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Sunday, May 23, 2004

ABC 4 :: Scam Using Stolen Social Security Numbers in Utah

ABC 4 :: NEWS

Scam Using Stolen Social Security Numbers in Utah
LAST UPDATE: 5/19/2004 6:42:32 PM



A complex fraud scheme involving homes with artificially inflated prices purchased with stolen Social Security numbers is proving to be Utah's newest and most costly scam, victimizing individuals and costing the state millions of dollars.

An ongoing investigation by federal and state agencies has found that 87 homes in Utah have been purchased using stolen Social Security numbers. The government has already lost $2.5 million on a small percentage of those homes, according to the Utah Attorney General's Office.

In one example, a Salt Lake City grandmother found that her Social Security number was used to buy a $143,000 home in Layton worth about $80,000. In another, an Ogden home was purchased using the Social Security number of a 4-year-old New York girl.

So far, 21 individuals, all illegal immigrants, have been charged with felony crimes including identity theft, communications fraud, and forgery for their part in the scam. Of that group, four individuals who agreed to plea bargains are in the process of being deported, said assistant Attorney General Richard Hamp. The investigation will eventually implicate over 100 individuals, including four or five heading the scam, he said.

"One of the greatest moments in a person's life is when they first gaze upon their new home, unless, of course, somebody else bought it with your Social Security number," said Attorney General Mark Shurtleff Tuesday, during a press conference in Layton in front of a three-bedroom home purchased under the scheme.

Authorities alerted Salt Lake City resident Marla Vandermyde last fall that her Social Security number had been used to purchase the $143,000 home on the tree-lined street.

"I have to tell you it's scary," Vandermyde said. "I was not really able to believe this."

Vandermyde, who said she doesn't know how her Social Security number was stolen, is currently trying to put her financial affairs back in order. "It is devastating because I do have good credit," she said.

The scheme combines mortgage fraud with identity theft. Brokers target illegal immigrants in grocery store parking lots, and offer them the opportunity to buy a home despite their lack of credit or jobs.

The undocumented workers then buy stolen Social Security numbers, which are used to find employment. The numbers sell for about $20 in Utah and up to $90 in Los Angeles, according to Hamp.

The brokers, known as "flippers," then provide free down payments to the buyers, who use the Social Security numbers to qualify for mortgages. A lender then gives the buyer a loan based on an inflated appraisal of the home provided by an appraiser involved in the scheme.

Eventually, the home buyer forecloses on the property and taxpayers are forced to cover the losses -all 87 homes purchased in Utah were federally insured through the U.S. Department of Housing and Urban Development. Meanwhile, the victims are forced to spend hundreds of dollars and many hours trying to clear up their damaged credit reports, Shurtleff said.

A task force involving federal, state and local agencies was established last fall to aid in investigating and prosecuting the crimes and aiding the victims, Shurtleff said.

Complicating the problem is credit reports that do not necessarily list every transaction pertaining to a specific Social Security number, Hamp said. Consumers may be defrauded even though their credit reports appear to be clean.

Legislation passed this spring eliminates some of the jurisdictional problems involved in prosecuting identity theft cases to facilitate prosecutions, said Shurtleff spokesman Paul Murphy.

According to the Federal Trade Commission, one in eight adults nationally have been the victim of identity fraud within the past five years.

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