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The Resource Center Identity Theft & Protection | post

Is it okay to sell fake IDs if the goal is identity theft prevention?

by Steve Schwartz on

Identity theft prevention is normally not the goal of many fake ID sellers. But it was if you were buying from Celtic Novelty and its owner Mike Adams.

Adams, you see, is a Secret Service agent and from late 2007 until March 2011, he ran "Celtic's Novelty I.D. Service" in Las Vegas. It advertised in certain places on the internet saying "if you wanted a high quality phony IDs, we are your go-to source."

What Mike Adams was doing is summed up in the headline of a wonderful story in Wired Magazine, "The Secret Service Agent Who Collared Cybercrooks by Selling Them Fake IDs." The online service was  run by agents of the Treasury Department who manufactured flawless driver's licenses for 13 states and shipped them to buyers around the world.

The agents were not out to provide fake ID's for under-aged college students to get into bars. Rather the goal was identity theft prevention by selling to, thus identifying, and eventually arresting ID theft gangs - hardened criminals - and then closing down the entities that helped the criminals operate.

In the end this plan was called "Operation Open Market" and it has resulted in the arrest of a wide range of scammers with colorful online nicknames like "Oink-Oink," "XXXSimone," and "Temp." So far 55 defendants based in 10 different countries have been named in four federal grand jury indictments.

More than simply busting individual cyber-criminals, the Celtic operation allowed agents to penetrate deep into the internet black market that is the home of whole organized international ID theft enterprise. For the first time U.S. investigators developed an understanding of how exactly this global illegal marketplace operates.

For instance, Celtic advertised its products on a Russian based internet forum - where amusingly it garnered rave reviews for its high quality work, prompt shipping, cheap prices and yes, its top rate customer service.

It sold its product and collected its cash using a underground online payment service. It turned out this payment service was the main one that moved money for this whole loosely aligned global network. Another Treasury/Justice Department investigation of that payment service resulted in more indictments.

Open Market began almost by accident when in 2007 Las Vegas police arrested a scammer and found a storage facility that he had set up to manufacture phony IDs.  Secret Service agent Adams interviewed the scammer and got details of the grafter's rather elaborate card manufacturing set-up.

From the grafter Adams learned about the so-called online "carder forums," where stolen identities are bought and sold. Adams had previously wanted to go undercover to penetrate the underground black market in stolen identities. Now, he saw the perfect opportunity. Operation Open Market was born.

"The prosecutorial strategy centers on disrupting and dismantling the organization while at the same time acting as a deterrent to similar organizations that may be operating under the belief that because they are outside U.S. territory they are safe from U.S. law enforcement," read a report made public with the first set of Open Market indictments.

Identity theft prevention was the goal of Open Market and a number of other Treasury, Customs and Justice Department investigations, many that are still ongoing. What these investigations are showing is just how sophisticated, how global in scope and how profitable these criminal enterprises are.