Prying Eyes: With These Operators, Your Bank Account is Now an Open Book

Devious Information Brokers, Using Many Ruses, Tap Private Financial Data

A Rebate Out of the Blue

Wall Street Journal
by Jon G. Auerbach, Mark Maremont and Gary Putka

Dale Ohmart didn’t know it at the time, but this bank-account balances at Fleet Financial Group Inc. were revealed last year to lawyer Frank Frederico, of Methuen, Mass. Mr. Frederico, acting on behalf of a client, says he wanted to see if Mr. Ohmart, a minister in Derry, N.H., was wealthy enough to be suing: he wasn’t.

The $613.12 that Salvatore Miniero had in his BankBoston Corp. checking account in March 1997 was disclosed without his knowledge to a lawyer working for St. Thomas Aquinas High School, of New Britain, Conn. St. Thomas was pursuing Mr. Miniero to settle unpaid tuition bills for his daughter.

Irene Snee of San Jose, Calif., learned recently that her account balances at Great Western Financial Corp. had been secretly revealed to a shipper seeking payments from her building-supply concern. “Somebody has sneaked into my whole life,” Ms. Snee says.

All three were targets of the same information broker, one of a fast-growing group of firms that specialize in hunting down confidential financial data. Although many information brokers use only legitimate public records to conduct their searches, others employ ingenious ruses to pry into customers’ bank accounts and brokerage records. The most widely used practice involves impersonating an account holder to obtain balances, say federal officials and state investigators.

The growth of the illicit industry is “explosive,” says Robert Douglas, a private investigator in Alexandria, Va, who testified on information brokers in July before the U.S. House of Representatives Banking Committee. Committee Chairman James Leach opened the hearings by saying there is a “threat to financial privacy posed by those information brokers.”

Mr. Douglas and other observers say the rise of these unscrupulous asset researchers has been fueled by the Internet, which has made it easier for them to advertise and to gather information on individuals. Those data, in turn, make it easier to impersonate an account holder when calling a financial institution.

Julie L. Williams, acting comptroller of the currency, calls dishonest information brokering a “growing and alarming” practice. Ms. Williams’s office — the other main federal banking regulator, besides the Federal Reserve — is working with the Federal Bureau of Investigation and other agencies to help banks beef up their security. In the banking-committee hearings this past summer, Ms. Williams warned banks that their failure to keep confidential date under wraps “may well result” in her office “stepping up activities in this area.”

In the cases of Messrs. Ohmart and Miniero and Ms. Snee, their pursuers obtained the bank balances by using a small information broker in Stamford, Conn., doing business as Summer Associates Information Services, according to the internal documents from Summer. The Connecticut attorney general’s office is looking into Summer and the head of the firm, Keith Wofsey, for possible violations of consumer-protection and bank-privacy laws, according to a state official familiar with the matter.

The state official says Connecticut authorities are seeking to determine whether the firm’s employees impersonated bank customers, mailed phony rebate checks to targets to obtain their bank-account numbers from their returned checks, or used bogus offers of credit to trick people into divulging bank information and Social Security numbers.

Mr. Wofsey declines to discuss the investigation and has denied impersonating depositors. Summer Associates apparently has gotten out of the information- brokerage business, but Mr. Wofsey declines to discuss the company’s current status.

Although the bank data that Summer was hired to find are generally regarded as confidential and extremely sensitive, documents from the firm show that over an 11-month period in 1996 and 1997, Summer routinely succeeded in discovering the balances of dozens of depositors at myriad banks and thrifts. These include such large ones BankAmerica Corp., Bank of New York co., Chase Manhattan Corp., Citibank, Great Western and PNC Bank Corp. Among smaller Connecticut banks whose depositors’ balances Summer found were People’s Bank, Webster Bank and the Lafayette American Bank unit of Hubco Inc.

Spot checks with 17 of the depositors who were Summer targets show the information provided by Summer was accurate about their names, account numbers and balances. Several of the parties listed as clients on the documents also confirmed they had hire Summer. Frederick G. Tilley, director of security at BankBoston, says the bank can’t say for sure how the information broker obtained Mr. Miniero’s balance. “I can only guess that what happened here is that an employee didn’t follow a procedure,” Mr. Tilley says. He adds that the bank has boosted training and monitoring of customer -service agents.

Each of the other banks involved either declined to comment on how the banking data of their depositors were obtained by outsiders, or didn’t respond to inquiries.

Summer’s clients were often lawyers specializing in debt collections, and they represented a wide variety of creditors. collection lawyers have come to see the asset-searching industry as “a bonanza,” says Mr. Douglas, the private investigator. Generally, the legal avenues for discovering the assets of a debtor who won’t volunteer the information are time-consuming and costly.

By using information brokers, lawyers can unearth account information on the cheap. In collection cases where a court judgment against a debtor exists, deposits can then usually be seized by a court order at relatively little cost to the creditor.

Summer charged many of its clients between $120 and $175 for a search of bank accounts, its invoices show. Among the hundreds of asset searchers, legitimate or otherwise, that advertise on the Internet, prices range from $69 to about $200. One such service, called The Cat, boasts it will “prowl the U.S.A.” to locate hidden assets such as bank accounts, property and airplanes. Another Internet advertiser, Wind Associates Inc., offers to find mutual-fund or brokerage-account balances for $250 and to find nonpublished phone numbers for $95 a pop. One of its mottoes: “No locate. No charge.”

Gregory John, senior partner for the Minneapolis-based Cat service, says his firm generally doesn’t say how it gets information and only rarely obtains bank balances. Messages left for a Wind spokesman weren’t returned.

Connecticut Attorney General Richard Blumenthal says his office is looking into several information brokers in connection with possible privacy violations and other misconduct. He also says the state plans to issue subpoenas to as many as six banks that operate in Connecticut as part of the probe. He wouldn’t identify the banks. “There may be some potential responsibility on the part of the banking institutions,” Mr. Blumenthal says.

Documents showing Summer’s dealing were provided by Connecticut officials and this newspaper by Paul S. Bedford who describes himself as an investor specializing in small-business turnarounds. Mr. Bedford says he has been acquainted with information brokers since he worked as an outside marketing consultant to one such firm, NRS Information Systems Inc., of Fairfield, Conn., in the early 1990s. NRS filed papers with the state in September that dissolved the company.

Sometime after working for NRS — which often did asset searches for Summer, according to the latter’s records — Mr. Bedford says he approached Summer’s Mr. Wofsey and falsely said he might be interested in investing in the firm. In fact, Mr. Bedford admits that his primary interest was to try to get material showing that Fleet Financial had used information brokers, so that he could use it as leverage in a financial dispute with the bank. Fleet Financial says it no longer uses information brokers.

Mr. Bedford says that after he saw Mr. Wofsey making deceptive phone calls, he decided to report Summer to the authorities. Mr. Wofsey says that Mr. Bedford’s description of the way business was done at Summer isn’t true, and that Mr. Bedford owes him money, which Mr. Bedford denies. Connecticut authorities say they believe documents provided by Mr. Bedford are authentic.

Earlier this week, the Connecticut attorney general’s office filed a lawsuit against NRS and its president, Frederick Acker, seeking civil penalties and a halt to NRS’s “deceptive” business practices. According to the complaint, NRS paid employees at financial institutions to provide the firm with private financial information about consumers. The complaint also alleges that NRS under Mr. Acker’s direction, obtained personal information on targets through impersonation and unauthorized consumer-credit reports.

Frederic S. Ury, Mr. Acker’s secretary, declined to comment on any matters pertaining to either Mr. Acker or NRS. “I doubt very much that Mr. Acker will talk about his company,” he says. Mr. Acker couldn’t be reached.

Summer was small, operating out of a three-room suite in a converted factory in Stamford. but a look at its activities demonstrates just how easily a few people with a telephone and a computer modem can ferret out confidential bank information.

The company’s files show that Summer routinely obtained sensitive credit reports on its search subjects from Equifax Inc., the big Atlanta financial- data firm. Equifax says it scrutinized Summer to ensure that the firm was eligible to receive the reports. But a purported Connecticut Secretary of State license that Equifax says Summer provided to Equifax doesn’t resemble any document issued by that agency, says Thomas Ryan, an attorney in the Secretary of State’s office who examined a copy of the document. “It looks like a cut-and-paste job,” he adds.

Summer’s files show — and a former employee confirms — that finding a target’s phone number was often an important step. In the case of unlisted or other hard-to-find numbers, one tactic used by Summer involved sending an individual either a post card or letter saying he was owed money or a package delivery, and asking him to call a toll-free telephone number, records show. When the individual telephoned the number, caller-identification equipment would record the caller’s number.

Armed with a phone number, a Summer staffer would call the local telephone company, pose as the person Summer was targeting, and say he needed to pay his phone bill, but didn’t know the amount due, according to Mr. Bedford and the former Summer employee. After the phone company provided the account balance, the information broker would call the customer at home posing as a phone company official and would ask why payment hadn’t been received for that amount. If the customer claimed to have paid already, the caller would ask for the account number on the check so that payment could be verified. With that account number, the information broker could then call the bank, posing as the customer, and obtain account balances, says Mr. Bedford.

Connecticut investigators are also looking whether Summer and other brokers have gathered information on targets through bogus offerings of credit, mailed to the homes of targets. Summer records include purported circulars from “Bankers Credit Company,” offering the recipient up to $20,000 in “pre-approved” credit in the form of an immediate cash advance. The forms asked for such information as Social Security number, date of birth and bank-account numbers.

One person who took the bait was John A. Lepito, a deputy sheriff who lives in Southington, Conn. After receiving such a credit offer in mid-1996, Mr. Lepito signed the “acceptance certificate” on Aug. 17, 1996, requesting a $5,000 cash advance. He also filled out the form, raveling two account numbers at Southington Savings Bank, his birth date and his Social Security number.

The returned form was included in Summer records, which show that about five weeks later, Summer supplied balance information on both of Mr. Lepito’s Southington Savings accounts to a client identified as Edward D. Jacobs, a New Haven, Conn., lawyer. Mr. Lepito, who acknowledges that he owed about $104,000 to creditors from a failed real-estate investment, says the creditors later froze both of the accounts and eventually seized a small sum from one of them. Summer records show that Mr. Jacob’s office used Summer on dozens of occasions. Mr. Jacobs declined to be interviewed.

“They got me. And I didn’t even get the damn $5,000 check” promised in the form, Mr. Lepito says. “These people are pretty clever.”

Also among the Summer files are a number of canceled checks, cashed by search, in the sum of $5.69. Ms. Snee, the California building-firm owner, received one such check in the mail — giving “Nationwide Refund/Rebate Account” as the apparent payer. She deposited it on March 31, 1997, writing on the back of the check her account number at Great Western. At the time, she figured the rebate check had come from a credit-card company.

In early July, a lawyer armed with a court order seized $8,707.44 from Ms. Snee’s Great Western account to pay off Unishippers Association Inc., a shipper that had obtained a debt judgment against a business owned by Ms. Snee and her late husband Donald.

Unishippers says it hired Amy Gordon, a lawyer in Burlingame, Calif., to help it collect the debt. Ms. Gordon, who declined to answer questions, hired Summer, according to a Summer order form. About three weeks after Ms. Snee cashed the rebate check, Summer reported that it had found an account at Great Western held by Mr. and Ms. Snee, according to these records. ” The balance as of 4/14/97 is $9,738.50,” Summer noted. Great Western says t doesn’t know how such information was obtained.

Early last year, Summer was hired to find information on Mr. Ohmart, the New Hampshire minister, after his automobile struck a bicyclist. Mr. Frederico, the attorney pursuing Mr. Ohmart, says he hired Summer because “we don’t like to go after people individually unless they have liquid assets.” In February 1997, Summer provided Mr. Frederico with account numbers and balances on four different accounts at Fleet Financial kept by Mr. Ohmart.

Mr. Frederico, who chose not to pursue the matter based on the information that Summer provided him, says he has “no idea” how Summer unearthed the bank account information.

Mr. Ohmart, age 39, didn’t know that his account confidentiality had been violated until he was contacted for this article. He now says he is considering closing his Fleet Financial accounts, and asks, “How in the world can I feel that the relationship I have with the bank is secure or that my own assets are secure?”

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