For me, identity theft always happened to the “other guy,” though when it did, it was devastating to watch. That is, until it happened to my wife and I. As an industry professional, it was alarming to see that a “sophisticated” advisor could become a victim so readily. It was also alarming to see the level of sophistication of the culprits and realize that they were not only victimizing individuals but large corporations and small business owners. This was not some teenager stealing my credit card application from my mailbox, who then proceeded to spend $300 on a shopping spree. In my case, and as I soon found out in many others, it was actually organized crime. These career criminals not only stole my identity, but they a) bundled it within a portfolio of other Americans in my spending demographic, and b) they re-sold the portfolio to a “retail distribution channel” that used the credit profiles to make credit cards, apply for mortgages, and wire money. It reminded me of how credit card receivables were bundled and sold to Wall Street professionals, except in this case the individuals in the portfolio didn’t know their information was being sold! Only months later would you begin to see an audit trail of purchases and other disbursements revealing the theft.

Once the perpetrators were caught, it was fascinating to see how they actually ran their business. They built an information network of ATM kiosks which were the loss leader to obtain victims’ personal information. They then had a systems person upload the information to a server which allowed them to obtain a history of my spending behavior. A duplicate credit card was manufactured and configured to be “me.” A hired “buyer” was given my spending history–shopping in the same stores would make it less likely that I’d notice the charges on my statement–along with the newly configured card and off he went.

There isn’t a sufficient framework of legal penalties to prevent this behavior. This is no longer an issue of petty crime, but rather one of the fastest growing segments of white-collar crime. Through a nonprofit group I helped found and a Web site (www.stopidentitytheftincalifornia.org), we propose that my state of California make identity theft a felony, not a misdemeanor. We will then bring the campaign national as it has become evident that this is a nationwide problem that will continue to cause irreparable damage to so many Americans in their personal and professional lives.

For now, we need to become exceptionally proactive. I would recommend that we:

Use either a credit card or cash for purchases and avoid checks and debit cards. Better to use someone else’s money via credit for 30 days. The card is insured and you should only be liable for $50 in charges.

Change all your online passwords monthly.

Trust no one who has the ability to make any disbursement on your behalf.

Audit every account on a scheduled basis.

Some of the biggest victims of identity theft are those who are most defenseless: the elderly, single moms, even soldiers fighting in Iraq. We all have clients that fall into these demographics and it is imperative that we make them aware of the dangers associated with ID theft. We can help them help themselves through education. Please sign up and register your support to make ID theft a felony.

Frank Troise

SoHo Capital

Los Angeles, California