Synthetic identity fraud schemes have proliferated in the past few years, becoming the largest form of identity theft in the nation.
They combined real Social Security numbers with mismatched or phony names to create new identities, according to investigators. Prosecutors began the investigation in 2018 and charged them with 108 counts of illegal financial activity, mostly borrowing huge amounts of money they never intended to pay back, according to investigators.
Synthetic identity fraud schemes have proliferated in the past few years, becoming the largest form of identity theft in the nation, according to the financial company FiVerity, which in a report last year put the losses at an estimated $20 billion in 2020. About five years ago, the Federal Reserve estimated the losses at $6 billion.
Except for unemployment fraud, synthetic identity crimes usually are not confined to one state, forcing law enforcement agencies to cooperate, according to former Suffolk County District Attorney Tim Sini, who led the county’s part in investigating Arena, who has lived in both New York and California.
Sometimes the crook lets those fake accounts simmer for years before “busting out,” the term law enforcement officials use for pulling the trigger on the fake person’s account and charging up to the limit on a credit card, for example, and then defaulting. Arena and about a dozen others created the synthetic identities using Social Security numbers of children, recent immigrants, dead people, older adults and people in prison, according to the Suffolk County District Attorney’s office.
Another challenge has been how to define the term “synthetic identity fraud.” The Federal Trade Commission defined it in 2021 as “the use of a combination of personally identifiable information to fabricate a person or entity in order to commit a dishonest act for personal or financial gain.” Law enforcement agencies now use that definition to prosecute the theft.
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