[Senate Hearing 106-574]
[From the U.S. Government Publishing Office]
S. Hrg. 106-574
PHONY IDS AND CREDENTIALS VIA THE INTERNET: AN EMERGING PROBLEM
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HEARING
before the
PERMANENT
SUBCOMMITTEE ON INVESTIGATIONS
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MAY 19, 2000
__________
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
64-986 cc WASHINGTON : 2000
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Darla D. Cassell, Administrative Clerk
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PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
SUSAN M. COLLINS, Maine, Chairman
WILLIAM V. ROTH, Jr., Delaware CARL LEVIN, Michigan
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico MAX CLELAND, Georgia
THAD COCHRAN, Mississippi JOHN EDWARDS, North Carolina
ARLEN SPECTER, Pennsylvania
K. Lee Blalack, II, Chief Counsel and Staff Director
Linda J. Gustitus, Minority Chief Counsel and Staff Director
Mary D. Robertson, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 1
Senator Levin................................................ 4
Senator Akaka................................................ 5
WITNESSES
Friday, May 19, 2000
K. Lee Blalack, II, Chief Counsel and Staff Director, Permanent
Subcommittee on Investigations, Washington, DC................. 8
David C. Myers, Special Agent, Identification Fraud Coordinator,
Division of Alcoholic Beverages and Tobacco, Department of
Business and Professional Regulation, State of Florida,
Jacksonville, Florida.......................................... 13
Thomas W. Seitz, user of counterfeit identification documents
obtained from the Internet, convicted felon currently awaiting
sentencing in the U.S. District Court for the Middle District
of Florida..................................................... 15
Brian L. Stafford, Director, U.S. Secret Service, Washington, DC. 24
Alphabetical List of Witnesses
Blalack, K. Lee, II:
Testimony.................................................... 8
Myers, David C.:
Testimony.................................................... 13
Prepared statement........................................... 31
Seitz, Thomas W.:
Testimony.................................................... 15
Prepared statement........................................... 36
Stafford, Brian L.:
Testimony.................................................... 24
Prepared statement........................................... 38
Exhibit List
* May Be Found In The Files Of The Subcommittee
1. GIdentification and credential montage....................... 47
2. GConnecticut Driver's Licenses--one authentic, one fake...... 48
3. Gidsolution.com Web site..................................... 49
4. GTemplate for State of Maine driver's license................ 51
5. GK. Lee Blalack's fake driver's license prepared with
template from State of Maine driver's license identified above
in Exhibit 4................................................... 52
6. GTim Catron's fakeidzone.com home page....................... 53
7a. GAuthentic Victory Memorial Hospital birth certificate...... 54
7b. GTim Beachum's Victory Memorial Hospital birth certificate.. 55
8a. GTim Beachum's Kent State University Certificate............ 56
8b. GTim Beachum's Ohio Resident Activity Coordinator Training
Project Certificate of Attendance.............................. 57
9. GFake Oklahoma driver's license.............................. 58
10. GMexican 311 E-mail.......................................... 60
11. GPowerpoint presentation of Special Agent David C. Myers,
Identification Fraud Program Coordinator, Division of Alcoholic
Beverages and Tobacco, Department of Business and Professional
Regulation, State of Florida................................... 61
12. GThomas Seitz documents...................................... 89
13. GPage from PromasterCards Web site........................... 90
14. GMay 19 and 30, 2000 Internet postings of PromasterCards..... 91
15. GSEALED EXHIBIT: Permanent Subcommittee on Investigations
Deposition of Tim Beachum, April 5, 2000....................... *
16. GSEALED EXHIBIT: Permanent Subcommittee on Investigations
Deposition of Brett Skye Carreras, April 13, 2000.............. *
17. GQuestionnaire sent by Permanent Subcommittee on
Investigations to various Web site operators and replies
received from Tim Beachum, Tim Catron, Josh Dansereau, and
Jeremy Martinez................................................ 93
18. GAffidavit of Tim Catron..................................... 113
19. GAffidavit of Josh Dansereau................................. 115
20. GStatement for the Record of the Federal Bureau of
Investigation.................................................. 117
21. GStatement for the Record of the Social Security
Administration................................................. 120
22. GE-mail: ``Authentic Confidential New ID's--Driver's
License!!!''................................................... *
23. Gcoolcards.com: ``CoolCards--Postcards from the Net''........ *
24. Gtheidshop.com: Order page terms and conditions.............. *
25. GMessage Board: Risingson ``advice,'' 10/13/99............... *
26. GWill & Ed E-mail correspondence re: technology.............. *
27. GMessage Board, Webhost posts, 10/13/99, re: use of words
``novelty'' and ``educational''................................ *
28. Gexcite Web search results for ``fake id,'' 4/12/00.......... *
29. Gcarreras.net: ``Premium Files''............................. *
30. Gfakeidone.com: Home Page.................................... *
31. Gtheidshop.com: ``PVC Plastic Id's''......................... *
32a. Gprestigious-images.com: `` `Official' College Diploma
Template''..................................................... *
32b. GFake ID Zone Kits.......................................... *
33. Galt.2600.fake-id message board, Webdiaster post, 3/22/00,
re: Ohio templates............................................. *
PHONY IDS AND CREDENTIALS VIA THE INTERNET: AN EMERGING PROBLEM
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FRIDAY, MAY 19, 2000
U.S. Senate,
Permanent Subcommittee on Investigations,
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:33 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Susan
Collins, Chairman of the Subcommittee, presiding.
Present: Senators Collins, Levin, and Akaka.
Staff Present: K. Lee Blalack, II, Chief Counsel and Staff
Director; Mary D. Robertson, Chief Clerk; Kirk E. Walder,
Investigator; Eileen M. Fisher, Investigator; Brian C. Jones,
Investigator; Adam Thomas, Intern; Barbara Cohoon, Intern;
Linda Gustitus, Minority Chief Counsel; Michael Handley,
Congressional Fellow; Felicia Knight (Senator Collins); Blake
Thompson and Brad Tennison (Senator Cochran); Karin Rodgers
(Senator Specter); Nanci Langley (Senator Akaka); Marianne
Upton, Jessica Porvas, and Elaine Paulionis (Senator Durbin).
OPENING STATEMENT OF SENATOR COLLINS
Senator Collins. The Subcommittee will come to order.
Today, the Permanent Subcommittee on Investigations will
explore a new and disturbing trend, the use of the Internet to
manufacture and market counterfeit identification documents and
credentials. This hearing is the culmination of a 5-month
investigation by the Subcommittee that examined more than 60
Web sites which either distributed fake identification
documents or the computer templates that allow customers to
manufacture authentic-looking IDs in the seclusion of their own
homes.
The high quality of the counterfeit identification
documents that can be obtained through the Internet is truly
astounding. As you will see from Exhibit 1,\1\ which is on the
monitor, with very little difficulty, my staff was able to use
Internet materials to manufacture convincing IDs that would
allow me to pass as a member of the U.S. Army Reserves--I note
that my staff made me an E-4, not a general---- [Laughter.]
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\1\ See Exhibit 1 which appears in the Appendix on page 47.
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Senator Collins [continuing]. As a reporter, as a student
at Boston University, or as a licensed driver in virtually any
State--Florida, Michigan, Wyoming, to name just a few of the
identities that I could easily assume.
During the past decade, government agencies have added
numerous security features to identification documents, such as
holograms and bar codes, to prevent such counterfeiting. Yet,
the Internet sites that sell fake IDs appear to have kept pace
by duplicating many of these security features.
Displayed on the monitor is a comparison between an
authentic driver's license provided by the State of Connecticut
on the top and a fake Connecticut license that was created
using a template obtained from the Internet.\1\ As you will
see, just like the real Connecticut license, the fake with my
picture on it includes a signature written over the picture and
an adjacent shadow picture of the license holder. The State of
Connecticut added both of these sophisticated security features
in order to reduce counterfeiting.
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\1\ See Exhibit 2 which appears in the Appendix on page 48.
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Unfortunately, some Web sites sell fake IDs complete with
State seals, holograms, and bar codes to replicate a license
virtually indistinguishable from the real thing. Thus,
technology now allows Internet site operators to copy authentic
identification documents with an extraordinary level of
sophistication and then mass produce those fraudulent documents
for their customers.
These counterfeit identification documents are relatively
easy to manufacture. With only a modest understanding of the
Internet and $50 worth of supplies purchased from an arts and
crafts store, one can design authentic-looking identification
documents within a few hours or even minutes.
The Web sites investigated by the Subcommittee offered a
vast and varied product line, ranging from driver's licenses
for virtually any State to military identification cards to
Federal agency credentials, including those of the FBI and the
CIA. Other sites offered to produce Social Security cards,
birth certificates, diplomas, and press credentials.
Because this is a relatively new phenomenon, there are no
good data on the size of this new Internet industry or the
growth that it has experienced. The Subcommittee's
investigation, however, found that some Web site operators have
evidently made hundreds of thousands of dollars through the
sale of phony identification documents and other bogus
credentials. One Web site operator told a State law enforcement
official that he sold approximately 1,000 fake IDs every month
and generated about $600,000 in annual sales.
Many of these Web sites are by no means subtle in their
advertising. As you can see from the posterboard,\2\ a site
called idsolution.com informs its customers that it is ``the
leading source for all your identification needs.'' It urges
customers to click on the link for a new identity kit, which is
described as a complete package that allows you to really
become someone else.
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\2\ See Exhibit 3 which appears in the Appendix on page 49.
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When you click on the new identity kit, you are directed to
another page of the Web site that offers five fraudulent
identification documents for $125. The new identity kit
includes an American or Canadian birth certificate, a FedEx
employee identification card bearing the customer's photograph,
complete with holograms and even a magnetic swipe, three bills
from AT&T, TCI Cable, and a utility, all of which includes the
name and address supplied by the customer. The site even offers
a guarantee that the authenticity of these documents will be
unmistakable from their original counterparts.
Subcommittee investigators attempted to contact
idsolutions.com in late January, but it did not respond to our
request for information. idsolutions.com ceased to operate
shortly thereafter and we believe that the owners of this Web
site have now gone underground to evade our investigation.
This highlights one of the principal challenges presented
by these Web sites. Unlike a business with a physical address,
a Web site operator can simply shut down the site once they are
discovered, disappear, and then return to the Internet sometime
later under a completely different name, making the job of law
enforcement officials all that much more difficult.
For the criminal who has just stolen someone's identity,
these sites offer an attractive service. For a relatively low
price, the crook can get a State's driver's license using the
victim's name and date of birth but showing the criminal's
photograph, or the thief can obtain a fraudulent birth
certificate using the stolen identity, then fabricate some
utility bills purporting to show his or her address, and then
use these documents to trick the Department of Motor Vehicles
into issuing a real driver's license.
Subcommittee staff examined several sites that sell
templates which a criminal could use by downloading it onto his
computer and using it to make fake IDs again and again. Each
time, the criminal appropriates a new identity. Our
investigation found that driver's licenses are the most
commonly fabricated identification document. These fake
driver's licenses appear to serve as gateway documents that
allow criminals access to other bona fide identification
materials.
Identity theft is a growing problem that these Internet
sites encourage. Fake IDs, however, facilitate a broader array
of criminal conduct. The Subcommittee's investigation found
that some Internet sites were used to obtain counterfeit
identification documents for the purpose of committing other
crimes, ranging from the very serious offense such as bank
fraud to the more prevalent problem of underage teenagers
buying alcohol or gaining access to bars. And indeed, as the
Director of the Secret Service will tell us later, a false ID
is almost always an essential element in financial crimes.
The Internet is a revolutionary tool of commerce and
communication that benefits us all, but many of the Internet's
greatest attributes also further its use for criminal purposes.
While the manufacture of false IDs by criminals is nothing new,
the Internet allows those specializing in the sale of
counterfeit identification to reach a far broader market of
potential buyers than they ever could by standing on a street
corner in the shady side of town. They can sell their products
with virtual anonymity through the use of E-mail and free Web
hosting services and by providing false information when
registering their domain names.
Similarly, the Internet allows criminals to obtain fake IDs
from the seclusion of their own homes, substantially
diminishing the risk of apprehension that attends purchasing
counterfeit documents on the street.
At today's hearing, the Subcommittee hopes to shed much
needed light on the growing and alarming use of the Internet to
manufacture and distribute false identification documents. We
will hear from both State and Federal law enforcement
officials, including the director of the U.S. Secret Service,
which is one of the key law enforcement agencies responsible
for enforcing Federal laws prohibiting the distribution of
counterfeit IDs.
These witnesses will be joined by a convicted felon who
used the Internet to obtain a fake birth certificate and the
names and Social Security numbers of several individuals, I
might add, from public government Web sites, and then produced
documents to commit identity theft and bank fraud. I look
forward to hearing from all of our witnesses today.
I would now like to call on the distinguished Ranking
Minority Member, Senator Levin, for any comments he might have.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Madam Chairman, first, let me congratulate
you for taking the initiative to bring the attention of the
Subcommittee, the Congress, and the country to a growing
problem, and that is the use of the Internet to obtain
documents which can be used for improper purposes very, very
easily and very widely.
Although most of us recognize the extraordinary, positive
capabilities and potential of the Internet, we have also become
increasingly aware of and concerned about the use of the
Internet for unlawful purposes. The worldwide appeal of and the
access to the Internet carries with it both tremendous benefits
and real risks. While it enables us to bring useful, beneficial
information to every part of the globe, it also allows anyone
on any continent to bring offers of illegal activity directly
into a person's home. Wherever there is a computer connected to
the Internet, there is the possibility of and the opportunity
for misconduct. We are just beginning to observe and understand
all of the implications of global access, and the proliferation
of sites that promote fake identification is one such example.
The range and accessibility of various false ID products
using the Internet is extensive. Using generally available
search engines, my staff got literally thousands of hits by
searching the Internet under the term ``fake identification.''
While recognizing many of these hits represent the same actual
Web site, there are conservatively, as the Chairman said,
dozens of readily accessible sites which are active in
providing false identification over the Internet.
Documents from fake driver's licenses, Social Security
cards, and birth certificates to false passports and law
enforcement credentials, including Secret Service agent IDs,
are all readily available by a click of the mouse. These false
IDs can be used for benign purposes, such as playing a trick on
a friend or a family member, but they can also be used and are
more often now being used to carry out improper or criminal
activities--to obtain fraudulent loans, to evade taxes, to
establish a new identity, to steal another individual's
identity, to defraud Federal and State Governments, to
misrepresent one's residence or place of birth or age for any
variety of purposes.
The Secret Service, the Social Security Administration, and
other Federal agencies have an interest in addressing these
activities. My own home State of Michigan has recently
established a High Tech Crime Unit in the Attorney General's
office in order to focus on this type of activity.
The sale and promotion of false identification is more than
a few young people obtaining false IDs for the purpose of
underage drinking. Selling false identification over the
Internet is a serious matter and a growing problem. With
continuing technological growth, it is going to grow further
and faster unless the tools for enforcement and deterrence are
brought to bear and unless any loopholes in the law are closed.
This hearing will allow us to understand better the
problems so that we might begin to move toward some meaningful
solutions, and again, I want to commend our Chairman for
calling this hearing, for her initiative in investigating this
matter, and I want to thank the PSI staff for the hard work in
preparing for this hearing.
Senator Collins. Thank you, Senator Levin.
I am pleased to welcome Senator Akaka, who has joined us,
for any opening remarks that he might have.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Madam Chair and Ranking
Minority Member, Senator Levin, for calling attention to
another significant Internet-related privacy concern. The
manufacture and use of false identification is a growing and
vastly underpublicized problem.
The number of commercial Web sites advertising the sale of
templates for making fake IDs and official documents is really
striking. It is little wonder that incidents of identity theft
and associated fraud have skyrocketed, in recent years. With
the proliferation of commercial online information brokers,
virtually anyone with a computer and modem now has the ability
to search and quickly retrieve a wide range of personal
information about others. The ease of access to this vast store
of information facilitates ID theft and fraud at a fairly
sophisticated level, with high expectation of success and
little fear of detection. It is surprising that there are
currently no laws regulating the publication of personal
information in online databases.
Identification templates sold indiscriminately by Internet
vendors includes driver's licenses for all 50 States, birth
certificates, Social Security cards, military IDs, special
agent and law enforcement IDs, professional licenses, college
diplomas, and many others. A permit to carry a concealed weapon
can even be obtained in this manner.
It is important to note that the possession and/or use of
false identification for purposes of misrepresentation is a
Federal crime and a crime in virtually every State. Yet,
paradoxically, the sale and manufacture of IDs for the
ostensible purpose of novelty use is significantly
unrestricted.
I am proud to say that my State of Hawaii has been
proactive in this area through enactment of tough laws. In
Hawaii, the use of a fictitious name or having in one's
possession a reproduction, imitation, or facsimile of a
driver's license is a crime punishable by a $1,000 fine and 1
year imprisonment.
Although I believe that statutory restrictions on
information sharing should not be more restrictive than
absolutely necessary to safeguard public and private interests,
the unwarranted invasion of personal privacy posed by
unregulated and indiscriminate information sharing is clearly
unacceptable. I support ongoing efforts to create a
comprehensive Federal policy guaranteeing individuals a right
to control the collection and distribution of their personal
information.
Is the practice of marketing and selling fake IDs a
legitimate business practice consistent with constitutional
protections that serve a greater societal good or a highly
questionable practice that clearly facilitates fraud and other
illegal practices? Well, I look forward to hearing the
testimony of today's witnesses to help answer these questions.
Madam Chairman, I also have a longer statement that I would
like to submit for the record, and thank you so much for this
opportunity.
Senator Collins. Thank you, Senator Akaka. Your statement
will be included in the hearing record.
[The prepared statement of Senator Akaka follows:]
PREPARED STATEMENT OF SENATOR DANIEL K. AKAKA
Thank you Chairman Collins and Ranking Minority Member Levin, for
calling attention to yet another significant Internet related privacy
concern. The manufacture and use of false identification is a growing
and vastly under-publicized problem. The availability of high quality
fake IDs via. the Internet is a small but important component of the
much larger problem Congress has in protecting personal privacy,
striking a proper balance of maintaining an open public record system,
and ensuring freedom of speech and open commerce. It is undeniable that
the computerization of publicly available data in recent years has
heightened the importance and difficulty of balancing the divergent
needs of access and privacy. Our private lives are now exposed in ways
we never could have anticipated. I support the President's recently
announced initiative to formulate comprehensive legislation to enhance
financial and medical privacy, providing consumers the right of
affirmative consent before sensitive information about them can be
shared with others. I am pleased to note that Hawaii is in the
forefront of enacting enhanced privacy legislation, and is one of the
few states in the nation that now requires consumer consent prior to
the release or exchange of their private insurance information.
The issue of privacy has not escaped public attention. Last fall
the Wall Street Journal surveyed its subscribers about the most serious
issue facing America in the twenty-first century. The top concerns were
not the economy, education, or illegal drugs, it was loss of personal
privacy. In another poll, the American Association of Retired Persons
(AARP) found an overwhelming majority (93 percent) believes that any
personal information they give during a business transaction should
remain the property of the consumer and not be shared with other
businesses without the permission of the consumer.
The Internet has had a profound impact--both good and bad--on our
quality of life. It has literally revolutionized the world, stimulated
our incredibly robust economy in heretofore unimaginable ways,
increased efficiency, lowered costs, added convenience, and will no
doubt serve as a primary stimulus for future scientific and economic
breakthroughs. Unfortunately, the dark side of the Internet serves as a
counterbalance, to remind us that evolving technology can also serve to
our detriment. The information industry has grown dramatically every
year, and shows no sign of slowing down. The Internet has the capacity
to be the most effective data-collector known to man. The privacy
problem is therefore likely to become more acute as more and more
sensitive insurance and medical information is collected and exchanged
over the Net. Although I believe statutory restrictions on information
sharing should not be more restrictive than absolutely necessary to
safeguard public and private interests, the unwarranted invasion of
personal privacy posed by unregulated and indiscriminate information
sharing is clearly unacceptable. I support ongoing efforts to create a
comprehensive federal policy guaranteeing individuals the right to
control the collection and distribution of their personal information.
The number of commercial Web sites advertising the sale of
templates for making fake or IDs and official documents is striking--it
is little wonder the incidence of identity theft and associated fraud
has skyrocketed. In recent years, with the proliferation of commercial
``on-line'' information brokers, virtually anyone with a computer and
modem now has the ability to search and quickly retrieve a wide range
of personal information about others, including: names; addresses;
social security numbers; telephone numbers (published and unpublished);
dates of birth; relative names and addresses; neighbor names and
addresses; criminal records; civil records; tax liens; real estate
holdings; bank account numbers and balances; stock holdings; credit
card account numbers and individual credit card transactions; long
distance phone records; cellular phone records; pager records; 800
number records; motor vehicle records; driving records; aircraft and
water craft ownership; credit histories; medical histories; where you
shop and what you buy. Indeed, the profile of an individual which can
be compiled using information stored in databases can be so complete as
to constitute a near complete invasion of privacy. The ease of access
to this vast store of information facilitates ID theft and fraud, at a
fairly sophisticated level, with a high expectation of success and
little fear of detection. It is surprising that there are currently no
laws regulating the publication of personal information in online
databases
Identification templates sold indiscriminately by Internet vendors
include drivers' licenses for all 50 states, birth certificates, social
security cards, military IDs, Special Agent and Law enforcement IDs,
professional licenses, permits to carry concealed weapons, college
diplomas and many others. It is important to note that the possession
and/or use of false identification for purposes of misrepresentation
are a crime in virtually all states. In Hawaii for example, displaying,
lending, use of a fictitious name, or possessing a reproduction,
imitation, or facsimile of a driver's license is a crime punishable by
a $1000.00 fine and one year imprisonment. Federal statutes also impose
criminal penalties for the production and use of false identification
in some instances. Yet paradoxically, the sale and manufacture of IDs
for the ostensible purpose of ``novelty use,'' is significantly
unrestricted.
Although Internet vendors post disclaimers that the fake IDs they
sell are for recreational purposes only, these disclaimers serve as
little more than thinly veiled attempts to indemnify vendors from legal
responsibility for the most likely use of such items, that is, to
facilitate underage purchase of tobacco products and alcohol, and to
provide the means and instrumentality of identity theft and fraud. A
relative novice with ill intent can easily acquire realistic ID
templates, obtain publically available information about anyone he
chooses, and follow specific Web based ``how to'' instructions for
manufacturing fake IDs in another persons name.
Congress and the administration have aggressively petitioned
industry to change policies and practices found to be overly intrusive
or harmful to consumers, and have enacted laws as necessary to close
loop holes. It is important to note that the Federal Trade Commission
(FTC) and Direct Marketing Association (DMA) has worked together to
provide comprehensive on-line guidance and information regarding a wide
range of consumer privacy concerns including identity theft.
Nevertheless, the rapid evolution of technology and increased
availability of public information often outpaces efforts by industry
or government to predict problems or to react quickly and appropriately
once problems surface. Public awareness and vigilance are key to
ensuring individual privacy needs are met. We need to ask ourselves if
the practice of marketing and selling fake IDs is a legitimate business
practice, consistent with constitutional protections that serves a
greater societal good, or a highly questionable practice that clearly
facilitates fraud and other illegal practices. I look forward to
hearing the testimony of today's witnesses to help answer these
questions.
Senator Collins. We will also include in the hearing record
written statements that we have received from the FBI and the
Social Security Administration. Without objection, these
statements will be included in the written hearing record.\1\
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\1\ See Exhibits 20 and 21 which appear in the Appendix on pages
117 and 120.
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Our first witness this morning is Lee Blalack, the
Subcommittee's Chief Counsel and Staff Director. His testimony
will provide an overview of the Subcommittee's extensive
investigation of the Internet's role in the manufacture and
marketing of counterfeit documents. I would note that the
Subcommittee staff has worked very hard on this and I look
forward to hearing Mr. Blalack's presentation.
Our second witness will be Special Agent David C. Myers,
who is the Special Agent in Charge of the Identification Fraud
Unit for the Florida Division of Alcoholic Beverages and
Tobacco. Special Agent Myers is a 20-year law enforcement
veteran who has also served as a felony investigator for the
Florida Highway Patrol and as a city police officer. A
certified expert in electronic interception, Special Agent
Myers has been involved in hundreds of felony investigations of
identification counterfeiting, including Internet
identification sales and identity theft.
Our third witness on this panel this morning is Thomas
Seitz. Mr. Seitz recently pleaded guilty to bank fraud and is
awaiting sentencing in the U.S. District Court for the Middle
District of Florida. Mr. Seitz was apprehended by law
enforcement officials in New Jersey after he used false
identification documents that he acquired on the Internet to
illegally obtain checks for approximately $60,000 in connection
with several fraudulent car loans.
Pursuant to Rule 6, all witnesses who testify before the
Subcommittee are required to be sworn in, and at this time, I
would ask that the witnesses please stand and raise their right
hands.
Do you swear that the testimony you are about to give to
the Subcommittee will be the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. Blalack. I do.
Mr. Myers. I do.
Mr. Seitz. I do.
Senator Collins. We will be using a timing system today.
Please be aware that approximately 1 minute before the red
light comes on, you will see the lights change from green to
orange, which will give you an opportunity to conclude your
remarks. We are not going to be that strict on time today, but
if you could try to keep within the allotted time, that would
be helpful. Your written testimony will be included in the
hearing record in its entirety.
Mr. Blalack, I will ask you to proceed.
TESTIMONY OF K. LEE BLALACK, II, CHIEF COUNSEL AND STAFF
DIRECTOR, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, WASHINGTON,
DC
Mr. Blalack. Thank you, Chairman Collins, Senator Levin,
Senator Akaka, and members of the Subcommittee. Last November,
Chairman Collins instructed the Subcommittee staff to examine
the availability of counterfeit identification documents and
credentials on the Internet and the criminal uses to which such
phony documents can be put. Over the last 5 months,
Subcommittee staff have devoted hundreds of hours to surfing
the Internet as part of an effort to understand this little
known but growing cadre of Web sites that offer fake
identification materials. In furtherance of the investigation,
the Subcommittee issued 11 subpoenas for documents and
depositions and interviewed over 40 witnesses. My testimony
today will provide a brief summary of that investigation and
its findings.
The Subcommittee staff began this inquiry by using Internet
search engines to develop a list of Web sites that offer fake
identification documents. After reviewing over 60 Web sites, we
focused our investigative efforts on 15 sites that purported to
sell fraudulent identification documents or the means for
customers to create those documents themselves.
The Subcommittee staff then commenced an undercover
operation in which we ordered--using the fictitious name
``Keith Wilson''--products offered by several of these Web
sites. Through these undercover purchases, the Subcommittee
acquired several high-quality false identification products,
including a counterfeit driver's license for the State of
Oklahoma, templates that could be used to produce fake driver's
licenses from numerous States, authentic-looking birth
certificates, and documents that could be used to fabricate
credentials for employment.
Based upon this undercover operation and information
obtained from the Web sites of these companies, the
Subcommittee staff narrowed its focus to three major operators
of Web sites that manufacture and/or market phony IDs. The
first site is fakeid.net, which is operated by Brett Carreras,
a 21-year-old student at Loyola University in Baltimore,
Maryland. Mr. Carreras started his site on July 28, 1998. His
site offers top-quality templates or computer files that allow
customers to manufacture their own fake identification
documents.
For instance, this is a file from Mr. Carreras's site that
depicts a template for a previous version of a driver's license
from the State of Maine.\1\ We found that someone with a
computer can use this template to manufacture a counterfeit
license that is of very high quality. Indeed, at my request,
Subcommittee staff used Mr. Carreras's template to create this
fake Maine driver's license bearing my picture and did so in
only a few minutes.\2\
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\1\ See Exhibit 4 which appears in the Appendix on page 51.
\2\ See Exhibit 5 which appears in the Appendix on page 52.
---------------------------------------------------------------------------
In return for computer access to these templates, Mr.
Carreras charged his customers a monthly fee of $14.95. Billing
records obtained by the Subcommittee indicate that in the 2
months between mid-October 1999 and mid-December 1999, Mr.
Carreras received 621 orders and generated over $8,000 in sales
revenue.
Earlier this year, Mr. Carreras announced that he intended
to open two more Web sites called illegalimmigrant.com and
fakeid.com. Mr. Carreras advertised illegalimmigrant.com as a
site that would specialize in ``identity documents, such as
passports, Social Security cards, green cards, SSN lists,
generators . . . resident alien cards, birth certificates, . .
. and many more.''
The Subcommittee staff was unable to obtain additional
information about Mr. Carreras and his Web sites because he
declined to respond to the Subcommittee's interrogatories after
invoking his Fifth Amendment right against self-incrimination.
Mr. Carreras also refused to answer any substantive questions
at a Subcommittee deposition on the grounds of his Fifth
Amendment rights.
The second site is fakeidzone.com, which began operations
on October 2, 1998. It is operated by Tim Catron, who resides
in Lawrence, Kansas. Mr. Catron sells a computer disk that
includes templates for various types of fraudulent
identification documents. Mr. Catron charges from $19.95 to
$39.95 for the disk. Billing records obtained by the
Subcommittee indicate that over a 2-month period in late 1999,
Mr. Catron received 652 orders and generated revenue of over
$12,000.
As this page from Mr. Catron's site indicates,\1\ the disk
contains a fake ID kit that includes ``college transcripts you
customize, college diplomas, new birth certificates, green
cards, Social Security cards, updated driver's licenses, plus
more.'' The site adds that, ``We provide you with templates and
step-by-step instructions on what you need to create fake IDs
so real you could fool your own mother.''
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\1\ See Exhibit 6 which appears in the Appendix on page 53.
---------------------------------------------------------------------------
As with Mr. Carreras, Mr. Catron refused to give deposition
testimony to the Subcommittee after invoking his Fifth
Amendment right against self-incrimination.
The third site is bestfakeids.com, which is operated by Tim
Beachum, a resident of Virginia Beach, Virginia. According to
the deposition testimony of Mr. Beachum, he purchased the
materials for his site from Mr. Catron and began operations on
May 25, 1999. Mr. Beachum charges $39.97 for essentially the
same fake ID kit that is sold by Mr. Catron. Mr. Beachum
estimates that in the 1 year that his site has been
operational, he has sold over 1,100 kits and earned almost
$28,000 from the site.
Not only does Mr. Beachum's site offer driver's licenses,
but he sells a birth certificate from an actual hospital in
Waukegan, Illinois. During his deposition, Mr. Beachum claimed
that he modified the birth certificate so that it would be
distinguishable from the real certificate issued by the
hospital. Subcommittee staff contacted Victory Memorial
Hospital in Waukegan and obtained a copy of a birth certificate
that it issued prior to 1990. As these two exhibits show,\2\
the phony birth certificate sold by Mr. Beachum, which is on
the left, is virtually identical to the authentic birth
certificate that the hospital formerly used on the right. Mr.
Beachum also sold fake press passes that he promoted with
fictitious testimonials from individuals who had purportedly
used the credentials to gain access to restricted events, such
as concerts.
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\2\ See Exhibits 7a. and 7b. which appear in the Appendix on pages
54 and 55.
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The Internet offers many exciting opportunities for
commerce but, as our investigation has shown, it can also offer
inventive criminals more effective tools to engage in illegal
conduct. After reviewing the activities and products of these
Web sites, we believe that several general findings can be
made.
First, many Internet sites offer a wide variety of phony
identification documents and some of these sites offer
extremely high-quality counterfeits that include security
features such as holograms designed to make the documents
appear authentic. In fact, most of these sites market their
products by touting the ability of the fraudulent IDs to pass
as authentic.
Second, this marketing strategy is inconsistent with the
disclaimers posted on some Web sites which claim that the phony
IDs are for ``novelty'' purposes only. For instance, Mr.
Beachum's site offers these two Activity Coordinator
Certificates, which were supposedly issued by Kent State
University on the left and Ohio Health Care Association on the
right.\1\ At his Subcommittee deposition, Mr. Beachum testified
that he never intended for his customers to actually use these
certificates to get a job. Indeed, his site includes a
disclaimer that states, ``All information on this Web site is
for entertainment and educational purposes only.''
---------------------------------------------------------------------------
\1\ See Exhibits 8a. and 8b. which appear in the Appendix on pages
56 and 57.
---------------------------------------------------------------------------
However, Mr. Beachum's marketing shows that he expects and
even encourages his customers to pass off these phony documents
as legitimate credentials. His Web site states as follows:
``Receive access to authentic downloadable certification
certificates to get you a job as an Activity Coordinator. Why
should you pay $1,000 for a couple of certificates just to
learn how to plan activities for individuals?''
And, just in case the customer is not sure how to use these
fraudulent documents, Mr. Beachum gives them some helpful
hints: ``We have received tons of E-mail from people wanting
documents that could help them get jobs. . . . When you use the
following certificates to apply for a job, you should use them
together. On the first blank line, place your full birth name.
On the last line place the date that the certificate was
issued. Make sure that the date is the same on both
certificates.''
We do not know whether anyone has used these certificates,
but we do know that Mr. Beachum sold them for that purpose. His
marketing vividly illustrates how many of these sites attempt
to shield themselves from criminal liability through the use of
disclaimers that are patently disingenuous efforts to mask
their intent to sell illegal products.
We found that these Web site operators are quite ingenious
in their efforts to evade the law. Exhibit 9,\2\ Chairman
Collins, is an Oklahoma counterfeit driver's license that we
purchased in part of our undercover operation from a Web site
known as theidshop.com. With your permission, Chairman Collins,
I would like to enter this fake license into the hearing record
and submit it to the Subcommittee for inspection.
---------------------------------------------------------------------------
\2\ See Exhibit 9 which appears in the Appendix on page 58.
---------------------------------------------------------------------------
Senator Collins. Without objection, it will be included.
This is an example of how these Web site operators get
around the disclaimer, is that correct?
Mr. Blalack. That is correct, Chairman Collins. As you can
see, as required by Federal law, the document appears to have
the words ``Not a Government Document'' printed diagonally in
red ink across the front and back. But, as you can see, this
disclaimer is easily removed by cutting the top portion of the
lamination and simply removing the actual identification
document and, hence, the disclaimer.
Senator Collins. So, in effect, this license is sold in a
laminated document that has the required disclaimers on it, but
all one has to do is to remove it from the plastic pouch----
Mr. Blalack. That is exactly right.
Senator Collins [continuing]. And then the disclaimer is no
longer appearing anywhere on the fake ID?
Mr. Blalack. That is exactly right, Chairman Collins. And
if that was not simple enough for some people, there are even
message boards like this one here, Exhibit 10,\1\ that instruct
customers how to remove the disclaimer. It says, ``OK, the
IDShop sends their ID in a white envelope, exactly as they
describe on their Web page. When you open this envelope, the ID
has a laminated wrap, extending well over the edge of the ID.
It also has printed `Not A Government Document' printed across
the lamination in red. This slip is easy to remove with
scissors, and takes less than a minute.''
---------------------------------------------------------------------------
\1\ See Exhibit 10 which appears in the Appendix on page 60.
---------------------------------------------------------------------------
Incidentally, this site is operated by a young man named
Robert Sek, who recently had his operation shut down by the
Secret Service and Texas authorities. Law enforcement
authorities seized from his apartment a computer, photographic
quality printer, ID making machine, printed identification
cards, and a safe containing holograms and approximately
$25,000 in cash. Pending the criminal investigation, Mr. Sek
refused--through his attorney--to discuss his activities with
Subcommittee staff.
Our third finding is that the Internet has greatly
facilitated the manufacture and sale of counterfeit
identification documents by allowing sellers to mass market
high-quality fake IDs with virtual anonymity. This has, in
turn, presented significant obstacles to effective law
enforcement.
Mr. Catron's Web site illustrates the challenges that these
Internet sites present to law enforcement. When he registered
his Web site on the Internet, he attempted to disguise his true
location of his operation by listing an address and telephone
number in the Philippines, and an E-mail address that appeared
to originate from another small country in the South Pacific.
We eventually discovered that Mr. Catron directed payments from
his site to an address in Pittsburgh, Kansas. And, we finally
obtained Mr. Catron's actual location in Lawrence, Kansas,
after enlisting the U.S. Marshals Service to serve him with a
subpoena.
Mr. Catron's tactics, including the use of private mail
receiving agencies and multiple anonymous E-mail accounts,
allowed him to market his products to a wide audience with very
little overhead cost and minimal risk of criminal exposure.
Chairman Collins, in conclusion, our investigation found
that a significant number of Web sites offer a wide range of
counterfeit identification documents, and that some of these
sites offer phony documents of shockingly high quality.
Moreover, we found that the distribution of these counterfeit
materials is growing because of the expanding technology of the
Internet. This new technology could very well result in a flood
of phony identification documents and counterfeit credentials
if steps are not taken to curb this emerging problem. It will
be no easy task to maintain the integrity of the identification
documents on which both the government and the private sector
rely.
Chairman Collins, this concludes my prepared remarks. I
would be pleased to answer any questions that you and the
Subcommittee might have regarding the staff's investigation.
Senator Collins. Thank you.
We will next hear from Mr. Myers, and I want to thank Mr.
Myers for all of the assistance he has given the Subcommittee
with our investigation. You may proceed with your testimony.
TESTIMONY OF DAVID C. MYERS,\1\ SPECIAL AGENT, IDENTIFICATION
FRAUD COORDINATOR, DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO,
DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, STATE OF
FLORIDA, JACKSONVILLE, FLORIDA
Mr. Myers. Thank you. The Florida Division of Alcoholic
Beverages and Tobacco under the Florida Department of Business
and Professional Regulation has established the Fraudulent
Identification Enforcement Program. This program has been
established to obtain the most current intelligence on
counterfeit identification. Other duties include technical
review of ID scanning equipment, enforcement of counterfeit
identification operations, possession of false ID enforcement,
counterfeit identification detection training for law
enforcement, and investigation of Internet sites that sell
false IDs.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Myers appears in the Appendix on
page 31.
---------------------------------------------------------------------------
In the past 12 months, our training has been conducted to
over 96 local, State, and Federal law enforcement agencies.
Eleven arrests were made for sales and manufacturing of
counterfeit IDs, with 33 Internet sites removed from the Web.
Our intelligence gathering and training is the key to
successful enforcement.
Over the past 4 months, over 300 arrests were made by our
agency for possession of false identification. During this
time, over 5,000 counterfeit IDs were obtained, and as you can
see, there is a very large problem.
These IDs were also, when the subjects were arrested,
identified as purchased from the Internet. A large percentage
of counterfeit IDs we seize were purchased from the Internet.
With these high-quality identification cards, detection has
become very difficult. Many counterfeiters have advised that
the templates they use to create identification were received
from the Internet. These counterfeit IDs were not only used to
purchase alcohol and tobacco by underage persons, but may also
be used in bank fraud and identity theft.
Internet sales of false identification has increased
dramatically. Identification is available on the Internet for
all 50 States and many government agencies. With the use of
current technology, high-quality identification cards and
driver's licenses can be produced with easily accessible
equipment. These high-quality identification cards can be
purchased by anyone, in any name, with any date of birth.
Our main concern is protection of the public, industry, and
saving the lives of our young people. I will show you a segment
from our training program.\2\ This is a common site which sells
counterfeit identification that operates behind the word
``novelty.'' This is one site that was operated by Josh
Dansereau, which sold thousands of false identification cards.
Fake passports are also very common and can be purchased off
the Internet for virtually any country in the world.
---------------------------------------------------------------------------
\2\ See Exhibit 11 which appears in the Appendix on page 61.
---------------------------------------------------------------------------
Some sites, like this one, sell all the information that
you need on software to assist you in generating your own
identification within your own home.
This site offers helpful hints on how to create false
identification, including templates, birth certificate
information, and bar coding which is used as a security feature
by most States with the issuance of a driver's license.
Fakeidzone sells a complete kit on how to create high-
quality ID on your own home computer.
As you can see, this Canadian site even sells police and
FBI identification.
Many Internet sales sites recruit high school and college
students to sell identification on school campuses.
This site, theidshop, operated by Robert Sek, at one time
was the most popular site on the Internet. It was a million-
dollar business. Though the operator of the site was located in
Texas, we were able to communicate with him through his
attorneys and our attorneys to prevent his sales of false
identification to people within the State of Florida.
This is a restricted chat page where people discuss new
ways to create counterfeit identification and avoid police. You
have to have a special password in order to get into this chat
page.
Here are some samples of counterfeit IDs sold on the
Internet. Arizona--note the license on the left. It is a true
and original license. The counterfeit licenses are on the
right. If you will note--some of the licenses even have the
hologram that are used by the State of California to protect
their security, as well as by Colorado and Florida. Even the
exact type of plastic and magnetic strip that is embedded in
the plastic are used on these counterfeits, representing
Georgia and Indiana. As you can see, it is difficult to
determine the counterfeit from the original. New York--even the
exact same paper that the State of New York uses, which is
unique, is used on these counterfeit identification documents.
This is a Michigan license that even has a working magnetic
stripe. This is a security feature that many States use to keep
the license known as an original. It is a very important
feature. Some identification cards are so--the counterfeits are
so accurate that we cannot tell whether they are counterfeit or
original by looking at the face. We use the magnetic encoded
information to determine whether or not the license is
counterfeit or original. Now that we are finding some that have
a counterfeit magnetic strip, it makes it very, very difficult
for law enforcement to determine the counterfeit from the
original.
Here are some samples of holograms found on the Internet.
Holograms are a security feature used by most States to
restrict the counterfeiting of identification documents.
Law enforcement depends on ID. Without proper ID, we cannot
do our job. Here is an operation we raided in Miami Beach where
thousands of IDs were made. The equipment you see is basically
the same type and style, uses the same printing materials as
those used by most motor vehicle departments. The Internet was
the backbone of this operation. The subject operated two
stations almost 24 hours a day to create identification cards
making, not just IDs for government agencies, but also certain
security passes for airports and passes to get into restricted
areas on government locations.
This young man, Josh Dansereau, was operating three
different Web sites selling false ID until his arrest by our
agency. These are some examples of licenses that he produced.
With just basic equipment, you can easily make a 6-figure
salary. This is some of the equipment that was used by Mr.
Dansereau, basically the same equipment that is in the average
home. Here are 85 fake IDs ready to mail. These were in the
home of Mr. Dansereau when we entered it. This equals
approximately $7,000 of income in one mailing for Mr.
Dansereau.
Identification is the backbone of society. Our office is
always ready to answer any questions that you may have. Thank
you.
Senator Collins. Thank you, Special Agent Myers.
Mr. Seitz, would you please proceed.
TESTIMONY OF THOMAS W. SEITZ,\1\ USER OF COUNTERFEIT
IDENTIFICATION DOCUMENTS OBTAINED FROM THE INTERNET; CONVICTED
FELON CURRENTLY AWAITING SENTENCING IN THE U.S. DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
Mr. Seitz. Thank you, Chairman Collins. My name is Thomas
Seitz. I am originally a resident of the State of New Jersey. I
am presently incarcerated at the Baker County Correctional
Facility in Macclenny, Florida. I am 23 years old and I am
currently serving a prison sentence imposed by the State of New
Jersey after I was convicted and sentenced to 3 years for
committing the crimes of theft by deception, forgery, and
uttering a forged instrument. I have also plead guilty to bank
fraud and I am awaiting sentencing by the U.S. District Court,
Middle District of Florida.
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\1\ The prepared statement of Mr. Seitz appears in the Appendix on
page 36.
---------------------------------------------------------------------------
I appreciate the opportunity to testify before the
Subcommittee. I hope that I can show its members how relatively
easy it is for someone to engage in obtaining information from
the Internet, including such personal information such as
Social Security numbers. Moreover, I hope to show how easy it
is to craft phony identification using that information and
obtain significant amounts of money with very little effort.
I consider myself to be fairly well versed in the use of
computers. I worked with computers since the sixth grade and I
was employed as a network engineer. I obtained via the Internet
names, Social Security numbers, and addresses of people by
accessing files maintained as public records on the Securities
and Exchange Commission Web site. Although at first I did not
have the intent to defraud anyone, I started searching the
Internet again and determined that there were a large number of
sites that offered the means to make false identification and
the opportunity presented itself.
I used a computer at the library in Old Bridge, New Jersey,
and accessed various Web sites that offered documents for
downloading, including birth certificates and driver's
licenses. Some were free, so I found one that offered a New
Jersey birth certificate and I downloaded it. I utilized
computer software to add the information that I wanted, and
after I obtained a blank W-2 form from the IRS Web site, I took
the completed documents with the fake identity information to
the New Jersey Department of Motor Vehicles and obtained in
short order a genuine New Jersey photo identification card. I
feel that if I wanted to take the time and the effort, I could
have easily used the same documents to obtain a genuine New
Jersey driver's license.
During the time that I was searching the Internet for fake
identification Web sites, I frequently came across disclaimers
on the individual sites stating, ``For novelty use only.'' I
cannot think of any reason why a statement like that would be
there. It did not deter my actions in any way.
I also made a fake driver's license by altering mine, using
various computer programs, including Adobe Photoshop. After I
had these documents, I went on the Internet and obtained car
loans using the identity of people I found on the Web. When
these loans were approved and I received checks, I went to the
car dealers to attempt to purchase new vehicles with the false
identification. For the most part, it was very easy. The new
car dealers want to sell cars and pay very little attention to
the details of identification.
I got cold feet the first time and I left, but the second
time, the car dealer just accepted the fake ID, took the
insurance binder I had previously secured, and a short time
later, I was driving one of the most expensive vehicles off the
lot. I eventually was discovered after the car dealer submitted
the paperwork to DMV and they determined that the numbers of
the fake driver's license were not valid. I realize what I did
was illegal, but I also must say it was not very difficult to
accomplish.
In conclusion, I found that there was a readily available
supply of fake identification providers on the Internet. Anyone
with some computer skills can download these templates for fake
identification and produce some very high-quality documents. I
feel that if Web sites, especially the U.S. Government Web
sites, were prohibited from providing specific personal
identifiers on the Web, such as Social Security numbers, that
would make activities such as mine a lot more difficult. That
is all.
Senator Collins. Thank you, Mr. Seitz. I would like to
begin with you and ask you some questions about the phony
documents that you created and used. I would like to have
Exhibit 12 displayed.\1\ It is my understanding you are
familiar with these exhibits.
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\1\ See Exhibit 12 which appears in the Appendix on page 89.
---------------------------------------------------------------------------
Mr. Seitz. Yes.
Senator Collins. This exhibit contains the three documents
that you used to commit your crimes. The name and address and
Social Security number of a Richard Clasen is on two of these
documents. Who is he and how did you happen to choose his
identity?
Mr. Seitz. Richard Clasen is a--he is a ranking executive
with a company called EFI Electronics. I discovered his
information and Social Security number, name, place of
employment, and home information, it was his address and his
phone number, from the Securities and Exchange Web site.
Quarterly reports must be filed with the SEC, and that
information is public. They publish that right on their Web
site and he was just a random person off of there.
Senator Collins. So he was not someone whom you knew
personally?
Mr. Seitz. Oh, no.
Senator Collins. And all you had to do was go to a Web site
that actually was maintained by the Federal Government and you
were able to obtain this individual's--not only his name and
his address, which one might expect--but his Social Security
number and his telephone numbers, is that correct?
Mr. Seitz. Correct.
Senator Collins. Have you used any other Web sites
maintained by the Federal Government as a source of these kind
of identifiers, the personal information?
Mr. Seitz. Well, I also found that Congressional Web site--
I am not too sure of the exact address--they put up--they
publish the military nominations for promotions. I know they
list the Social Security numbers, as well, of dozens, if not
hundreds, of individuals.
Senator Collins. What we found in our investigation, after
finding out about what you had been able to do with government
Web sites, is that the Congressional Record no longer includes
the full Social Security number of those military officers who
are up for promotion. But the back editions, which are still
available on some Web sites, do still contain that kind of
information.
Mr. Seitz. Correct. As of the last time I checked, you were
just using the last four digits. But the previous Congressional
Records still contained the full numbers.
Senator Collins. So this suggests to me that in addition to
our need to look at strengthening the laws and going after more
aggressively those who run these private Web sites, that we
need to review the Web sites maintained by Federal agencies to
make sure that they are not a source of information that could
be used easily to commit identity fraud.
Mr. Seitz. Correct.
Senator Collins. The third document I want to draw your
attention to is the green document on the bottom of the
exhibit. Now, is this the counterfeit birth certificate that
you created from the template that you obtained from the
Internet?
Mr. Seitz. Yes, it is.
Senator Collins. The document says on it, ``Do not accept
this certificate unless the seal of the city is affixed
hereon.'' Did you have any trouble getting or making the seal?
Mr. Seitz. No. The reason I chose the City of New Brunswick
as the one to download and use as a template is because it
mirrors my birth certificate. I was born in the City of New
Brunswick and it was something I had to compare, so it was
fairly easy to create a plausible, or a fictitious document.
Senator Collins. And the seal was already on the downloaded
document, is that correct?
Mr. Seitz. Yes.
Senator Collins. Is the white document in the middle of the
page the W-2 form that you also downloaded from the IRS Web
site?
Mr. Seitz. Correct. The IRS provides blank tax forms for
almost all the forms that they have. It was just a matter of
downloading it, inserting it in the printer, and finding the
correct font in which to print on, and it came out, as you can
see, it comes out pretty plausible.
Senator Collins. Why did you choose this document? What was
your intent? What were you going to do with the W-2?
Mr. Seitz. Well, as you said earlier, the birth certificate
is sort of the key. That is the preferred document of identity
that most agencies, DMV and other government agencies, like to
see. That, coupled with a second form, the W-2, enabled me to
go to the New Jersey Department of Motor Vehicles and present
those documents and they would, in turn, give me the top
document there, which is a genuine photo identification card.
Senator Collins. So what you did is you took the W-2 form
which you had downloaded from the Internet and filled out, the
phony birth certificate, which you also got from the Internet
and filled out, and then took that to the Department of Motor
Vehicles in New Jersey and got an actual driver's license, but
with wrong data on it, correct?
Mr. Seitz. Correct.
Senator Collins. Did anyone question either of the
documents that you brought to DMV?
Mr. Seitz. Not at all.
Senator Collins. I understand that you searched several Web
sites during your search for false identification documents.
Was this a lengthy process? Did it take you a long time to find
the kinds of computer templates that were suitable for your
purposes?
Mr. Seitz. No. As Mr. Blalack earlier said, it is very
simple. It is a matter of putting ``fake identification'' into
a search engine and clicking on links that it returns to you.
It takes a matter of minutes to find the sites.
Senator Collins. And was it difficult once you downloaded
the template to actually make the hard copy, the physical copy
of the documents?
Mr. Seitz. No, it was not. It was very simple. Once I had
obtained the--I guess the correct paper or the correct media to
print it on--it was a matter of minutes.
Senator Collins. If you had not been able to do this as
easily, would you have tried to find another source of false
IDs outside of the Internet?
Mr. Seitz. Probably not. I am very familiar with computers
and it was just something that I came across. To tell you the
truth, I have never--I do not know any other places to go get
fake identification as good as on the Internet.
Senator Collins. As I was listening to you, that is exactly
the point that occurred to me. It is probable you would not
even know where to get a set of false identification documents.
But because of your expertise with the computer and because of
the ease with which you were able to locate these sites,
download the information that you need, and then produce the
documents, it was probably much more tempting to do so and much
easier to do so.
Mr. Seitz. Correct. It was familiar.
Senator Collins. In addition to the ease with which you
could get these documents, were there other reasons why you
chose the Internet as the source?
Mr. Seitz. For its anonymity. As you said before, I can
surf the Internet from my home, and from the library. No one
knows who I am.
Senator Collins. Were you afraid that you might be detected
as you searched?
Mr. Seitz. No, because as I stated in my opening statement,
I used a library, a public library. I used the computer in a
public library to conduct my search. Dozens of people use the
computers there every day and they also do not necessarily keep
logs of who is using the computer. I had no fear of detection
as I was searching.
Senator Collins. And arguably, using the library's computer
was much safer than using your own computer in your home as far
as the ability of law enforcement to trace you.
Mr. Seitz. Correct.
Senator Collins. In your written testimony, you said that
you frequently encountered disclaimers, and you mentioned this
in your oral statement, as well, as you searched the Internet
for false identification documents. Did you notice if a
disclaimer was posted on the Web site from which you obtained
the false birth certificate?
Mr. Seitz. I cannot remember if there was one on that
specific site. I do remember encountering them on several
sites, but on the one with the birth certificate, no.
Senator Collins. Did you think that the Web site operators
were truly trying to discourage illegal use of their documents
as you searched these sites?
Mr. Seitz. No, I do not. They are pretty much trying to
cover themselves, in my opinion, because they do not
necessarily go out of their way to say, go use this for an
illegal purpose, but the disclaimer, they are probably, in my
opinion, trying to cover themselves. It does not discourage
anyone.
Senator Collins. Thank you, Mr. Seitz.
Agent Myers, you mentioned in your written statement that
you have seen a significant growth in the use of high-quality
identification documents and you believe that is because they
are available on the Internet. In your statement, you had some
statistics on the percentage that you thought of false IDs were
attributable to the Internet and also the growth. Could you
give us that information, to give the Subcommittee an estimate
of the percentage of false IDs that you see that you believe
the Internet is the source for?
Mr. Myers. Yes. In my position as the State ID Fraud
Coordinator with the Division, I receive thousands and
thousands of IDs every year, usually in bags of 100 to 200
almost every week from either agents in the field, other law
enforcement agencies, even some banks have sent me some false
identification. It is my job to go ahead and look at the
identification, gather the intelligence to find out, is it
false and counterfeit, and what security features they have
been able to reproduce in this type of false identification.
We have found within the past few months such high-quality
counterfeit identification that it is virtually undetectable. I
have specialized electronic equipment that I use and we have
developed in order to determine counterfeit from original when
we cannot see it with our own human eye. Things like holograms,
bar coding, micro printing, all of these are found on the new
counterfeit identification cards.
We found approximately 2 years ago during an operation that
we do every year on false identification approximately 1
percent, or a little less than 1 percent, came off the
Internet. Last year, we found that a little less than 5 percent
of the counterfeits came off the Internet. This year, we have
determined there was approximately 30 percent of the
counterfeit and false identification that we seized came from
the Internet.
Senator Collins. So in just a 2-year period, the percentage
of false IDs that you have seen for which the Internet is the
source has gone from 1 percent to about 30 percent?
Mr. Myers. Yes, Senator Collins. Also, we believe that by
next year, we are going to find at least 60 to 70 percent of
the IDs that we are going to be seizing coming from the
Internet.
Senator Collins. So this is clearly an exploding problem
and the Internet is becoming a very troublesome source of very
high-quality IDs.
Mr. Myers. Yes.
Senator Collins. And in general, are the IDs that have been
produced using templates from the Internet higher quality than
the IDs that you used to see because of the ability to
incorporate the kinds of security features that you have
mentioned?
Mr. Myers. Much better. The graphics that can be produced
on the computer, they can be electronically transmitted to
anyone in the world in that same quality. Normally, what people
would use would be a poorer quality of printing and colored
paper and lamination procedures. Now, with the technology that
is available, they can actually laser scan the entire document,
including its hologram, and make it appear to be a true
hologram and just electronically send it to anyone who
purchases the access.
Senator Collins. Many States, such as Connecticut, have
added the kinds of security features that you talked about in
your presentation, and in the case of Connecticut, for example,
one of the security features is the shadow picture and the bar
code. But my staff was able to replicate that in a way that
makes it virtually indistinguishable from a real Connecticut
license. Is that the problem you are seeing, that it is
impossible for States to modify and add enough security
features to keep pace with the ability of scam artists to
duplicate exactly the same kind of security feature?
Mr. Myers. Well, the problem we have, there are over 200
active State identification cards and driver's licenses due to
the fact that most States have an ID card and driver's license
and have valid older formats also. So in order for a law
enforcement person to be able to recognize all these features
in areas like Florida, where we have a lot of out-of-State
people, it is almost impossible to have everyone at the expert
status in order to identify these all types of legal
identification.
Some of the features on the license that you showed, such
as the what we call a ghost image picture, those were very,
very difficult to reproduce in years past due to the technology
that we had at that time. Now, it is very simple. Things like
bar codes and even 2-dimensional bar codes that some States are
going to are easily generated off the Internet. There are
several sites that assist you in generating these security
features.
Senator Collins. And even the magnetic stripe on the back
has been able to be duplicated so that if this license were put
through a machine, it would actually show a true driver's
license, is that correct, too, in some cases?
Mr. Myers. That is correct. It is very rare for us to find
an electronically encoded mag stripe, but we have found a small
portion of those.
Senator Collins. Given the growth of phony IDs over the
Internet and the difficulty that most law enforcement officials
would have in discerning that this is not a real ID, what is
the answer? Do law enforcement officials have the proper
training and the tools that they need? Are laws tough enough?
Mr. Myers. Our agency focuses on the training issue. We
find that very, very few law enforcement agencies train their
people on the detection of false identification. Even I, as a
former State trooper, received very, very little training on
our own Florida driver's license.
We have been focusing on very detailed 4- and 8-hour
classes for law enforcement people to determine certain
counterfeit characteristics where they can make that
determination. The issue of false identification is becoming
very, very popular and with the growth of intelligence and
information we are gathering, our training programs have to be
updated virtually every month to come up with new technologies
that are being used.
Senator Collins. One of the problems that the Subcommittee
investigated is that law enforcement officials tend to focus on
combating the crime that is committed with the false ID rather
than focusing on shutting down Web sites that are selling
illegal, bogus identification. Later today, we will hear the
director of the Secret Service point out, as he has in his
written testimony, that some form of false ID is a prerequisite
for many financial crimes.
Since this is so, does not this fact suggest that a
crackdown by law enforcement on the Internet sites that we have
highlighted would, in turn, prevent other crimes from
occurring, such as bank fraud and identity theft, if we went to
the source of these documents?
Mr. Myers. For every manufacturer of counterfeit
identification that we raid and make arrests on, we feel that
we are preventing tens of thousands of counterfeit IDs from
hitting the streets. Some of it may be an alcohol issue. A lot
of it is bank issues, identity theft, and many, many other
crimes. We depend on identification for virtually every type of
transaction that we deal with in today's society.
Our main focus is to look at these counterfeiting
locations, because as you said, to find the crime, then locate
the identification, is basically a long, drawn-out process when
it would be much easier to locate those that are manufacturing
the identification, especially on the Internet. Probably the
biggest impact that we have seen on the Internet, as I monitor
it and have for many years is the work that was done by your
own Subcommittee's investigators. They had a dramatic impact on
those on the Internet. Not even knowing your investigation was
going on, I could see that the activity on the Internet as it
related to false ID was going through some changes.
Senator Collins. We have noticed that a lot of the Web
sites that we identified early on are no longer in existence,
but my fear is that once we complete our work in this area,
that unless law enforcement starts being more aggressive in
shutting down these Web sites, that they will just pop back up
again.
Mr. Myers. That is correct. We anticipate that any of those
that were not arrested, and most were not due to certain
problems with statutes, these people will be right back, and we
have found in many cases that we have even arrested people for
it, then we find them back on the Internet.
Senator Collins. Just a couple more questions for you. One
is that we found that there are, in addition to false IDs,
there are also documents that are phony that imply a person has
completed a course or has been trained, for example, as a
nurse's aide. That troubles me because that implies that
another potential problem that we may have is the use of these
phony credentials by people to get jobs for which they are not
qualified and potentially that is a threat to public health and
safety.
Similarly, the presence on the Internet of credentials for
law enforcement officials I find frightening. The idea that
someone could duplicate a police officer's ID or an FBI
credential to gain access to someone to harm them, which may
have happened in a case in the South that we are proceeding
with, also adds a new and very ominous dimension.
I know we have talked a lot this morning about bank fraud
and identity theft, but would you agree that other very serious
crimes are a potential threat due to these credentials and law
enforcement IDs being available via the Internet?
Mr. Myers. That is very true, and what we have found, there
are several Web sites, some of them harder to find than others,
that will sell university degrees from universities and
colleges around the United States. When law enforcement does a
background check to hire someone, we do not just accept that
diploma or degree. We require transcripts. And as we looked on
the Internet, we found several of these sites also sold
transcripts to go along with these documents, making it very,
very difficult to determine the difference between true and
false information. Sometimes they will use someone's name that
actually graduated from these colleges, which a phone call
check would confirm that the person did go there and did
lawfully graduate.
The issue with law enforcement identification and
credentials is a major issue. It has not been looked at very
well. Most law enforcement credentials are much easier to copy
and to counterfeit than driver's licenses. Most driver's
licenses in most States have multiple security features. Most
law enforcement identification is merely a picture stuck on a
card and laminated.
Senator Collins. That is a very good point. Ironically,
these driver's licenses have far more security features in them
than the credentials for law enforcement officials that we
found on the Internet, which were, as you point out, generally
just a picture on a piece of paper with some information. They
were extremely easy to duplicate compared to the driver's
licenses with more security features.
One final question for you. As a general rule, have you
found any validity to the claim that these Internet site
operators make that they are selling these phony identification
documents or credentials solely for novelty or entertainment or
educational purposes?
Mr. Myers. That issue has come up quite a bit. There are
certain Federal laws, like the ``Not a Government Document''
disclaimer. The laws in the State of Florida are very specific,
which allows us to bypass those particular issues. If they
issue a identification document with just a date of birth, they
are required to meet certain guidelines.
The word ``novelty'' we find on a large percentage of
identification cards that come off the Internet. It may be
printed so small that you need a magnifying glass to read it,
or it may be just part of the disclaimer that comes across. I
know of no lawful purpose for someone to use a supposed novelty
ID, and in hundreds and hundreds of cases that we have
investigated, we find that the word ``novelty'' is right on the
license somewhere. It is just no one can take the time or has
the ability to even detect it.
Senator Collins. The Subcommittee investigators also found
that the novelty claim, even when printed on a license, was not
indelible as the law requires and, in fact, was easily erased
with a pencil eraser in many cases, or in the example I gave
previously, the phony ID is enclosed in a laminated pouch from
which the license can easily be used and, thus, no more
disclaimer.
Mr. Myers. That is correct.
Senator Collins. Thank you very much, Mr. Myers.
Mr. Blalack, just one final question for you. The
Subcommittee, in the course of its investigation, made
purchases from several of these Internet Web site operators. In
a few cases, the Subcommittee's check was cashed but no product
was provided, is that correct?
Mr. Blalack. That is correct, Chairman Collins.
Senator Collins. This strikes me as the ultimate scam
because someone who is purchasing a phony ID and gets ripped
off by the Web site operator is very unlikely to file a
complaint with the police.
Mr. Blalack. That is exactly right, and in fact, Chairman
Collins, one of these individuals we actually were able to make
contact with and admitted that they had not sent the product
and had advertised for the Web site intending not to provide
the product because they had been ripped off themselves and
were just trying to get their money back, so I think that is
very accurate.
Senator Collins. I would note the Subcommittee is turning
over those cases to the proper law enforcement authorities, but
I bet we are the only one who has been ripped off by those Web
sites who will file a complaint with the police.
Thank you very much to all of you. Your testimony was very
helpful.
I would now like to welcome our final witness of the
morning, Brian Stafford, the director of the U.S. Secret
Service. Mr. Stafford was appointed director in 1999 after 29
distinguished years with the Secret Service, including many
years as a field agent. Mr. Stafford will testify regarding the
proliferation of Internet crime and how the Internet
facilitates identity theft and other serious crimes through the
increasingly common use of false identification documents
acquired online.
Mr. Stafford, I would like to welcome you this morning. We
look forward to hearing your testimony. Pursuant to Rule 6, all
witnesses are required to be sworn in, so I would ask that you
stand and raise your right hand.
Do you swear that the testimony that you are about to give
to the Subcommittee will be the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. Stafford. I do.
Senator Collins. Thank you. Please proceed.
TESTIMONY OF BRIAN L. STAFFORD,\1\ DIRECTOR, U.S. SECRET
SERVICE, WASHINGTON, DC
Mr. Stafford. Thank you, Madam Chairman. It is a pleasure
for me to be here and for you to afford the Secret Service the
opportunity to testify before this Subcommittee concerning the
subject of false identification documents on the Internet and
the Secret Service's efforts to combat this crime. I would like
to thank the Chairman for your leadership in this area. The
marketing of false identification documents on the Internet is
a growing problem that requires the attention of law
enforcement at all levels.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Stafford appears in the Appendix
on page 38.
---------------------------------------------------------------------------
As a law enforcement bureau within the Department of
Treasury, the Secret Service was created in 1865 to investigate
and suppress counterfeit monetary instruments that affect the
integrity and well-being of the Nation's financial
infrastructure. In this role, the Secret Service has seen an
expansion of its investigative authority commensurate with the
evolution of payment systems, from paper to plastic and, most
recently, to e-commerce.
The theft of personal information and other related data,
often available through electronic media, has led to a
significant increase in the production of false identification
and the assumption of people's financial identity in the
proliferation of financial crimes. Additionally, the Secret
Service has witnessed the Internet become a tool for organized
criminal groups to conduct these financial frauds through the
production of false identification, the compromise of personal
account information, and the ability to commit these crimes in
a relatively anonymous environment.
Today, some form of false identification is a prerequisite
for nearly all financial crimes. False identification provides
criminals with the anonymity needed to conduct a myriad of
fraud schemes.
To respond proactively to this growing problem, the Secret
Service created a counterfeit instrument database. This
database enables us to link cases of common origin through the
forensic and investigative analysis of counterfeit financial
instruments and identification documents. We are also enhancing
our partnerships with both the law enforcement and financial
communities through the use of our counterfeit check database.
This database is available to the financial community as well
as local, State, and Federal law enforcement officers, thereby
expediting the exchange of investigative information.
As the Internet continues to evolve, the ability for the
criminal element to obtain false identification and compromise
our financial systems from afar makes it imperative for law
enforcement to combine personal resources and investigative
expertise through the formulation of financial crimes task
forces in cities on a national and international level. Task
forces are not a new concept. In fact, the Secret Service
started its first 11 financial crimes task forces in 1983.
These initial 11 task forces are still in effect and we have
expanded with 17 additional task forces, focusing primarily on
financial crimes and organized criminal groups who are making
use of the Internet.
The Internet has also led to information collection as a
common byproduct of the newly emerging e-commerce. Internet
purchases, credit card sales, and other forms of electronic
transactions are being captured, stored, and analyzed by
entrepreneurs intent on increasing their market share. It is
estimated that there are currently more than 1,000 data
warehouses. The ability to obtain online personal information
coupled with the sale of false identification has allowed
financial crimes to flourish on the electronic highway.
We have investigated numerous cases where criminals have
used other people's identities to purchase everything from
computers to homes. Financial institutions must remain
vigilant, or they will fall victim to the criminal who attempts
to obtain a loan or cash a counterfeit check using false
identification.
The United States financial community makes $3.5 billion in
electronic payment transactions per year utilizing various
telecommunications systems. The financial community, private
citizens, and private industry have migrated to the use of the
Internet to conduct electronic commerce. The United States is
moving to an electronic commerce society with a vastly
decreased reliance on paper currencies. This migration to e-
commerce has revolutionized the way business is conducted and
is the forerunner to the truly global economy.
The Secret Service has responded to this type of fraudulent
activity in several ways. In 1988, the Secret Service created
the Electronic Crimes Special Agent Program. This is a group of
highly trained special agents assigned to our field offices
throughout the United States and abroad are tasked with the
examination and collection of electronic evidence. These agents
are routinely utilized in assisting Federal, State, and local
law enforcement in combating a host of computer and Internet-
related fraudulent activities.
This program is unique within the law enforcement community
in that it utilizes only special agents who are trained and
conversant with the elements of the violations under
investigation. It permits the agents to be part of the search-
and-arrest teams, allowing them immediate examination of the
computer evidence and often leading to additional pertinent
investigative leads. All examinations are conducted and
documented within 10 days. And lastly, these agents provide a
proactive and immediate response rather than seizing evidence
and awaiting laboratory results.
In addition, the Secret Service continues to work with the
G7 and G8 high-tech subgroup to address jurisdictional concerns
and international obstacles in an effort to effectively deal
with international criminal organizations.
Some very positive steps are being taken to address the
misuse of false identification documents and to combat identity
theft. The Secret Service will always encourage both business
and law enforcement to work together to develop an environment
in which personal information is securely guarded. The
emotional toll on the lives of those whose identities have been
compromised cannot be fully accounted for in dollars and cents.
Everyone is responsible for protecting personal information.
We do not believe in nor are we in the business of
inhibiting the free flow of information so vital to a free
society. We do, however, believe that those identified as
misusing personal identification for criminal purposes should
be subject to punishment commensurate with the crime.
Madam Chairman and Members of the Subcommittee, I would
like to personally thank you for raising the awareness of the
current problem of the Internet as a vast and growing
marketplace for false identification fraud and identity fraud.
I will be keeping you up to date on the Federal response to
this emerging problem. On behalf of the men and women of the
Secret Service, I would like to thank you for your continued
support of the Secret Service and law enforcement.
This concludes my prepared statements and I would be happy
to answer any questions you may have.
Senator Collins. Thank you very much, Mr. Stafford.
During the course of the Subcommittee's investigation, we
talked with law enforcement officials all over the United
States who confirmed what we heard from Agent Myers this
morning, that the manufacture of very high-quality IDs is a
growing problem and most of these investigators were able to
link it to the availability of the high-quality templates on
the Internet. Has your experience been similar? Are you seeing
bogus IDs that are much more sophisticated than ever before and
are you able to link that increase and the sophisticated nature
of the IDs to the Internet?
Mr. Stafford. Yes, I agree with everything you said. In
almost every arrest we make in the area of financial crimes,
whether it be bank fraud, credit card fraud, telecommunications
fraud, computer fraud, there is usually a component of false
identification. Most of the false identifications either come
from, as you mentioned, the template on the Internet or they
actually come from true identities that are scanned and then
desktop publishing is utilized and it is ultimately placed on
the Internet, where, as you know, a button can be pushed and it
can be sent anywhere in the world.
Senator Collins. Then if we were able to crack down on Web
sites that were providing these false identification templates
or documents, is it not likely that we would see a
corresponding decrease in financial crimes?
Mr. Stafford. That would be likely if it was possible to
crack down on these numbers, but I would question whether we
can do that. As I know you are aware, there are over 14 million
Web sites right now on the Internet and they are adding
approximately 10,000 a day. For any entity, including the
Secret Service, and I have a lot of confidence in our people,
but for any one to be able to monitor that, would be extremely
difficult.
Senator Collins. Well, the SEC, the Securities and Exchange
Commission, has volunteers, a cadre of volunteers that surf the
Net looking for securities scams. We have held hearings on
securities scams on the Internet previously and the SEC
obviously did not have the staff and the resources to have an
ongoing effort with its own staff, but it put together a group
of volunteers who regularly surf the Internet to identify those
kinds of questionable sites.
Does the Secret Service do any kind of monitoring of the
Internet to look for sites that are selling and marketing false
identification documents?
Mr. Stafford. No, we do not. We do not monitor specifically
for false identification. We feel that we prioritize and focus
our investigations primarily on crimes that involve false
identification, primarily our core violations. We feel that
through prioritizing, through addressing large dollar amount,
high-impact cases that affect our community, whether it be
credit cards or bank fraud or bank loans, all of which possess
some form of counterfeit or fraudulent identification, that we
can make an impact even with our limited funding and resources
in this area.
We do have a very good relationship with the Internet
service providers and we have been very successful when certain
Web sites come to our attention in negotiating and talking to
the Internet service providers, and they usually will shut them
down voluntarily.
Senator Collins. I would certainly agree that bank fraud
and identity theft are far more serious crimes than the
manufacture of false IDs, but, in fact, it is the manufacture
of the phony IDs that allows the bank fraud or the identity
theft to occur. One of the troubling findings of this
investigation is that law enforcement officials, perhaps
understandably, have focused on the crime committed with the
phony IDs, but if we could somehow crack down on the
manufacture and marketing of those IDs, some of the subsequent
crimes would never be committed.
Mr. Seitz said today, for example, that if it had not been
so easy for him to manufacture false IDs on the Internet, he
never would have known even another source to get a false ID
and, thus, he never would have committed the bank fraud with
which he is now charged and in jail.
Mr. Stafford. Well, I agree with everything you are saying,
Madam Chairman. It is a good idea to have volunteers search the
Net and have hearings like this which make people aware of this
huge issue. If we could eliminate some of these sites, it would
drastically help with some of the other high impact, high-
dollar financial crimes investigations.
The problem is, there are so many sites that policing may
not be the answer. I am not sure standardizing or enhancing
some of the security features and identification would help to
solve the problem. I think probably the answer is research and
development, maybe biometrics, and go in that direction versus
trying to police all these false identification problems.
There are prosecution problems with these low dollar amount
cases. It is very difficult, particularly on the Federal level,
to come up with thresholds that would meet prosecutable
guidelines and sentencing guidelines. We met with the Federal
Sentencing Commission a few weeks ago and are asking them to
enhance and strengthen some of the sentencing guidelines.
Senator Collins. Do we need tougher laws? Do we need to
increase the penalties for these kinds of crimes?
Mr. Stafford. The statutes as they exist are pretty good
right now. As you are aware, and I would like to thank you, in
1998, the Identity Theft Act was passed and you voted for that.
It did put some strength in that law of identity theft by not
just making it illegal to possess or produce but actually to
assume somebody's identity. So right now, the statutes are
fine. I would rather zero in on some of the--what happens
afterwards, and as I mentioned, we are working on that
aggressively as far as strengthening the sentencing guidelines.
Senator Collins. There is no doubt that the identity theft
law passed in 1998 is a very helpful tool, but a lot of the law
that pertains to false IDs was passed in, I think, 1982, and
there are legal experts who have told us that there is some
question about whether they need to be modernized to make it
clear that it applies to documents downloaded from a computer,
that the use of the word ``document'' in the 1982 law could be
interpreted as not applying to a computer template, for
example. I would like to ask you to work with the Subcommittee
to review the basic laws applying to false IDs to see if they
do need to be updated and strengthened.
Mr. Stafford. We will and we do need to continue to address
those issues. As technology evolves, oftentimes legislation is
required, as it was in 1998.
Senator Collins. I applaud the work that you are doing with
the sentencing guidelines so that judges understand that this
is a serious crime, but I do think we also need to work to
deter the crimes from occurring in the first place by having
tougher penalties, by having some high-profile prosecutions of
people that might well deter others from setting up these Web
sites.
I would like to show you one that is particularly blatant.
During the course of the Subcommittee's investigation, we
discovered a Web site, and I have had it blown up on the
posterboard, called PromasterCards, and it offers phony
identification documents.\1\ This is a page from
PromasterCard's Web site which openly boasts that it is
breaking the law. As you can see, it says, ``We are openly
admitting that we are breaking State, Federal, and several
European laws by providing IDs that are exact replicas in every
detail of the current IDs provided from the countries on our
list.''
---------------------------------------------------------------------------
\1\ See Exhibit 13 which appears in the Appendix on page 90.
---------------------------------------------------------------------------
Now, we obviously were very interested in talking to the
operators of PromasterCards, but we were never able to do so
because they are located beyond our borders and, thus, not
subject to our legal process. But, in fact, you can see that
this Web site boasts that it moved from the United States
because of troubles with law enforcement. It states, ``We have
now moved our Web site to the United Kingdom but continue to
process orders from our clients from around the world from our
studios in the New York area. In the next few months, we expect
to be shut down again, but we will bound back as always from
another part of the Net.''
How do we combat this problem, given the ability of a Web
site to operate from another country, or to pretend that it is
operating from another country, or to shut down and open up the
next day under a different identity? Is this part of the
challenge that you face?
Mr. Stafford. Yes, it is a huge challenge and particularly
when they shut down before we can get to them and then open up
someplace else with a different name and a different identity.
It creates even more of a challenge when they migrate overseas.
As you know, we do not have, and we may be asking for,
legislation for extraterritorial legislation for white collar
crime. We have it for counterfeiting right now, but we do not
have it for this. It would be very difficult unless there was a
mutual assistance treaty. Also, you need similar laws and
criminals must break the law in the country in which they
reside also in order to extradite them back.
So I think for those criminals that are migrating overseas,
answer is to seek additional legislation, specifically
extraterritorial legislation where, if we could find them, we
could bring them back and prosecute them.
Senator Collins. Is there any sort of international law
enforcement effort underway now to deal with this problem?
Mr. Stafford. Yes, in the Secret Service alone, we have
task forces in England, Germany, Lagos, and Nigeria. We have
permanent personnel in 16 other countries.
Senator Collins. My final question to you deals with Mr.
Seitz's experience in which he used government Web sites as a
source of the personal data that he then entered into the phony
identification documents that he downloaded from the Web. Do
you think the Federal Government needs to do a better job of
making sure that Federal agencies are not putting personal
identification information on the Web sites that are readily
available to the public?
Mr. Stafford. Yes, I do.
Senator Collins. Is there any effort underway that you are
aware of on that?
Mr. Stafford. Yes, there is.
Senator Collins. Could you tell me about it?
Mr. Stafford. There have been some very high-profile cases
lately in the news about exactly what you are talking about. I
believe that everybody involved, including those of us in the
government, have become very aware of what can happen with a
lot of that personal identification. The safeguards are very
important. We all have to be responsible for safeguarding that
information, including those of us in the Federal Government.
We conducted a national summit on identity theft about 2
weeks ago in the Department of Treasury. Also, on our Web site,
there are a lot of recommendations, on what not only government
can do but what we can do as individuals.
Senator Collins. Director Stafford, I very much appreciate
your testimony this morning and your pledge to work with the
Subcommittee so that together we can come up with an effective
means to at least stop the growth of this problem. Is there
anything further that you would like to recommend to us?
Mr. Stafford. Nothing, other than I would just like to add
that I believe having hearings like this are extremely
beneficial. Your leadership in this area is extremely
beneficial and I would just like to thank you again for the
opportunity to be here and to speak on some of these issues.
Senator Collins. Thank you very much. I am glad I asked you
if you had anything to add. Thank you for your testimony and
your cooperation.
I would like to thank all of the witnesses who testified
today. The testimony has been very helpful to the Subcommittee
as we continue our efforts to combat this burgeoning problem.
The wide availability of false identification and credentials
on the Internet poses a serious new threat to the integrity of
government operations that depend upon identification. For
example, many government benefit programs require
identification of beneficiaries to make proper payments under
these programs. In addition, law enforcement, and an untold
number of security operations rely on identification documents
to grant persons access to government property, information,
and secured areas.
The private sector is equally dependent on proper forms of
identification for commercial activities. As the testimony we
have heard this morning indicates, counterfeit identification
is a common tool and, indeed, a prerequisite for many financial
crimes.
If the government and private sector are to have confidence
in the integrity of the identification documents on which they
rely, we must somehow strive to stay ahead of the technology
that allows these Web sites to flourish. I am very concerned
about the ease with which these high-quality phony documents
could be distributed. My staff, while extremely talented, is
not comprised of computer experts, and yet with very little
time and just buying materials readily available at an arts and
crafts store, they were able to duplicate and manufacture an
unending number of very convincing phony IDs.
After hearing the testimony today, I am more convinced than
ever that we need a crack-down by all levels of law enforcement
on this area and that we need to evaluate very closely whether
Federal law and penalties are sufficient to deter the
proliferation of these Web sites.
During the course of this investigation, the Subcommittee
received assistance from a number of officials, officers, and
individuals. I would like to thank all of the agencies
involved. I also want to thank the staff of the Republican
Conference for their help today with all the technical aspects
of our presentation.
And finally, I would like to thank the Subcommittee staff
who worked very diligently on this investigation during the
past 5 months, particularly Lee Blalack, Rena Johnson, Kirk
Walder, Leo Wisniewski, Eileen Fisher, and Mary Robertson.
Again, I want to thank my staff for its hard work.
The Subcommittee is now adjourned.
[Whereupon, at 11:11 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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