U.S. GOVERNMENT PRINTING OFFICE

64–986 cc WASHINGTON : 2000

S. Hrg. 106–574

PHONY IDS AND CREDENTIALS VIA THE

INTERNET: AN EMERGING PROBLEM

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

(

For sale by the Superintendent of Documents, Congressional Sales Office

U.S. Government Printing Office, Washington, DC 20402

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

JUDD GREGG, New Hampshire

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

HANNAH S. SISTARE, Staff Director and Counsel

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel

DARLA D. CASSELL, Administrative Clerk

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

SUSAN M. COLLINS, Maine, Chairman

WILLIAM V. ROTH, JR., Delaware

TED STEVENS, Alaska

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

K. LEE BLALACK, II, Chief Counsel and Staff Director

LINDA J. GUSTITUS, Minority Chief Counsel and Staff Director

MARY D. ROBERTSON, Chief Clerk

(III)

C O N T E N T S

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. Identification and credential montage ............................................................ 47

2. Connecticut Driver’s Licenses—one authentic, one fake ............................... 48

3. idsolution.com Web site .................................................................................... 49

4. Template for State of Maine driver’s license .................................................. 51

5. K. Lee Blalack’s fake driver’s license prepared with template from State

of Maine driver’s license identified above in Exhibit 4 ................................. 52

6. Tim Catron’s fakeidzone.com home page ........................................................ 53

7a. Authentic Victory Memorial Hospital birth certificate ................................. 54

7b. Tim Beachum’s Victory Memorial Hospital birth certificate ........................ 55

8a. Tim Beachum’s Kent State University Certificate .......................................... 56

8b. Tim Beachum’s Ohio Resident Activity Coordinator Training Project Certificate of Attendance ........................................................................................ 57

9. Fake Oklahoma driver’s license ....................................................................... 58

10. Mexican 311 E-mail .......................................................................................... 60

11. Powerpoint 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

Page

IV

12. Thomas Seitz documents .................................................................................. 89

13. Page from PromasterCards Web site .............................................................. 90

14. May 19 and 30, 2000 Internet postings of PromasterCards ......................... 91

15. SEALED EXHIBIT: Permanent Subcommittee on Investigations Deposition of Tim Beachum, April 5, 2000 ................................................................ *

16. SEALED EXHIBIT: Permanent Subcommittee on Investigations Deposition of Brett Skye Carreras, April 13, 2000 ................................................... *

17. Questionnaire 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. Affidavit of Tim Catron .................................................................................... 113

19. Affidavit of Josh Dansereau ............................................................................. 115

20. Statement for the Record of the Federal Bureau of Investigation ............... 117

21. Statement for the Record of the Social Security Administration ................. 120

22. E-mail: ‘‘Authentic Confidential New ID’s—Driver’s License!!!’’ .................. *

23. coolcards.com: ‘‘CoolCards—Postcards from the Net’’ ................................... *

24. theidshop.com: Order page terms and conditions .......................................... *

25. Message Board: Risingson ‘‘advice,’’ 10/13/99 ................................................. *

26. Will & Ed E-mail correspondence re: technology ........................................... *

27. Message Board, Webhost posts, 10/13/99, re: use of words ‘‘novelty’’ and

‘‘educational’’ ..................................................................................................... *

28. excite Web search results for ‘‘fake id,’’ 4/12/00 .............................................. *

29. carreras.net: ‘‘Premium Files’’ .......................................................................... *

30. fakeidone.com: Home Page ............................................................................... *

31. theidshop.com: ‘‘PVC Plastic Id’s’’ ................................................................... *

32a. prestigious-images.com: ‘‘ ‘Official’ College Diploma Template’’ ................... *

32b. Fake ID Zone Kits ............................................................................................ *

33. alt.2600.fake-id message board, Webdiaster post, 3/22/00, re: Ohio templates ................................................................................................................. *

(1)

1See Exhibit 1 which appears in the Appendix on page 47.

PHONY IDS AND CREDENTIALS VIA THE

INTERNET: AN EMERGING PROBLEM

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.]

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.

2

1See Exhibit 2 which appears in the Appendix on page 48.

2See Exhibit 3 which appears in the Appendix on page 49.

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.

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.

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

3

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.

4

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.

5

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,

6

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 datacollector 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 unVerDate 11-MAY-2000 14:41 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 64986.TXT SAFFAIRS PsN: SAFFAIRS
7

1See Exhibits 20 and 21 which appear in the Appendix on pages 117 and 120.

regulated 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

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

8

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.

9

1See Exhibit 4 which appears in the Appendix on page 51.

2See Exhibit 5 which appears in the Appendix on page 52.

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 highquality 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, authenticlooking 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

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 LawVerDate 11-MAY-2000 14:41 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6601 64986.TXT SAFFAIRS PsN: SAFFAIRS
10

1See Exhibit 6 which appears in the Appendix on page 53.

2See Exhibits 7a. and 7b. which appear in the Appendix on pages 54 and 55.

rence, 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.’’

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.

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 highquality 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

11

1See Exhibits 8a. and 8b. which appear in the Appendix on pages 56 and 57.

2See Exhibit 9 which appears in the Appendix on page 58.

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.’’

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.

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?

12

1See Exhibit 10 which appears in the Appendix on page 60.

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.’’

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.

13

1The prepared statement of Mr. Myers appears in the Appendix on page 31.

2See Exhibit 11 which appears in the Appendix on page 61.

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.

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 highquality 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

14

common and can be purchased off the Internet for virtually any

country in the world.

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 alVerDate 11-MAY-2000 14:41 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6601 64986.TXT SAFFAIRS PsN: SAFFAIRS
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1The prepared statement of Mr. Seitz appears in the Appendix on page 36.

most 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.

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

16

1See Exhibit 12 which appears in the Appendix on page 89.

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.

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

17

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?

18

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.

19

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

20

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

21

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

22

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

23

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. StafVerDate 11-MAY-2000 14:41 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 64986.TXT SAFFAIRS PsN: SAFFAIRS
24

1The prepared statement of Mr. Stafford appears in the Appendix on page 38.

ford 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.

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

25

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.

26

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

27

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.

28

1See Exhibit 13 which appears in the Appendix on page 90.

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.’’

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

29

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

30

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.]

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