On the hunt for ID thieves

This report airs Dateline NBC Sunday, July 22, 7 p.m.

It happens so often TV commercials joke about it: a faceless stranger is able to get a hold of your credit card and go to town.

But for real people, it’s no joke at all.

Leigh Morton woke up one Sunday morning and decided to log on to check her bank account.

On Dateline, we’ll put a face on a world-class crime and track down people actually involved in schemes to steal your identity—involved in crimes that add up to billions.

Magaw is in charge of criminal investigations at the U.S. Secret service which fights identity theft. He says there was a time when crooks would get your credit card number by stealing a purse or digging in the trash.

And, thanks to the Internet, once the thieves have your card number, they’re off on an online shopping spree with your money.

It happens once every 4 seconds, thousands of times a day, millions of times a year: That’s how many times experts estimate there’s a phony charge made with a stolen credit card number.

Restaurant owner Steven Yu says he’s been fighting with his bank for more than 8 months. After he woke up one morning, he discovered his account was overdrawn.

In the end, Steven Yu says the bank tried to hold him responsible for more than $400 in charges he says he never made, even sending a debt-collector after him.

It’s an experience neither Steven Yu nor Leigh Morton would wish on anyone.

When you hear stories like those, it makes you want to track down the thieves, find out how they steal your identity, and confront them face to face.

On Dateline, we’re going to take you along on an undercover investigation that start at a computer keyboard and travel across America and around the world.

It’s a year-long probe into what’s become a massive, multi-billion dollar, global problem.

We’ll show you exactly how the crooks swipe your identity. And, once they have it, how fast and how much they can steal, as  we try to catch a new kind of Internet predator— the identity thieves.

Our guide to the secret Internet underground is Dan Clements, president of “Card Cops”, an Internet security company that monitors chatrooms where criminals go to buy and sell your most personal information.

It’s a black market we’re about to expose, though we’ll be careful not to reveal people’s private information.

In a matter of minutes, Dan Clements shows us just how much a crook can obtain in the wide-open Internet underground.

Want the password to take over someone’s bank account?

And that’s just the start. Want credit cards?

There are so many thieves, crooks don’t have to pay much for your personal information. You won’t believe the deal this hacker is offering.

So for $5, a thief can buy a name, an address, Social Security number, credit card number, pin number—enough details to completely rip you off.

So where do the thieves get all that information?  First, they can get it from stolen laptop computers. Next, “hackers” actually break into computers and not just big computers. Any computer system at any store, especially a small store with weak security is vulnerable. And, finally, the crooks sometimes fool consumers into helping them.

Remember Leigh Morton, the woman whose bank account vanished overnight?

She says she got an authentic-looking e-mail asking her to update some banking information.

It’s called “phishing,” when you answer the fake e-mail, the information doesn’t go to the bank—it goes to the thieves.

Leigh Morton doesn’t know who stole her money. Neither do most victims of identity theft. The fact is most cases are never solved.

But we’re going to try to find the crooks who steal your identity—we’re about follow the trail back into that mysterious Unternet underground... and confront the thieves face to face.

To catch an identity thief, we’ll need some bait, so we get a major credit card issuer to cooperate. We make up some names and they give us real cards under those fake names.

The next step is asking Dan Clements to go back into the Internet underground, pretending to be a thief who stole our credit cards.

He’s about to put them into the thieves market—

Dan Clements and I are watching at the Card Cops office in California. Halfway across the country, a fraud investigator for the credit card company is standing by. Her computer will tell her every time our bait cards are used to make a fraudulent purchase. We even have a stop-watch to measure the time, second by second.

Clements tells us this is something that’s never been done before.

We test the waters, as Clements, pretending to be a thief, offers to sell some of our bait cards.

The response is almost instantaneous.

At first, the thieves appear to be feeling us out to see if we’re for real.

But it doesn’t take long for the thieves to take the bait. At the credit card monitoring center, the fraudulent charges are beginning to roll in. At first, they’re small charges to make sure the card works.

They even make a small donation to the Red Cross to test the card.

Once they’re sure the card works, the thieves start making bigger purchases by the minute.

Remember, we are watching Internet thieves at work in real time. Imagine it’s your card they’re using, buying from all kinds of stores.

The illegal charges could go on forever, but our card has a thousand-dollar limit.

But if you thought that was fast, you haven’t seen anything yet. 

Another of our bait cards carried the fake name Oscar Ernesto, with an address in Washington, D.C.—but in no time at all it’s used a continent away.

And as we follow our bait cards, Chile’s not the half of it. 

Our cards are being used to make illegal purchases all over the world within minutes of being stolen.

This part of our investigation lasts less than two days but the illegal charges are astonishing: flowers in Latin America, cell phones in Canada, and airline tickets in Asia.

Just how big?   Experts estimate that identity theft costs Americans nearly $5 billion dollars a year. And in most cases, the thieves get away with it.

By now, it’s clear: catching the crooks won’t be easy.

We figure our best shot at tracking them down is to follow the merchandise— all that stuff they’re buying with stolen credit cards. And the best way to do that? Go into business ourselves, and set up our own online store. And when the thieves place an order, we set up our own delivery company. So we can follow the loot right to the thieves’ doorsteps.

Dateline is about to set a trap for these new predators.

For nearly two days, we’ve been watching in amazement as Dan Clements of Card ops” has taken us inside a criminal Internet underground of hackers and identity thieves, where stolen credit cards are bought and sold and used to make illegal purchases with lightning speed.

The Internet thieves come from all over the world targeting Americans.  They’re rarely caught, almost never identified. But Dateline has figured out a way to lure these crooks out from the underground and put a face on this epidemic of crime.

The first step is to set up our own Internet company—“Hansen Discount Electronics.” We’re selling some popular items: Sony Playstations, Microsoft XBox-360s, mp3 players. But there’s a catch: our Website is secret. We’ve programmed it so that normal Internet shoppers can’t find it.

In fact, the only place we’re going to advertise our new Website is back in those underground chat rooms full of criminals. It’s likely the only ones to know about our online store will be identity thieves.  And we let them know we’re ready to take their business.

Remember, the only way to know about our new Website is to read the message in the thieves’ underground—or have one of the thieves tell you about it.

But within hours, “Hansen” is a hotspot for crooks.

We even set up a special program to keep track of who’s checking out our Website.

It doesn’t take long for people to start ordering merchandise with stolen cards.  Our first sale: a Sony Playstation, ordered with one of our own bait cards. 

But the thieves aren’t just using our bait cards. They’re also using real cards stolen from real people.

Don’t worry though—our online store isn’t letting any of those charges go through. So,  actual consumers whose credit cards may have been stolen are not being billed during our sting.

But as the fraudulent orders roll in, we get what we’re looking for: the addresses where the illegally-purchased merchandise is supposed to be delivered.

And, if we follow those deliveries, we figure the trail should lead us to the thieves.

So, we set up another undercover business: CH Delivery.

We pack up some of the electronics matching what the thieves have ordered and set out to start making deliveries all across the country to see what happens to the loot purchased with stolen credit cards.

We’ve infiltrated a high-tech den of thieves, an Internet underground at the heart of an epidemic of crime. It’s a place where people’s stolen identities are bought and sold every minute, every day.

We’ve even lured some of the thieves to our own online store, where they’re buying popular electronics items with stolen credit cards.

But what the thieves don’t know is something else is  coming along with the packages—something  they surely don’t expect: Dateline’s hidden cameras.

As we criss-cross the country making deliveries, the first thing we discover is that some of the people seem genuinely surprised to be getting our packages.

One Pennsylvania man doesn’t seem to know anything about the expensive video game he’s getting.

So what’s going on here? Authorities say some crooks have packages delivered to other people’s addresses, especially when they think those people will be away. Then the thieves intercept the packages without the homeowners ever knowing.

Could that be the case with this package?   It’s a Sony Playstation from our online store - ordered with a stolen credit card and on its way to Savannah, Georgia and a woman named Angela Vater.

So, as “Chris” from “CH delivery,” I head to her door, where I find an unusual note.

We decide to knock, anyway  to find out what’s going on. Remember, she thinks I’m the delivery man.

Before we can even explain what’s in our package, the woman inside says she doesn’t want it.

And listen to the reason:

Angela Cater, a single mom with four young kids is already suspicious about the packages that have been flooding her house.

There’s an entire side room filled with boxes. And, after I tell her I’m really from Dateline, she invites us to take a closer look—digital cameras, computer equipment, home theaters systems, marine radios, expensive shoes... and more from retailers all over the country.

Angela says she became suspicious after she got a phone call from an investigator who suggested that some of the stuff was bought with stolen credit cards.

But these packages weren’t delivered by mistake, because angela knows who ordered them: a man from London named “Paul.”

She says she agreed to accept his packages because Paul isn’t just any friend.

Angela says she met Paul on the Internet. He’s even sent her this picture and asked to marry her.

Angela has picked out a wedding dress. And some of Paul’s merchandise has been shipped to her, addressed as if they were already husband and wife.

It looks to us as if Angela is a pawn in an international theft ring. But is she alone?

Clear across the country we make another undercover delivery to Porterville, California, to Vickie Beebout another single mom.

It’s a package of electronics ordered with a stolen credit card, from that online store we created.

And guess who the stuff’s addressed to?  A man named “Paul.”

Turns out, Vicki Beebout also met her “Paul” over the Internet.

And, not surprisingly,  he’s been flooding her with packages too. And Vickie’s gone a step further than just receiving packages, she’s actually been re-shipping them overseas.

In fact, we saw DHL picking up one bound for Africa.

And when we ask Vickie to show us a picture of her Paul, we see a familiar face: Angela Carter’s "Paul Desmond."

And guess what? He wants to marry Vicki too. Turns out “Paul” is engaged to two different women on opposite sides of the country. And who knows how many others in between.

So why would international thieves want to trick women into accepting and reshipping so many packages?

Experts says it’s because many American retailers refuse to ship overseas, so, to collect their loot, the identity thieves need a middleman, a so-called “drop,” somebody in the United States who can accept a delivery, then forward the stolen merchandise.

That’s apparently how people like Vicki and Angela are being used.

And if a thief doesn’t already have a drop site, Dan Clements says it’s easy to buy one in one of those criminal chat rooms.

In the thieves’ market, we negotiate to buy a drop address where the criminals tell us we can send stolen merchandise.

Turns out, Penn Yan is very real—a small town in upstate New York, a place we’re about to become very familiar with, because back at our online electronics store, we’re getting more and more orders with stolen credit cards—a lot of them telling us to ship the goods to that same address in Penn Yan, New York.

In fact, dozens of orders, electronics worth more than $10,000 dollars. The name on the orders were for Wendy Kenson.

So we head for upstate New York using that shipping company we set up: CH delivery.

But when we get to the address, there’s no “Wendy Kenson” listed.

The house, proudly flying an American flag, actually belongs to a couple named Jeff and Therese Ball.

And as we make our delivery, we wonder: Are the Balls victims of a scam or are they scammers themselves?

The woman at the door knows the name Wendy Kenson.

We make more deliveries to this house—Playstations, cellphones, mp3 players...  but “Wendy” remains just as mysterious.

Mrs. Ball seems tight-lipped about “Wendy”.

So who is this mysterious Wendy?

We’re hoping that these people are middlemen who can help us answer that question and lead us to the mastermind of the identity theft operation.

Finally, on our fourth visit, a new face, and some new information.

This time, Jeff Ball answers the door. Unlike his wife, he starts to open up about what’s happening with all these packages.

Remember all this stuff has been ordered with stolen American credit cards, and now we’re finding out they’re being shipped to Africa?

So there’s a store in Africa, but that still doesn’t tell us much about Wendy.

It turns out, Jeff says Wendy is actually his business partner. That store in Africa is doing so well, Jeff says, Wendy wants to open more stores.

And as he tells us about the expansion plans, he drops a bombshell. 

So we’ve managed to track thousands of dollars in electronics ordered with stolen credit cards right to Jeff Ball’s doorstep. But we don’t know yet if he’s in on the fraud or another pawn. Either way, we’re hoping he can lead us to the kingpin behind the identity theft ring.

Jeff Ball says he’s in business with a mysterious Australian named “Wendy Kenson.”

And just look at the photos his big-time international business partner has sent, supposedly of herself. 

He says a romance has bloomed and soon he hopes they’ll get married.

Does Jeff Ball realize the merchandise he’s receiving has been bought with stolen credit cards?

Is he in on it, or is he being duped? 

To find out what’s really going on, we decide we need to spend more time with Jeff. So we’re telling him we have more packages — but to get them, he’ll have to stop by our delivery company “office.”

It’s really just a room in a warehouse we rented, about a 30-minute drive from Jeff Ball’s home.

We’ve wired the room with five different hidden cameras.

Remember, Jeff Ball thinks I’m with the shipping company, "CH delivery," and this is just our depot.

So good he claims he just got paid thousands of dollars ...

Sounds like a lot to us—not a bad payday for reshipping stolen merchandise that could have been ordered with your credit card.

Next, we ask how come the orders are sent first to his house if they’re ending up going to other countries. He says Wendy Kenson coordinates all of it. Jeff says Wendy’s told him she has customers who live outside the U.S. but need to order American merchandise.  It’s easier to buy if friends or relatives here in the U.S. simply pay for it with their credit cards and let Wendy forward it overseas.

The way Jeff tells it, it’s all on the up and up.

But we know friends and family aren’t buying it. The credit card numbers are really stolen. Remember ID theft victim Leigh Morton in Nevada?

Her stolen card was used to order a Playstation that was sent to Jeff’s house in care of “Wendy Kenson.”

Steven Yu’s card was stolen, too—and used to buy more stuff for the mysterious Wendy.

So, back at the our delivery depot, we’re trying to get Jeff Ball to tell us more about just who Wendy is.

To hear Jeff tell it, Wendy seems too good to be true. He says she’s a prize-winning model.

And that’s not all—

And for months, she’s been sending romantic email after romantic email.

So how did Jeff Ball meet her? Take one guess.

Believe it or not, Jeff Ball is about to give me a warning—and you may think it’s a bit ironic. Because remember, he’s on hidden camera and he doesn’t know who I am, as he tells me about the dangers of meeting women over the Internet.

Jeff Ball apparently knows all about our “Predator” series, but it’s obvious he doesn’t know he’s actually talking to someone who has more than a passing knowledge.

In fact, I learn he’s quite a fan of the Dateline series.  He knows all the “greatest hits.”

I’m thinking it’s about time tell Jeff who we really are and what we’re really up to.

But that’s when he gives us some news about Wendy.

This could be our chance to meet Wendy face-to-face and get to the bottom of this.

We hang around. But, not surprisingly, the mysterious Wendy doesn’t  show up.

So, we invite Jeff back to our “CH Delivery” office.

He’s cleary disappointed his fiancee didn’t come to see him.  And he begins to open up. First, he admits he never got that 18,000 dollar payment as a partner in Wendy’s business. 

In fact, he hasn’t made a dime....

It turns out, Jeff Ball has been duped all along. Overseas identity thieves have been using the picture of a beautiful woman to convince him to launder and ship stolen merchandise.  They’ve even convinced him to pay for the shipping.

Remember he still thinks I’m Chris from CH delivery.  I tell him I think he’s been swept up in a scam.

And one by one, I show him the orders we uncovered and the people who told us their identities had been stolen to pay for all the expensive electronics being delivered to his home.

This isn’t going to be a good day for Jeff Ball. Now that Jeff is beginning to realize he’s caught up in a scam, we’re about to tell him who we really are.

So far, the trail has lead to middlemen like Jeff Ball in Penn Yan, New York, who themselves may be pawns.

He’s been scammed with romantic e-mails and eye-catching photos—a woman he met on the Internet has convinced him to go into business with her and accept packages apparently ordered with stolen credit cards ..

Then forward them on to Europe and Africa.

Wendy Kenson has even convinced him to pay for the shipping.

Not only has Jeff Ball helped the thieves in their ripoff, apparently he’s been ripped off himself.

And remember, until now, Jeff thinks he’s been talking with Chris of CH delivery. He still doesn’t know I’m with Dateline - and that we’re recording all this on hidden camera.

But what about Jeff’s new love and business partner, that swimsuit model, Wendy?

Jeff Ball now realizes it may all be a cruel hoax costing him thousands of dollars and threatening his marriage.

Now, he has a decision to make:

Jeff Ball not only agrees to help, he lets Dateline take over the e-mail account he uses to talk to Wendy the thief. From now on, when the Internet thieves think they’re talking to Jeff Ball, they’re really talking to us.

As you’ll find out next week, the trail is going to lead us far from Penn Yan, New York, across the Atlantic—as we go on the hunt for Wendy and her gang of international identity thieves. Dateline, April 3, 8 p.m. on NBC.