industry.

estimation

Association

exists

and

credit

FACFI's

virtually

cants

by the

have

they

when

obtained

are

results

measureable

most

the

that

notes

do not

in

makes

the

distinguish

between therefore

necessary

securities

losses

by widely

differing

only

between

is

describe

false

up

securities

less

It

introduced

fraud

losses

a portion

many

potential

and

identification to

fraud

define

in order

loss

of

industry;

to

estimates

the

on

actual

and

other

carefully

terms

eliminate

actual

reports

types

confusion

contained

in various

the

of

reports.

The

FACFI

stolen

or

use

false

of

that

IDs.

certificates

cash or checks.

is

certificates

name

the

bearer

do not

of

is

assumed

require

identification

criminal.

of

and

would

record, are

are

of

interest

are

owner,

of

not

an

are

are

not

the

to

are

legal

ID

for

similar

38

are

the

elements

"bearer

as

documents,"

and

imprinted

with

by anyone

and

for

Bearer

their

upon

negotiable to

through

negotiable owner.

bear

lost,

of value,

criminal

negotiation;

be necessary

legally

negotiated

registered

they

value

ownership

securities

certificates

therefore

that

with

represent

If the

to be

use

Registered

owner

record,

the

they

which

a specific

concermed

securities

Because

as

the

the

specifically

counterfeited

securities

much

is

checks,

in

false

negotiation

their only

certificates

therefore,

face

by the that

the

by a

name

owner

some

of

measure

of

of

fraud

is necessary

rightful

owner.

certificate owner

of

This

or

use

of

lost

or

An "actual

of loss" stolen;

loss"

to

bearer

cash.

certificates

certificates.

may ID

accomplished

use

of

the

concerned

an

which

through

are

lost still

mentioned

1973,

or

as

the

are

of

consent

of the

alteration

to

of

the

impersonate

the

arises

securities

below

before

the

Committee

on

statement

by Mr.

judgment

Government,

be as high from

as an

the

state,

estimated

W.

loss,

actual

the

loss,

or

sale

through a loan.

and

light

of

corporate

figure was number

the

on

missing

false

Senate

and

securities

based

Investi-

aes Ou

on

of handlers

of

the concern.

U.S.

ee

extrapolation,

applicability

subsequently

of this

of

lost,

are

from

Subcommittee

that

or

from

collected

duPont

the

We

resulting

in the

total

validate

industry

Negotiation

data

and

conwhen

registered

financial

Operations,

This

to

replace

secure

value

are

a loss

cash

Permanent

municipal

incurs

counterfeited

Henry

securities.

securities

negotiated.

loss

ID;

dollar

1% of

established

or

the

$50 billion".

was

to

Government

that

can

when

those

by the

to

of actual

evaluated

the

considered

he

suffered

fales

of

securities

fraudulently

of

were

testimony

of

stolen,

use

value

or stolen

collateral

lost,

the

the

conversion

cases

included

of

form

industry

stolen,

be

are

gations,

risk

without

attempt

lost

owner

may

certificates

securities

tion

the

an

equals

by direct

only with

negotiated

No basis

take in

financial

risk

certificates

be

stolen

ownership

only when

Although

Loss

if registered

to the

the

may

In

fraud false

occurs

verted

sources

transfer

record.

A "risk are

to

could

informaof securities.

to

define

ID to

the

this

figure.

The U.S. of

Marshals'

287 banking

period

1971-1973,

representing in that

was

loss

equated

of

on

stated

11 incidents

a dollar

report

Service,

institutions,

the basis that

of stolen $5,136,554

only

to

39

risk

of a 1974-1975

during or

securities

reported.

loss

as

survey

three-year

fraudulent

were of

the

defined

Loss above.

Neither

actual

loss

nor

false

ID

involvement

were

addressed

specif-

ically.

In a report

entitled

Member

the

low

of

from

"Magnitude

Firms

reported

million

reporting

Corporation

million actual

ranged

loss

the

extent of

as

Since to

the

best

cover

the

of

to

of

$14.7

million

to

from

in

a

1970.

Data

Clearing

1972

to

$104

specifically may

address

have

been

FACFI.

(NASD),

the period

area

of

false

an

almost

Inc.,

90%

vis-a-vis

that

Replies

response,

reported

counterfeit

securities

previously

The value

con-

1972-1974

identification.

securities

of misappropriation".

securities

ranged

Dealers

convering

of

stolen

identification

value

"...incurred

in

Exchange

in N.Y.S.E.

or

Stock

do not

representing

loss

Stock

million

N.Y.S.E.

false

the marketplace

forms

Securities

of Securities

specific

York

Corporation

the

direct

New

of lost

figures

to which

Association

cases

some

reported

of

of its membership

a return

through

a high

these

little

respondents,

44 distinct and/or

to

$24.1

are

to

Clearing

from a low

or

2,734

Stolen

to

they

a survey

attempted from

in 1973

Since

The National ducted

Stock

by The

value

organizations

in 1973.

involved,

and

the market

the N.Y.S.E.

$4.6

conducted

of Lost

1969-1972,"

to

all

of a survey

obtained

of this

loss

was

$563,412.

the

FACFI,

NASD the

indication

survey

specifically

information

of

the

scope

reported of

the

addressed therein

false

the

area

appears

ID problem

to in

of be

concerm the

securities

fraud.

Embezzlement

Embezzlement may

is

be perpetrated.

their

true

name,

the

employees

hired

1974,

Washington,

the

under

another While

area

the majority

potential false D.C.

in which of

fraud

embezzlers

of infiltration

identities Metropolitan

40

against

should Police

operate

of business not

business under

firms

be overlooked.

Department

by In

investigated

twenty-two

be

cases

complaints

average

for

loss

Banks losses

borrower. falls

However,

through

of

grantors

type

false

made

to

are

incident

also

involves

a confederate

cannot

in

1974.

was

about

subjected loans

found

to

with

The

as

be located

$3,000.

large

false

a dishonest

posing

to

of all

Department

making

fraud

was

15%

identibank

a legitimate

when

the

loan

the

names

of

the

data

banks

in

these

loan

to match

their

bogus

scheme with

$188

The

from

losses

lost

false

in

false can

effectiveness

fiscal

of

false

often

businesses

or

prosecutors

to

AGAINST

We have grams

are

take

tities,

and

year

persons

credit-reporting

acquire

ratings.

in

loans

complete

A single on

have

been

bank

nonexistent

1975. may

written

off

sustain

it

difficult

a fraud

for a

losses

Total

identification

makes

blamed

embezzlement

swindles

unwittingly

perpetrator

of

schemes

credit

schemes

fraud

the

fictitious

identification.

ID credit

be

fraud

$200,000

borrower" million

of

FRAUD

by a criminal's

in

institutions

such

accomplished

of

such

the

is

ratings

"nonexistent of

grantors

debts. traces

IDs

fraud

manipulation

borrowers

financial

because

loan

credit

by one

part

eredit

of

internal

These

may

of

for

"borrower"

Participants

victimized

major

type

excellent

the

services.

by

this

the

the

reported

by persons

loans

suspect

due.

creating

cars

credit

processes

Another

sets

other

by

each

the

represented

cases

handled

from

embezzlement

Typically, who

in which

These

embezzlement

and

fication.

embezzlement

ID.

to business

through

officer

of

a false

using

never as

reported

losses

to

be known simple

bad

in removing for

all

victimized

complaint.

GOVERNMENT

found

very

that

most

vulnerable

various claiming

forms

--

to

state

and

false

identification

applying

nonexistent

for benefits

dependents,

41

national

or

in

social

under the

welfare

fraud.

Such

several

case

of

profraud iden-

Social

all

Security

programs,

claimants

to be

for benefits;

in

a dependent

fact,

some

of

a covered

states

do not

wage

of

identity

the

verifying

for

exist

standards

uniform

No

earner.

claiming

require

any

identification.

In

a recent

of using money

four

and

Romero,

and

stamps

Director to

than

of welfare

different

food

difficult often

case

of

know

the

happening

personnel.

or

Social

in which

studies

stolen"

both

that were

cities

is

able

of

large to

$50,000

was

Social

accused

in welfare

According

a scale

detect

admits,

to

Orlando

Services,

it

is happening

with

present

"I'm scared

is

committed

City

by imposters,

checks

and

or

stolen

with

the

is

more

procedures

to death

cashed

this

kind

of

this

have

shown

with

stamps,

is

aid of a false mentioned

checks

by forgers.

fraud

usually

food

Philadelphia,

to 40% of all welfare

subsequently

from

almost

period.

Department this

of benefits

Security

York

30%

collect

a woman

is

cases."

fraud

in New

revealed

on

Romero

Misappropriation

way

Denver

if fraud

in other

to

in Denver,

a four-year

the Department

limited

welfare

names over

fraud

reaches

ID.

The

previously,

reported The

stolen another

"lost

or

loss

in

annual

multimillion

dollar

proportions.

Welfare

Fraud

Our

surveys

standards have

for welfare

a very

in public

We have,

idea

therefore,

collection

fact,

good

assistance

who and

welfare

stitution

of a photo resulted

to

such

have

fraud;

the

42

of identification nor

state

$37 billion

agencies

per

year

payments.

estimate

using

the

several

admitted however,

for welfare

closing

lack

Federal

almost

Security

accurately

ID program in the

to

receiving

officials

for detecting

in 1973

due

neither

by individuals

procedure

City

is

Social

no way

of benefits

several

that,

recipients,

that we

scope

there

have

3,000

organize

that

in New

cases

In

is no

noted

recipients

of about

of multiple

identities.

in-

York

of in-

eligibility. per

year,

which

payments cases

These

for

represented

FY

1974,

represented

procedure

was

the

Although been

Attorney

benefits

under

in early

1975

of

attempts the

false

that

in the

are no present

which

the

New York to

FACFI

City

reduce

ments

for

stolen

has

checks

or

also

$4.8

million.

public

welfare

York

City,

subsequently

value

of checks

therefore, the year, ments

than

practice, is

so

slow

the

and

City

is

30%

uncertain

assistance of

these

change

in

may

have

not

been

(New York

City)

applications

Assistance

he

one

for

declared

serious

and

checks from

an

of

the

problem

for which

were

the

of

checks

annual

about

ending to

The

of

taxpayers,

1973

in or

of approxi-

the

total

total

was

$28 million;

$8.4 million

of total

welfare

of a forged

for

paycheck,

the

loss;

in

for welfare

check

losses

in

for

lost

The

least

responsible

replace-

month

replacements

October at

and

1972.

for which

of recovery

43

16%

for

in 1974

loss

fraudulently.

acceptor

the

each

reported

in an

FY 1974.

losses.

made

10,000

the year

amounted

legally

was

issued

checks

for

problem

Philadelphia

effort

represents

cashed

a major

average

resulting

of

is

0.7%

that

has

most

approximately

the process

fraud

center,

",...the

stolen

41%

fraud

for

issuer,

however,

or

in the year

through

represents

in New York

rather

the

which

over

replaced

losses

checks,

figure

were

welfare

data

in Philadelphia

issued

major

problem

County

a determined

forged,

In New

only

of multiple

welfare

lost

This

budget

City

portion

recipients.

the

is

million

safeguards...".

About

mately

the

to

$7.2

York

a large

Queens

fraud

received

alone.

New

of

identification

of Public

of welfare

subsequently

ID

cases

Before

reported

all

that

a single

forged

were

were

the

of

adequate

studies.

mailing

Philadelphia

in

type

administration

stolen

false

after

names

of

ID program,

several

this

faced

at

a saving

since

a photo

photo

found

there

Cashing

0.6%

likely

payments,

example,

District

about

seems

issuance

by

For

It

produced

multiple

many

discouraged

eliminated.

closings

fact,

absorb

most

of

The the

food

stamp

program

now

where

it encompasses

point

payment

level

structured

tion

of

ing

of

$5.2

provides

fraud

state,

billion

while

such

all

Not food

in the

investigations

have

false

identification

fraud

stamp

stamp

Arkansas, cases,

57

year.

Federal

cases

or

19.1

has

has

false

cases

about

This

be

our

data

on

a loss

to

the

Federal

identification where

evidence

fraud

funds

of

Pulaski

Arkansas were

of nearly

stamp

prosecu-

However,

all

a

presently

In North

of

and

to

participat-

false

sparse.

uncovered.

food

and

by the

significant

2.5%

as

returned

identification

2% of all

recipients

program

covered

must

only

carried

beginnings

investigation

be

been

been

modest

million

pursued,

includes

of

to

must

then,

been

from

year.

recovered

program

which

These

funds,

costs

funds

fraud

one

per

surprisingly,

local

County,

expanded

a disincentive

in that

government.

has

food

recorded

$19,000

in

expended

in

in

the

county.

The

sparseness

tification

fraud

assessment

of

of

data

does

the not

identification

(1% to been

the

seriously

has

fraud

were

uncovered

unique

to

those

of

false

an

investigation

only

primary

reason

welfare

programs

and

are

been

the in

localities

or

the

the

have

We

percentage

The

false

this

of

it has

only

is

be

ID

characteristic

the

therefore,

has

may

false

incidence

existence

that

identification

fraud

paucity

proportions

where

a significant

conclude,

is

the

estimates

methods

iden-

accurate

False

significant

programs

on

that

however,

jurisdiction

reported

of data

false

an

been

of

the

fraud

in

generally

ignored.

audits

based

in

in welfare

on

permit

insignificant.

investigations.

fraud.

nationwide

crime;

is

these

received not

sophisticated

that

lack

this

in every

Even

fraud

of such for

of

been does

discovered

least

the

has

problem

payments)

identification

Periodic

the

investigated.

since

that

of welfare

impact

that

total

low,

unrecognized

data

area

national mean

quite

audits

the

the

fraud

2% of

agencies

of

in

of

Federal on

federally~sponsored government

actual

cases

44

are

welfare

required

selected

at

by

random

programs law. and

by

state

These in

sufficient

numbers

to be a statistically

audits

involve

a careful

cases.

One

would

suppose,

fertile

and

valid

source

welfare

fraud,

the

case;

extent

of

fraud

mentioned

of

to determine overpayment audited

and

by

outright

or

simply

are

for

assurance

Action

to

of such

reports

show

fact,

the

food

are

contrary stamp

in

stamp had

of

were nation.

took

the

funds

even

and

program)

Welfare

is merely

that

could

be

or

of

agency

mistake.

the

caused personnel,

Federal fraud

action;

of such

to

of ineligibility,

suspected

true.

have

to

however,

referrals

For

ineligible;

in 378

to

state the

or

audit

any

that was

cases

in overpayments

of

the

1973-1975!

over

the

no

lost

cases

Those

ineligible funds;

in

audit

audited

against

In contrast,

1973-1975

have

of in

ineligibility

claims

ineligibility

stamp

of

Federal

the

who

however,

government.

numbers

the highest made

stamp

45

state;

a recent

50%

food

from food

recipients

the

recover

example,

this

years

lowest

of

the Federal

to

Massachusetts

in fiscal

welfare

the highest

trying

showed

Yet

from

be made

which

necessarily is

number

not

according

means

responsibility

must

nation's

action

$103,000

sole

program

recipients

one

3.1%, over

the

public

the

states

not

the

is

which

possible

of

the

benefits,

recipient

of

this

Education

stamp

be a

types

is not

audits

categories

innocent

cases

and

would

all

made.

actions

that

Massachusetts rate

is

food

any

the

an

report

on

are

recover

fraud

recipients

data

they

reports

the

no

that

committed

of

or

investigation

contain

fraud

Ineligibility,

part

of

The

selected

determing

of the

of Health, the

caseload.

the

audits

in

Suspected

for

total of

Unfortunately,

objective

received

error to

these

useless

in the broad

have

the

required

authorities reports

on

the

prevalence

fraud.

Department

not

a procedural

auditors

The

underpayment.

fraud

that the

government.

rates"

should

on

ID

of

investigation

virtually

of Agriculture

"error

case

is

audits.

the U.S.

Department

data

false

data

against

in these

instructions (and

audit

sample

and

therefore, of

including

the

valid

review

period

recipients.

Utah rates

food

which at

to recover

is

that

such

provide

laxness

is

encouraged

effective

ID

standards

enumerate

welfare to

such

100

$13.7

program,

fraud

in all

1973,

cases,

these

are

types

743

or

relationship ment.

Since

entitlement tion

fraud

cleared ment

may

has

detected

20%

involved

provided

been

to

of

make

state

no

effort

Security

of

3,762

in both

RSI

and

falsification earner,

classify

A majority

of

investigation

the or

Insurance

compared

of to

the

beneficiaries. ‘ In

Administration

illegai

fraud

cases

Of

these

these

age,

or

multiple

be presented

suspected

reim-

instances

programs.

by agreement

of

Health

of identity, or

and

Supplemental

form

potential

DI

of of

to beneficiaries.

the

low

value

Retirement

and

reported

remarkably

Social

issuance

the

of potential

must

cases.

in

under

The

a total

wage

the

a total

payments

benefits,

evidence

very

to

failure

audits

which

(DI),

monthly

we would

The

agencies

and

include

Income

number

for which

a covered

programs

Medicare.

and

available,

following

to

as

establish

false

fraud to

entitle-

identifica-

cases

repay

were

the

govern-

overpayment.

low

explained is

programs

is

for

with

documentary

any

programs

annual

expenses,

year

year,

to benefits,

for

be

provide

in

includes

were

to

These

which

of payments

latest

figures

in

states

responsible

Disability

billion

which

level

the

all

(SSI),

of medical

(HI)

Federal

uncovered

against

each

1975.

(RSI),

$9.2

are

checks

fiscal

Income

bursement

of

in

additional

immense

programs

benefit

Insurance

Security An

Security

billion

of

recipients,

Fraud

million

Survivors

fraud

action

take

failure

welfare

abuse.

Security

Social over

suspected

to

and

programs

deter

Social

of

instances

the

by for

find

also

We

it.

punish

and

discover

to

effort

least

the

there

where

prevalent

is most

abuse,

of program

types

other

like

programs,

in welfare

fraud

identification

false

that

conclude

only

can

We

incidence by several

established

of

fraud

factors.

by prior

46

detected

in RSI

and DI

First,

coverage

under

payment

into

the

system;

in

programs these the

case

of RSI,

coverage

documentary

firm

Second,

to

required

for

record

SSI

program

programs

for

the

require

prior

somewhat intent

in

the

SSI

appears

issued

fact

is

ever,

which

the

Secret

capabilities

false

successful

when

1973

disabled.

the RSI

or the

ID

fraud

replace

This

on

program

and

welfare

does

thus

might

to

persons

DI programs incidence

state

of

not

be

suspected

available.

from

loss the

stolen

in Social

forgery

more

of

Security stolen

frequently

Treasury.

The

regularly

of

to

entitlement,

mailed

to

forged

Service

during

1975

Security

benefit

than

any

probable

72,500

of Social

benefit

Treasury

were

checks

checks.

other

reason

recipients

the

of approximately

type

for

each

month.

checks

Social

Security

involved

a loss

$10 million.

ACTIVITY

examples

he

illustrate

success can

usefulness

confidence.

in

data

fraud

65%

forgeries

engaging

A citizen

are

or

criminal's

with

are

they

foregoing

the

result

by the

CRIMINAL

criminal

tials

advanced

and

is yet

by the U.S.

government

The

ease

to

no

of

checks

47,000

These

the

where

source

that

investigated

checks.

than

program

Security

Approximately

OTHER

has

establish

However,

programs

check

blind

to

attractive

largest

to

Processing

make

are

Security

Social

that

payments.

period

adjudication the

instituted

elderly,

fraud.

The

Social

was

payment

more on

fraud

this

an

and

of prior

Third,

retrieval

and

10 years

difficult.

The

of

least

evidence

of Data

Bureau

search

at

entitlement.

establish

Administration's

more

requires

is most

a criminal In large

is dependent

obtain

of

false

in crimes

often

tries cities,

major

false IDs

categories

in large

identification

has

not

been

of a lesser

scope.

victimized

by the

to gain

access

legitimate

47

lost

use

measure

crimes

on

documents; on

of

the

false

to his home, servicemen

of

and

the how-

common

creden-

business, utility

or

company of

the

employees

often

widespread

apartments

using

fear a

concerned

about

involving

for

the

growing

in

1974,

an

crime

increased

Individuals

Investigations

Police

showed

complaints

about

ID.

police

this

increase

may

handled.

Police use

do

their

access

departments

are

false

police

IDs

in New

York

88%

over

23%

in 1974

ID was

average

$380.

48

1973,

over

the

fraud

in 50%

complaint

and

by criminals. City

totalled

arrests

(268)

period.

by

by the Washington,

because

particularly

while

same

directly

a factor

job

to homes

impersonators of

of

to

gaining

be victimized

a false The

difficult

by only

also

conducted

that

it

imposters

false

Incidents 1,358

find of

"confidence

D.C.

of the involved

men,"

Metropolitan

876

fraud

a loss

of

Task

PART

Il:

Force

Reports

TASK FORCE REPORTS In order to address the many aspects of the use of false identification and to focus the concerns and expertise of its members, the FACFI divided into these five Task Forces:

e

Task Force | — Government Payments, which focused on false identification fraud in programs that involve disbursement of monies to individuals by local, state and Federal agencies.

e

Task Force 1! — Commercial Transactions, which was concerned with the fraudulent use of personal identification in over-the-counter sales and bank transactions.

e

Task Force II! — Fugitives, which concentrated on the use of false identification by fugitives to avoid detection and arrest or linkage to a previous criminal record, to remain in a covert status, or to aid in the commission of further crimes.

e

Task Force IV — Federal Documents, which investigated the use of false or fraudulently obtained Federal documents in the conduct of criminal activity.

e

Task Force V — State and Local Documents, which focused on the use of false or fraudulently obtained state- and community-issued documents in the com-

mission of crimes. The initial assignment for each Task Force was to determine the nature and scope of the false identification problem in their area.

liminary suggestions for solutions.

Task Force reports were to include their findings and pre-

To gather the necessary information, each Task Force examined

a variety of public reports and agency records, and conducted seventeen mail surveys of national and international scope.

The material gathered in this fashion reflects the experience and the records of

several hundred responsible individuals in business, law enforcement, and government.

First drafts of the five Task Force reports were issued between May 1975 and September 1975. The FACFI staff used these reports in developing a summary of the national false identification

problem and in formulating preliminary proposals for solutions.

The reports from Task Forces |

through V have since been redrafted to reduce the amount of repetitive material and to obtaina

more uniform and readable format.

50

REPORT OF THE GOVERNMENT

PAYMENTS TASK FORCE

ON THE SCOPE OF THE FALSE IDENTIFICATION PROBLEM AND PRELIMINARY

RECOMMENDATIONS

FOR SOLUTIONS

Submitted to

Federal Advisory Committee On False Identification David J. Muchow, Chairman

May 1976

51

CONTENTS SECTION:

| =-“INTRODUC

TIONG

ener

nectar etree 53

PUIDOSO % deen eran hrerie teria cen eee ae ete aS cael 53 SCOPO oh. ors eaten: Bega eter ali RSE teers ota a amt 53 Data Gathering aye at eee ree cere aie omer tare 53 Evaluation: Of Data cee pan ata art serdar eee 2 atone 53

SECTION

lio

Génerahzat

hbHEsFARSEsDaPROBLEM

Srvarvasd

wetease te see O18)

pene eet 28 FRomn-.-- 55

ApplicationaR Mase sew: wis eee ae tare. ome atians x’ min 55 WSE "PHASES ere eee oe eee eee Sees wits 56 AnalysiSOL PlOGranns sas terre tae ee Se 56 Aid to Families with Dependent Children......... 56 Medicaidis ast acted VRAIS oe ws 64 FOOG: Slang... co emer ee tener nett iteee ce terete ets 64 SOCialasecurityalRrOG ham Saaseraanak trteccteteks. « s2c00 ee 70

SECTION

Ill —

PRELIMINARY

RECOMMENDATIONS

75

General--.2:2 928 Veer ee ree eee oe ee "5 Recommendations to State Government............ Vs Recommendations to Federal Government ......... TCL

52

-

Report

of

the

Government on

Scope

of

the

Preliminary

False

Payments

Task

Force

the

Identification

Recommendations

SECTION

Problem

for

and

Solutions

I

INTRODUCTION

Purpose

The mission of the Task Force is to investigate the national impact of false identification fraud on programs that involve payments by local, state, and federal governments to individuals. Scope

Four areas, each of which involves programs of national scope, were investigated by the Task Force. These areas included the Aid to Families of Dependent Children (AFDC) and Medicaid programs administered by the Assistance Payments Administration, Department of HEW; the Food Stamp Program of the Department of Agriculture; and four programs administered by the Social Security Administration: Supplemental Security Income (SSI), Health Insurance (HI), Disability Insurance (DI), and Retirement and Survivors Insurance (RSI). Programs Department of

administered by the Veterans Administration and the Housing and Urban Development that involve government

payments

not

Data

were

investigated.

Gathering

Questionnaires

tigated.

Eighty-six

were

sets

prepared

for

each

of questionnaires

of

the

four

covering

areas

AFDC,

inves-

Medicaid

and Food Stamps were sent to Directors of Welfare in each state as well as Guam, Puerto Rico and the Virgin Islands; Welfare Quality Control Directors in several states; state and county auditors in several states; and the Inspectors General of New York and Michigan. Twenty sets of questionnaires covering the four Social Security Administration programs were sent to Social Security Headquarters and Regional Offices throughout the country. Evaluation

of

Data

Approximately 40% of the questionnaires have been returned. Evident thus far is the apparent lack of information relative to

53

the frequency of false ID fraud and its fiscal implications. This lack of information should not be taken to mean that a problem does not exist. Results of several investigations carried out independently by individual states and localities will be cited that show significant impact from false ID fraud in government payments programs. Several of the returned questionnaires have contained expressions of deep concern about the use of false identification and the hope that something can be done to alleviate the problem. The Office of the Commissioner of Welfare, Department of HEW, has recommended on several occasions to the National Welfare Fraud Association that information on frequency and impact of false ID fraud should be collected by the states and reported to the NEW National Center of Social Statistics in Washington, D.C.

54

SECTION THE

FALSE

II

ID PROBLEM

General

False ID fraud in government-assisted welfare and social insurance programs has significant national problem potential because of the ubiquitous nature and staggering dollar volume of such programs. For example, in January 1975, a nationwide average of 11.1 million AFDC recipients were receiving benefits at the rate of $730 million each month; this represents an annual cost to tax-

payers of $8.8 billion. The federal government issued over 100 million benefit checks in fiscal 1975 under SSI, DI, and RSI programs;

these

$13.7 care)

billion. amounted

checks

represented.a

total

dollar

value

of

over

Benefits under the HI program (which includes to an additional $9.2 billion in fiscal 1975.

Medi-

Government payments programs have generally displayed a steady growth in beneficiaries over recent years; the growth of some programs, such as Food Stamps, has been spectacular. In 1965, recipients of Food Stamp benefits numbered 400,000 and total benefits were $36 million. As of January 1975, the program had expanded over a hundredfold to encompass 19.1 million recipients and a payment level of $5.2 billion per year. Programs of this scale present many opportunities for abuse by fraud, whether by false ID or not. Even if only a small percentage of the transactions between government and the beneficiaries of these programs are fraudulent, the total dollar loss to taxpayers in direct payments and costs of fraud detection and prosecution can be very high. Thus, although our surveys have indicated that false ID fraud is generally viewed as only a small part of total program abuse, the Government Payments Task Force has concluded that such fraud constitutes a significant national problem that is deserving of further study.

Government

in both are

discussed

Application

All

payment

"application"

the

programs

and

"use"

are

subjected

phases

to

false

of the programs

ID fraud

and

these

below.

Phase

programs

of application for phase," applicants

studied

by the

Task

Force

require

some

sort

future benefits. During this "application are asked to identify themselves and any depen-

dents on whose behalf program benefits are sought. The types of identification documents currently required by state agencies were found to vary widely, ranging from none at all to a selfThe most commonly used consistent set of official documents. documents in false ID fraud in this phase appear to be birth and baptismal certificates, state-issued driver's licenses, and Social Security cards.

55

Fraudulent documents are obtained in a number of ways. Birth certificates are usually genuine documents that have been altered and then photocopied. Baptismal and some birth certificates, on the other hand, can be easily generated by forging data on official appearing blanks bought at stationery stores or through mail order companies.

Fraudulently

theft

and

using

a false

the

used

counterfeiting;

Social

birth

Security

driver's

they

can

certificate card

was

licenses

also

be

are

obtained

as a "breeder"

never

intended

obtained

by

document.

to

be

used

through

application,

Although as

an

iden-

tity document, it is used extensively as such in both legitimate and fraudulent transactions. Until recently, little identification was required to establish a new Social Security account. Thus, it was possible for an individual to establish accounts under several aliases. This has led to the collection of multiple benefits not only from Social Security programs but also from other government payments programs in which the multiple Social Security cards served

as “identity documents" at application. Social also been obtained by theft or counterfeiting. nent"

Social

supplying

Security

mail-order

or fictitious; these for identification.

cards firms

made with

unofficial

of metal an

account

cards

are

can

Security cards have Unofficial "permaalso be obtained by

number

that

sometimes

is

used

assumed

successfully

The period between application for government benefits and the receipt of benefits varies from a few-days (or weeks) in the case of emergency relief payments to several months (or years) in the case of certain Social Security programs.

Use

Phase

False

ID has been employed

in the

"use"

phase

when

persons

fraudulently assume the identity of others to collect their benefits. This use of false ID occurs most commonly in the cashing of stolen government checks or Food Stamps. Apparently, many banks and

businesses are identification Analysis

of

willing to cash these of the endorser.

instruments

without

adequate

Programs

The following sections present analyses by the Task Force of surveys of AFDC, Medicaid, Food Stamp, and Social Security programs. The analyses describe the range of requirements for recipient identification in application and use phases of the programs, and give available data on the scope of the false identification problem.

Aid

to Families Sources

of

with

Dependent

Children

Information

Twenty-eight responses to the questionnaires on the use of false identification to obtain Aid to Families with Dependent Children (AFDC) have been received. Respondents represent twenty-

56

five states, one the Commonwealth The

county (Los Angeles), of Puerto Rico.

Normal

one

territory

(Guam),

and

Process

The AFDC process begins when an applicant (generally one adult and one or more children) indicates verbally or in writing that they are in need of public assistance. Initial application may be made by phone, in writing or by personal appearance at a local political subdivision. Eligibility for public assistance under the AFDC program is limited to U.S. citizens and legal aliens permanently residing in the U.S. Eligibility criteria include resource and income limitations, financial need and deprivation. When application is made and the welfare organization is satisfied that the applicant is indeed eligible, instructions are generally forwarded to an office of the state welfare organization from which grants are issued. In some states, grants are prepared centrally within counties, in others by the state welfare office and

still

to

others

by the

state

controller

or

treasurer.

Once AFDC eligibility is established, states are not required issue an AFDC identification document to recipients. Of the

twenty-eight respondents to 2 issue an ID with no photo

the and

questionnaire, 21 issue no ID

5 issue at all.

a photo

ID,

The financial assistance provided to AFDC recipients is usually in the form of a semi-monthly check or warrant. Nationwide, as of January 1975, there were an average of 11.1 million AFDC recipients receiving benefits each month. ID

for

It the

for

Benefits

is evident that a wide initial identification

documents

accepted

and

the

variety of AFDC

number

of

of documents applicants.

respondents

are The

accepting

follow: ieee

DETENTCenCit 1caceccscies scree ders aceescie ceseree

2 COCTaIMSCCUL LEY

CALC a ..4 steransretersiscleveje sxefoiaxelexea=O

3) Pe

Drv ELS

MHGEISE sie cic ole cele ciclecieidiels slale steleie ects

4.

Welfare

1D.

Be

(Geacbite

6.

Employer

(it

formersreciptents)ic. ccjeiejcteyetcie

GriglyonnogagasooondoojcenndenodooOG Identification

He

=Sellective

Sa

Military

Identification

Oy)

Military

Discharge

1.OceHOOds tl en

Service

Cards

7,

&

Card.........20+++-.10

ccclss cece lees cees sokO (Card... sic. ice ce LO

sPapers. cl. sis sslsusissecces sald

SEaMp MUD). titre cittee va:e\earel erBierertieveeVelsineclersion

Lonel)

O

Catdiasisicisie's cic oavercleieiercre c/eis'e.e/e sieielecse 0

Sa

acceptable types of them

12.

Immigration

13%)

Baptismal

and

Naturalization

Documents...1/7

1 4cne

Marri ageCertitdicatesny.iterctelele stele crctelarsiotale

ROCOLGSsrerslereleteletelaieicieletetaieioietetelsielol

rom

toni

Of interest is the fact that five states returning questionnaires make no attempt to verify an applicant's identity. Some states only require identification to verify the birth of the children for whom assistance is sought, but none for the adult applicant who will also receive assistance. Most jurisdictions rarely, if ever, check the

authenticity

of "breeder"

The importance trated by a report!

identification

documents.

of an effective identification program is illusof the Office of the New York State Comptroller.

The New York Legislature, according to this report, mandated the New York City Human Resources Administration issue photo identification cards to all recipients of public assistance in the

that

AFDC or)

program. prevent

"The the

primary

cashing

purpose

of lost

of the Photo

and

stolen

ID was

to

(reduce

checks."

This report found that "as of May, 1973, about 3,000 cases were closed as a result of the Photo ID program. This represented a savings of about $7.2 million a year in payments to ineligible recipients." This reduction in caseload apparently came about

either

as

the

willingness"

result to

ID

for

be

of fictitious

photographed

Check

on

cases the

being

part

of

closed some

or

an

"un-

recipients.

Cashing

The types of documents accepted as a means of identifying recipients when benefits are obtained (e.g., when AFDC checks are cashed), depends on the criteria established by the banks and merchants who cash the checks. Unfortunately, a significant number of banks and merchants require little if any identification when cashing government checks. Checks are cashed under the false assumption that

government

issued

checks

are

automatically

"good."

Evidence

of

this can be seen of the Treasury,

in Figure 1, a chart prepared by the Department Fiscal Service, Operations Planning and Research

Staff

entitled

in a study

"Report

on Forged

Treasury

The basis of the Treasury report was a review checks for which a formal affidavit of forgery was Treasurer of the United States during the month of

iL Audit

Report

on

Administration,

Photo

Report

ID

Program,

No.

New

NYC-22-74,

limphasis added. 58

York

City

Feb.

15,

Checks."

of all forged filed with the August, 1972.

Human

1974.

Resources

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62

82

Vy

A total

of

3,978

forged

instruments

were

comparing the types of identification accepting them, reveals that 81.3% or contain written evidence on the check

time

of cashing.

The

study

found

that

reviewed.

The

chart,

used with the establishments 3,236 forged checks did not that an ID was used at the

"the

rate

of acceptance

of

drivers' licenses and Social Security cards as a means of identification is particularly high in department stores and other establishments whereas these identification forms (except for one instance) are unacceptable to check-cashing firms. Also, use of the Regiscope? as a means of identification is relatively low in commercial banks (4.6%) and department stores (4.1%), relatively high in grocery (24.4%) and liquor (25%) stores, and extremely high

in check-cashing AFDC

firms

(66.6%)."

Fraud

The survey requested specific information on the extent and impact of AFDC identification-related fraud. Data requested included the number of fraud cases investigated in which false ID was used, the fiscal impact of the fraud, estimates of the percentage of total AFDC frauds that involve false ID, administrative costs of prosecuting false ID, and types and use of false ID encountered.

Twenty-three of twenty-eight responses to all these queries left the questions blank or stated that the information was either not available or unknown. The states supplying some of the reques— ted information estimated that less than 2% of AFDC fraud cases involved the use of false identification. However, one state readily admitted that because fraud reports do not generally specify the nature of the fraud, true percentages are likely to be much higher. As a result, the Task Force has concluded that the frequency of the use of false identification remains undetermined because of the lack of adequate information at all levels of government and the private sector.

Because of the dearth of information, it is necessary to turn to specific welfare fraud reports in order to demonstrate the seriousness of the false identification problem. It should be pointed out that the available reports are not limited to obvious problems of false identification, but include numerous other fraudulent practices such as forgery, which is a false ID crime, the check itself being the false ID. It is abundantly clear that if proper identification is required at the time a public assistance check is cashed, millions of dollars can be saved annually. The

Mail

Theft

Issue

One of the most serious problems encountered by jurisdictions that mail checks to welfare recipients is mail theft. A Pennsylvania

3

A device that photographs cashing the check,

both

the

60

check

and

the

individual

study!

has

found

that

"Pennsylvania

welfare

checks

are

stolen

with

much greater frequency" than any other checks sent by mail. A prime reason for this is due to the length of time it takes Pennsylvania to complete an investigation on reports of lost or stolen checks.

In September non-receipt

area

were

and

October,

complaints

for

"checks

1974,

it was

currently

issued

in July

that similar delays are common areas throughout the country.

of

Most a lost

found

that

in progress

in

of 1971."

in many

of

the

investigations

the

of

Philadelphia

It should larger

be noted

metropolitan

states, including Pennsylvania, upon receiving a report or stolen check, have the recipient complete an affidavit

and issue a replacement check within twenty-four or forty-eight hours. These affidavits are used as the basis for collecting information to be used in any subsequent investigation. The Pennsylvania Grand Jury found that the majority of non-receipt claims cannot be resolved after a search of the files of the State

Treasury

Department.

of

the

cases

or

forged.'"'

are

Statistics

determined

Another

20%

to

indicate involve

of the

cases

that

checks

are

"approximately that

have

determined

to

41%

been

stolen

constitute

fraud, that is, a check was received and cashed by the welfare recipient but subsequently reported as lost or stolen, in order to obtain a double payment. A study by the New York State Comptroller! found that over thirty percent of the checks for which replacements have been issued are subsequently determined to have been fraudulently cashed. These percentages are shocking when one considers the number of replacement checks issued. The Pennsylvania Federal Grand Jury found the following:

"For the month of January, 1971, the incredible total of over twenty-six thousand replacement checks was issued in Philadelphia alone. Since the average welfare check amounts to approximately one hundred and eight dollars, the value of these replacement checks was more than two million six hundred thousand dollars. In 1972 and early 1973, ten thousand replacement checks, totalling over one million dollars, were being issued each month in Philadelphia alone. That figure is currently reduced to four or five thousand replacement checks per month, with an approximate value of one-half million dollars. This reduction, however, should not lull us into

lReport of the Federal Grand Jury for the Eastern District of Pennsylvania on Welfare Check Theft and Fraud in Pennsylvania and the Administrative Processing of Pennsylvania Welfare Recipient Complaints on Non-Receipt. laudit

Report

on

Human Resources

Fraudulent

Duplicate

Administration,

Check

NYC-50-74.

61

Claims,

New

York

City

believing that there has been a proportionately great reduction in the rate of theft of welfare checks. The continued and diversified enforcement efforts of the Postal Inspectors and some improvements in the process-— ing of these checks have reduced the theft rate. However,

most of the reduction of monthly replacement checks from twenty-six thousand to five thousand is the result of a substantial reduction in the number of checks being delivered by the mails.” The

City

Fraudulent

revealed

assistance

audit

that

(Human

Resources

310,000

checks

Check

in fiscal

payments

found

stolen."

Deplicate

that

were

"during

year

approximately

the year

Administration

worth

They also

a backlog

of 110,000

on which

no recoupment

that

which

in New

City's

$1.2 York

had

cashed

had been

These figures are substantiated gation of Welfare Fraud by Office of

The

1973,

City)

been

York

public

billion.

October,

HRA

replaced

reported

"as of November,

fraudulently

action

New

audit

the

ended

of

$28 million

found

Claims

1974,

checks

lost

1973,

there

worth

$9.7

or

was million

taken."

by the Report on Investithe Queens District Attorney

for the Year 1974, This report states that "the most serious problem faced in the administration of Public Assistance and one for which there are no adequate present safeguards is the multiple collection of welfare payments by people using several aliases." The report further states that "it appears that the only way to eliminate this type of welfare cheating is to require a form of identification which is absolutely unique to each individual and

which

and

is not

of fraudulent

duplication."

A recent article in the Washington Post on check thieves their victims, with emphasis on federally issued checks,

indicates The

capable

that

article

upwards

of $15,000,000

are

lost

"The check thieves

steal about

$50,000

to

forgery.

a day by forging

government checks. Most of those direct carried by the banks and businesses that forged checks. The indirect costs borne government

departments

that

investigate

the stolen

checks

into

the millions

A recent

Audit

due

stated:

review

and Quality

runs

conducted

Control

by the

showed

that

New

62

and

replace

each year."

York

welfare

the State of New York alone account for ulently cashed checks each year. It is studies were made of fraudulently cashed in other major metropolitan areas across would double or triple. It is unlikely Philadelphia metropolitan areas are the these problems.

losses are cash the by various

State

Office

of

checks

issued

by

$12,000,000 likely that government

the that only

in if

fraudsimilar

checks

issued

county, these figures the New York and ones experiencing

False The

come

most

under

order

to

il -

ID

Suspect

common

characteristics

investigation

obtain

20-30

AFDC

years

2-

Female;

3-

Unemployed;

4.

Has

5-

Resides

Profile

for

using

benefits

of

completed

are

as

The

fraud

7.

Had

no

12 years

8-

Has

resided

occurred

prior

individuals

who

have

identification

in

follows:

age;

of education;

in a metropolitan

6-

of

fraudulent

in

area;

a metropolitan

criminal

record;

in present

area;

and

residence

six months.

Apparent thus far is the fact that the amount of detectable fraud is commensurate with the effort made to detect it. As an example, of 343 cases sent to the prosecutor by the Special Investigative Section of the Department of Social and Health Services in the State of Washington, 338 or 98.5% resulted in guilty verdicts. This occurred in the first year of their operation beginning August, 1973. The annual report of the Special Investigation Unit for Suffolk County, New York, stated that "as a result of activities by the Special Investigation Unit in the year 1974, over one million dollars in fraud was uncovered, and resulted in an additional savings to the County of $900,000 in Public Assistance cases being closed." The

Treasury

Department!

expresses

the

frustration

in government concerned with the fraudulent cashing the question of proper identification. They state: "Tt is apparent that particularly banks,

of

of

those

checks

and

check-cashing establishments, and do not take proper precautions.

They are accepting checks (in some cases for large dollar amounts) with questionable endorsements and

forms

of identification

reliable. observance

It of

which

are not,

obviously,

is entirely conceivable that strict the simple maxim 'Know your endorser

- require identification' would reduce substantially the incidence of encashment of stolen and forged Treasury checks."

lipeport Fiscal

on Forged Service

Treasury

Operations

Checks," Planning

63

Department and

Research

of the Treasury, Staff.

Medicaid Sources

of

Information

Twenty-six responses to the questionnaires on the use of false identification to obtain Medicaid benefits have been received by respondents representing twenty-four states, one county (Los Angeles) and one territory (Guam). Analysis

While card

all

and/or

of

Data

states

Medicaid

Received

issue

some

labels,

the

form

of Medicaid

conclusion

that

identification must

be

drawn

from

the responses received is that states have little, if any, knowledge concerning the use of false identification in the Medicaid

program. keep

A common

Medicaid

fraud

response

is that

statistics

and,

states

are

therefore,

"not

required"

to

do not.

The states that did provide some information indicate that the problem appears to be more in the nature of provider fraud rather than recipient fraud. One state that found some recipients using Medicaid cards belonging to other persons discovered that in most instances the imposters were themselves eligible for Medicaid or other medical assistance but had lost or mislaid their own Medicaid ID.

The Task Force is, therefore, unable to provide any meaningful data relative to the use of false identification in obtaining Medicaid benefits. The Task Force believes that states should be required to mainuniform and detailed statistics on Medicaid fraud. In addition to providing meaningful national data, such statistics would serve as administrative tools for corrective action at all government levels.

tain

Food

Stamps

Sources

of

Information

The Food Stamp questionnaire was mailed to Welfare Departments of all U.S. states and territories. Twenty-four responses have been received; respondents represent twenty-two states, one county

(Los Angeles), and one territory (Guam). sisted of twelve separate questionnaires of as many counties. The

Normal

Maryland's response confilled out by officials

Process

The Food Stamp application process begins when an individual or family applies for benefits at a local or state welfare office (in many urban areas, community service organizations serve under

64

-

contract to the state as registration offices). Eligibility for Food Stamp benefits is limited to U.S. citizens and legal aliens in permanent residence and is based on income level, number of dependents, and certain other eligibility requirements. Recipients of federally-supported state assistance programs such as Aid to

Families

with Dependent Children

(AFDC)

are automatically

eligible

If the local registration office is for Food Stamp benefits. satisfied that the applicant meets eligibility criteria, the application is forwarded to an office of the state welfare departUpon a favorable determination, ment for a final determination. the applicant is provided with a Food Stamp ID card and (in most states) his first Authorization to Purchase The Food (ATP) card. Stamp ID is usually not a photo ID card; in Massachusetts, for example, it is a machine-readable card containing the applicant's The name and signame, Social Security Number, and signature. nature of an authorized proxy may also appear on the card. The ATP

document

also

is

a machine-readable

authorized face value of food coupons purchase price. The purchase price is the applicant and ranges from zero to Food Stamps may value of the coupons. authorized outlets, which are usually

stores

or

community

service

card

containing

the

to be purchased and the determined by the need of slightly less than the face be purchased at statebanks but may be retail

The

agencies.

"stamps"

(more properly

ATP are presently coupons) are issued by the federal government. issued monthly; revalidation, which entails redetermination of eligibility and issuance of a new Food Stamp ID, is required every three months. ID

at

Registration

It is apparent that there is no nationally-accepted standard for identification of Food Stamp applicants upon registration. Eight states require no identity documents at this point. Fourteen of the twenty-six respondents accept a Social Security card as identification at and eleven accept

registration; nine accept a driver's license, immigration and naturalization documents. Several

respondents

"if applicable"

ing One

noted

on immigration

documents,

imply-

that selection was exercised in demanding proof of citizenship. respondent (a Southwestern state) indicated that ID was required

"only if citizenship as choices! are Other documents

is questioned."

accepted by at not listed but

All the documents

suggested

least three of the respondents. accepted by one or more respondents

include library cards, income documents, bills, and "personal papers." Some of the respondents indicated that the responsibility of

the

of the

state

agencies

applicant,

lthe list programs added to

not

is

his

to

determine

true

the

eligibility

and

need

level

identity.

of suggested documents appears in the description of AFDC in this report; current and expired Food Stamp ID's were this list.

65

ID

for

Claiming

Stamps

The standards for identification of recipients picking up Food Stamps in person are apparently tighter and more uniform than those applying at registration. Twenty-three of the twenty-six respondents accept a current Food Stamp ID at this point; several respondents accept only this document for Food Stamp pickup. Ten respondents would accept the Food Stamp ID of a former recipient, six a driver's license, and five a current welfare ID. Only one respondent indicated that most of the documents listed as choices are accepted; none indicated that no ID is required for Food Stamp pickup. ID

for

Food

Purchase

The Food Stamp ID was also most frequently mentioned (nineteen responses) as the usual document required when Food Stamps are used to purchase food. Nine respondents indicated that an old Food Stamp ID would be accepted. Four respondents stated that the required ID

would while

depend on the "sales two believed that no Food

Stamp

outlet" at which the stamps were used, ID is usually required by food stores.

Fraud

Specific information was requested to the extent and impact of Food Stamp Fraud. The number of fraud cases investigated in which false ID was used, the fiscal impact of the fraud, estimates of the fraction of total Food Stamp frauds that involve false ID, administrative costs of prosecuting false ID, and types and use of false ID encountered. Unfortunately, the most common response (ten of

twenty-six) One

to

all

respondent's

state

welfare

formation)

these

comment

queries

departments:

since

there

was

summarized

"No

is no

"Information the

record

apparent

kept

requirement

(of

Not

Available."

attitude

this

to do so."

type

of

many

of in-

Almost

as

common (nine responses) was the comment that false ID fraud is nonexistent in the respondent's jurisdiction!, This was not only the response of such sparsely populated rural states as Oklahoma, North Dakota, and Montana, but also of urban states such as Connecticut and Delaware. Completely

in

contrast

to

these

responses

was

the

report

sub-

mitted by the State of Arkansas. This report covered only NonPublic Assistance Food Stamp recipients in North Pulaski County, which includes only 2.5% of statewide Food Stamp recipients. Nevertheless,

in FY

73-74,

this

county

(which

includes

part

of

Little Rock, Ark.) recorded 57 cases of false ID fraud carrying a loss to the Federal government of $18,740. All cited cases involved 2

i

Same

as

suggested

for

Food

Stamp

If no records are maintained, a statement can be given much

application.

it is questionable credence.

66

as

to whether

such

false ID at the time of application; seven cases also included the use of false ID at the time of food purchase. In 31 cases, imposter identification was used; counterfeit identification was used in 24 cases; and altered identification in 2 cases. The state estimated its administrative cost in prosecuting these cases to be $3500.

The Arkansas data are extremely significant, considering the relatively small sample of Food Stamp recipients that yielded all these cases. Two possible explanations of the data are suggested: either Little Rock, Ark. is a hotbed of false ID fraud, or the problem

is

being

in most

of

the

overlooked

nation.

the Arkansas response, more nearly correct:

"Since

April

1974,

(and

Some

suggests

the

therefore

additional that

the

prosecuting

declared

nonexistent)

information, latter

quoted

from

explanation

attorney

is

in Pulaski

County has been extremely concerned with all aspects of recipient abuse of the Food Stamp Program and has been very active in the prosecution of food stamp fraud cases.

To

date,

three

hundred

and

ten

(310)

felony

charges

of

false pretense have been filed against one hundred and twenty-seven (127) persons in Pulaski County. Thus far

eleven (11) persons have been found guilty with sentencing ranging from five (5) years in the State Penitentiary to one

(1)

year

suspended."

Substantive data on false ID fraud was also received from Los Angeles County, California. However, no special breakout for Food Stamp fraud could be provided: the figures given refer to

welfare fraud of all types. False ID fraud cases investigated increased from 24 in FY 70-71 to 103 in FY 73-74. Estimated welfare and Food Stamp payments to recipients as a result of this fraud totalled $24,170 in FY 70-71 and $85,148 in FY 73-74. Common

ID

Fraud

Documents

The documents most frequently Arkansas are Social Security Cards Social Security Cards are obtained

false

names;

unofficial

"permanent"

used in false ID fraud in and Food Stamp ID documents. by application under one or more

Social

Security

cards

made

of

aluminum are obtained by mail order and sometimes used as ID documents. The most frequent abuse of the non-photographic Food Stamp

ID is the

"loan"

of it to unauthorized

purchasing Food Stamps. is not used in Arkansas.

Apparently,

parties the

who

then use

intermediate

ATP

it in

document

California listed baptismal and birth certificates and driver's licenses as the most frequently abused ID documents. Birth certificates are commonly used to support the existence and ages of claimed dependent children; blank baptismal certificates are available in stationery stores, while birth certificates are most frequently genuine documents that are altered and then photocopied.

67

Most were

used

of the driver's licenses counterfeit documents. False

ID

Suspect

false

in

fraud

ID

in

California

Profile

Arkansas and California showed good agreement in their profile of the typical suspect in false ID investigation; both identified a young (18-30) unemployed woman resident in a metropolitan area. California described the typical suspect as not having a prior criminal record, while Arkansas could not supply data on prior criminal records. Both states cited metropolitan areas as the most common locales for ID fraud. Extent

None

of

indicated

of

the

the

Problem

twenty-six

a belief

that

respondents

false

ID fraud

to

the

Food

represents

Stamp

survey

a majority

of

total Food Stamp fraud cases. However, the Arkansas response, which contained the most detailed data on false ID fraud, estimated the

proportion of false ID cases as 10% of the total fraud cases. Much more common methods of fraud include falsification of income, medical expenses, or number of dependents. In Los Angeles County, the percentage of welfare fraud cases investigated that involved false ID was less than 1% for all years reported (FY 70-74 inclusive). Estimates of false ID fraud as percentages of total Food Stamp fraud supplied by other respondents ranged from below 1% to 5%; no basis for these estimates was given. Analysis

of

ID

Fraud

Data

These estimates establish clearly that the use of false ID is perceived as a minor problem with respect to overall abuse of the Food Stamp program. Three comments, however, appear to be in order. They are: (1) Based on the wide variance of the Arkansas response from the national sample, false ID fraud is probably much more widespread and considerably more frequent than most state welfare departments realize; (2) All of the methods of false ID use

that

were

detected

are

very

primitive.

This

includes

the

unauthorized use of Food Stamp ID, phony or duplicate Social Security Cards, and counterfeit driver's licenses; and (3) More sophis-— ticated methods of false ID (such as Infant Death Identity)1 could be in widespread use but not currently detected. Disposition

Cases the

local

of Food

of

Cases

Stamp

prosecutor's

fraud,

office

when

discovered,

(usually

are

county-level)

referred for

to

disposi-

tion. The cost-sharing provisions of the Food Stamp program do not provide a strong incentive for state and local prosecution of Food Stamp fraud; in fact, they provide the states with a strong

1 See

Part

I, Section

3 of

the

FACFI

68

Final

Report.

disincentive. The states pay a portion of the administrative costs of the program, including costs for the apprehension and prosecution of offenders. The entire cost of the coupons fraudulently obtained, on the other hand, is borne by the Federal government. Therefore, added emphasis on fraud results in added costs to the state, yet all funds recovered must be returned to the Federal government. Stolen or forged Food Stamp ID and ATP

cards

can

coupons

be used

where

no

at banks effort

and

retail

is made

to

stores

confirm

to obtain the

and

identity

of

"spend" the

bearer. The Food Stamp ID used in most states is not a photo ID and can, in certain cases, be used by a proxy to purchase coupons for a designated recipient. These characteristics make it relatively easy to counterfeit or to use if stolen. Federal guidelines for state action (FNS [FS] Instruction 736-1) make it extremely unlikely that states will elect to prosecute any but the most flagrant abusers of the Food Stamp program. Finally, several respondents to the Food Stamp survey indicated that communication is poor between state and local welfare officials regarding abuses of the Food Stamp program. Suggestions

Several

for

suggestions

Solutions

were

made

by survey

respondents

to

con-

sider the problem of false ID fraud. Establishment of a photo ID system was the most common suggestion. One respondent, however, in making this suggestion noted that this "would be one more

harassment

to Food

Stamp

Program

participants."'"

One

state

sug-

gested that others follow its practice of mailing Food Stamp ID and ATP documents in separate envelopes; this makes it more difficult for a thief to obtain both documents. One respondent

preferred the (apparently older) the former permits close control

FS-4 over

form to the ATP card "since currency of ID." The

Arkansas respondent suggested requiring at intake to the program. Finally, one

more than one form of ID respondent appealed to the

Federal

government

to

program

specification

workers

to perform

other

such

checking

"simplify

tasks,

as

to

free

ID!"

An overall view of the responses suggests the need for some uniform type of identification requirement to be used at application. Application frauds using counterfeit or imposter identities appear to be the most common types of known ID fraud. The Social Security card was mentioned most frequently as a document used in false ID fraud; until recently it has been very easy to obtain Social Security cards under assumed identities. It remains to be seen whether new regulations by the Social Security Administration will have a long-range effect on the false ID problem. For the present, acceptance of the Social Security card alone as an ID for the Food Stamp program should certainly be discouraged. More fundamentally, there is a need to restructure the balance of state and Federal responsibilities in the Food Stamp program to improve the efficiency of its administration and to discourage abuses of the program.

69

Social

Security

Sources

The Social Social Security

sible (HI),

of

Programs

Information

Security questionnaire was sent to appropriate Administration bureaus, including those respon-

for Supplemental Security Income (SSI), Health Insurance Disability Insurance (DI), and Retirement and Survivors

Insurance (RSI). of International

In addition, copies Operations (RSI) and

Laboratory in the Office information. It was the

"false

identification"

mentation

problem The

at

Normal

of Administration, a rich opinion of the Laboratory

is a very the

were sent to the Division the Documents Analysis

Social

small

part

Security

of the

source of Chief that

false

docu-

Administration.

Process

Social Security programs are unique among those considered by the Government Payments Task Force in that a large majority of the working population of the U.S. is registered for benefits under these programs. Registration or opening of a Social Security Account typically takes place upon an individual's first application for salary or wage paying work. Prior to 1974, little or no documentary evidence of identity was required to register for Social Security benefits. There is some evidence of multiple registrations under a variety of aliases, a procedure which can enable the collection of multiple benefits. The Social Security Administration instituted procedures in 1974 calling for presentation of documentary evidence of identity upon registration. Once

registered,

an

individual

ject to withholding of Social contributions are required of any

change

affecting

and acquisition Social Security

in

covered

employment

Security contributions; employers. Federal law

contributions

to

or loss of dependents, Administration.

the

program,

be reported

is

sub-

similar requires

such

as

promptly

that marriage

to

the

Application for benefits, as distinct from registration, normally occurs when an individual enters a status eligible for benefits. Eligible circumstances include retirement after age 62, permanent disability, blindness, and for survivors, the death of a

covered

wage

earner.

Documentary

evidence

of

eligibility

must

be presented with the application for benefits. However, no investigation of the claim is usually made unless there is some reason for suspicion. Referrals of possible fraud in Social Security

cases ID

generally

originate

from

voluntary

informants.

Required

Only the birth certificate and Social Security card were listed by all components as being accepted for initial determination for eligibility. The Supplemental Security Income Program appears to

70

-

accept more types of documents initially the Social Security Administration.

than

any

other

bureau

of

The types of documents shown as an acceptable means of identifying recipients when benefits are obtained, either when checks are cashed or services received, are varied. All four bureaus indicated that documents such as driver licenses, marriage certificates, credit cards, etc., are used. In fact, only two types of identification mentioned on the questionnaire that were not used by any bureau were the Welfare ID and the Food Stamp ID. From these statistics, it appears that the most common document used for identification purposes is the driver's license which is easily obtained, altered, and forged. Another in common use is the Social Security card which was never intended to be used for identification purposes. Social

The

most

Security

common

Program

response

mation not available."" investigated for fraud

to

Fraud

fraud

The survey in the four

impact

question

was

"infor-

yielded a total of only 56 cases fiscal years 1970-1974 that

involved the use of false identity. Of these, 17 cases were classified as altered ID, 5 as counterfeits, and 21 as imposter cases; classification was not made for the other 8 cases. No records of fraud based on false Insurance Bureau. In

cants would stated formed

response

for not

to

identity

Question

have

been

F, number

kept

of

by the

cases

Disability

in which

appli-

benefits were refused benefits because they could or provide identification, the Bureau of Health Insurance

that in their program, services in emergency situations even if

could conceivably an individual did

be pernot have

his health insurance identification card. They pointed out, though, that the physician or provider may not be able to collect from Medicare if it develops that the patient was not entitled to the services performed. All other respondents indicated that they were not aware of any cases. It was generally agreed among the respondents that it cannot be assumed that if identification is required, fraud has not taken place. In most cases, if a person decides to file a false application he would also have obtained false identification. In addition, it is not always possible to detect the fraudulent act unless a complete and extensive investigation is initiated when the claim is filed. In many cases, the fraudulent act is detected by reports from informers or through development of the initial claim, a subsequent claim, or a post adjudicative discrepancy. Relative to administrative costs and manpower resources for fraud investigation involving false identification, it appears that only a very small percentage of time is spent on the problem of false identification. In fact, 5 percent or less of all cases

71

examined for possible fraud by the Document Analysis Laboratory at the Social Security Administration involve false identification. These cases usually do not involve attempts at false identity. Rather, the individual has attempted to change certain facts about himself for personal benefit. For example, he may attempt to show that he is older than he actually is in order to qualify for retirement benefits. False

The most cation

as

ID

Techniques

common

reported

techniques

for

obtaining

fraudulent

identifi-

were:

1.

File several Forms SS-5 (Application for a Social Security Account Number) using completely different identifying information on each application (i.e., different name, parent's names, place of birth, birth date). When application is made on the various account numbers, a false birth certificate or affidavit supposedly signed by the parent is used3

2.

Find

3.

Applicant, who may be receiving wife's or widow's benefits, can file for retirement insurance using maiden name and falsely state that she had not previously filed for benefits;

4.

An applicant a person who

or

to use

steal

that

another the new

5.

An

person's

can obtain died at an

can

assume

legal wife,

Social

the birth early age

individual's

wage record and account number;

applicant

earner's

another

identity

Security

certificate of and then proceed

to build

subsequently

file

the

of

with

identity

the wage

up under

a wage

earner's

know-

ledge, using the marriage record pertaining to legal wife as proof of age on the basis of her allegation that this was the only proof of age available; and who

obtain is not

card;

the

6.

Contact a church of an individual certificate;

7.

Obtain fraudulent documents from outside the United States from both civil and religious sources, such as local civil registries and church records. It is sometimes possible to bribe the civil or church official to issue fraudulent documents.

%2

a baptismal certificate the requester of said

False There

was

ID

Suspect

general

Profile

agreement

among

all

respondents

as

to

the

profile of the typical suspect in false ID investigation: most are at least 65, can be either male or female, many are unemployed, with little known regarding their educational backgrounds. There are more cases of attempted use of false identification in metropolitan areas than rural or suburban areas, possibly because little or no identification is required in less populated areas since people tend to know each other better. Control

of

Abuse

It is a Federal offense subject to criminal penalties for an individual to furnish false information to the Social Security Administration in connection with the establishment and maintenance of Social Security earnings records, to use a Social Security number (SSN) with false information, to use a counterfeit SSN, or to use

someone

else's

SSN.

There are definite procedures to follow when a beneficiary fails to receive a check. Briefly, a beneficiary reports the nonreceipt to the SSA district office which in turn will forward the nonreceipt allegation to the Treasury Disbursing Center which has responsibility for issuing the payment. At this point, a request is made to place a stop payment in the Treasury system against the original check. If the original check is later presented for payment, the Treasury will make the determination as to the proper method of recovery. When a nonreceipt claim is received and the original check is paid by the Treasury and the check is found to bear an unauthorized endorsement, the Department of the Treasury will request directly the refund of these payments. Suggestions

for

Solutions

Several suggestions were made to counter the problem of false ID fraud. The use of the Social Security numbers as a universal identifier was the most common suggestion. However, this has already been considered in terms of the danger of invasion of privacy, the cost to the Federal Government, the time required to institute the system and the effectiveness of such a system for alleviating the

problem.

The

use

of the number

for

such

a system

seems

unlikely

at this time. Other respondents suggested that more specific care should be taken in identifying the claimant. They further suggested that all documentary proofs should be examined carefully. If any document appears altered or not authentic, a Document Specialist should be requested to verify the document. When fraud is suspected, development of the fraud aspects should be started quickly. Another suggestion was the universal use of one or more corroborating documents, rather than the use of only one. Along these lines, an applicant for a Social Security number must show convincing evidence of Preferably, the evidence will show his age or date of identity.

73

birth, his address, and his signature, and be at least several months old. Still another common suggestion was that all individuals applying for Social Security numbers could be fingerprinted when applying for benefits in order to establish their identity. This too would probably be unfeasible and not readily accepted by the public.

74

-

SECTION PRELIMINARY

III

RECOMMENDATIONS

General

The Government Payments Task Force presents in this section a list of preliminary recommendations to reduce the incidence of false ID fraud in the programs studied. These recommendations were developed from survey responses, by individual Task Force members after a review of survey findings, and by other individuals with whom Task Force members had contact. It should be emphasized that these recommendations represent individual viewpoints and do not neces-— sarily reflect the opinions of all Task Force members. The recom-— mendations have also not yet been screened, compared, and examined with respect to such criteria as cost effectiveness, practicality, and likelihood of public acceptance. Since detailed management of cost-shared welfare programs, including AFDC, Medicaid, and Food Stamps, is relegated to individual states, while Social Security is a strictly Federal program, recommendations have been divided into those that apply to state and Federal governments. Recommendations

1.

to

Provide be used

(ice.,

State

Government

a tamper-proof identification card which may for all assistance programs in the state,

AFDC.

Food

Stamps,

SSL,

Hit, Di5

is suggested that this ID card, the following information:

a.

Name

and

b.

Social

c.

Case

address

Security

or

other

of

as

recipient

Number

state

of

and RST).

a minimum,

(embossed) ;

recipient

number

Lt

contain

(embossed);

(embossed);

Note: This number should correspond with a case number and/or Social Security Number included on the assistance check, Food Stamps, etc. d.

Color cover

photograph of recipient large at least one-half of one side

e.

Signature

f.

Name

and

the

card;

g.

The

right

h.

Issuance

of the

and

to card;

recipient;

telephone

and

enough of the

number

left

thumb

expiration

75

of the

print date

of

office

of

the

the

issuing

recipient;

card;

i.

Any other data of the program

necessary for which

j.

A postage free return mailing statement and a warning, in bold type, of the consequences of misuse of the card. The card should conform to standard credit card size so that it can be used in credit card embossing machines.

Consider requiring merchants assistance checks to impress from the ID card onto similar to the use of

to satisfy requirements the card is issued; and

and the

others who cash public embossed information

the check prior credit cards);

to

cashing

(i.e.,

Consider sending or transmitting electronically public assistance checks to conveniently located banks where recipients would be required to personally claim and

sign for their benefits. This would make it practically impossible for a recipient to obtain a replacement check by falsely claiming that he did not receive the original. This would also substantially reduce the problem of assistance checks being stolen from the mails. This procedure would probably be more practical in metropolitan areas, which the Task Force surveys have shown

to

be high-risk

areas

for

false

ID welfare

fraud;

Recipients should be required to report stolen welfare checks directly to the local police and to sign an affidavit under penalty of perjury before being issued a replacement check; Identification should be required (ID card as described above) for cashing Food Stamps; merchants should not be paid for fraudulently used Food Stamps; Penalties Food

for

Stamps

Uniform claimed

knowingly

should

accepting

be made

standards for dependents at

fraudulently

cashed

severe;

identification of recipients and intake should be adopted by all

states;

The

security

tificates as

to

and

resist

of "breeder" driver's

documents

licenses

alteration,

such as birth

should

counterfeiting,

and

use

imposters. Steps such as mandatory matching of and death certificates and carefully controlled issuance should be immediately implemented.

76

cer-

be upgraded

so

by

birth

Recommendations

1.

the

Federal

Government

The Federal government should develop comprehensive standards for recipient identification for cost-shared assistance programs, and provide financial assistance to

2.

to

The

the

states

Food

Stamp

in

implementing

Program

should

these

be

standards;

restructured

by

legislation requiring state sharing of stamp cost and providing more Federal Assistance in costs of prosecuting Food Stamp fraud. These measures would

provide control

the states with incentives of this program;

for

improved

3.

Food Stamps should be redesigned to resist use of stolen coupons. One means of doing this would be to provide two signature blocks for recipients. One block would be signed upon the receipt of the stamps and the other at the time of use (i.e., similar to the use of Traveler's Checks);

4.

Positive identification of required prior to approval Social Security benefits.

V7

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