Brazen ‘Point-And-Click’ Criminals Steal Billions Computer Technology Makes It Easy For Thieves To Produce Phony Checks

A fast-growing corps of “point-and-click” criminals, from lone computer buffs to ethnic gangs, are stealing billions of dollars with phony checks - many times what bank robbers steal with guns.

The Secret Service and FBI warned Congress on Thursday of the thriving new kind of fraud from counterfeit checks. Consumer advocates cautioned that some of the solutions, such as requiring noncustomers to apply thumb prints to checks, penalize the innocent without deterring the guilty.

“The Secret Service has seen a dramatic increase in the number of investigations specifically relating to the counterfeiting of checks,” Kevin T. Foley, the service’s deputy assistant director, told the House Banking monetary policy subcommittee.

“The motivation behind these schemes is greed. The goal is always money,” he said. “It’s a point-and-click crime.”

Estimates of the size of the problem vary widely. The Federal Reserve put the cost of check fraud to banks at $615 million in 1995, more than 10 times the $59 million attributed to bank robbery.

The FBI said data compiled from banks, businesses and individuals showed losses amounting to $5 billion in 1993.

“More alarming than the total amount is the fact that it is growing at a very rapid rate and could threaten the current payment system with unsustainable losses if it is allowed to grow unchecked,” said Rep. Michael N. Castle, R-Del., the subcommittee’s chairman.

It’s not a crime committed only by nonviolent white-collar criminals. Chuck Owens, the FBI’s financial crimes section chief, said counterfeit checks finance gangs that traffic in narcotics, commit extortion, run auto and jewelry theft rings.

Though suspects include individuals operating alone, a “sizable portion” of check fraud has been committed by organized ethnic enterprises, including Nigerians, Vietnamese, Russians, Armenians and Mexicans, Owens said.

In one of the biggest cases to date, 33 members of Vietnamese organizations were indicted in October in Orange County, Calif., after a two-year FBI undercover operation dubbed “Operation Paper Caper.”

“Over 1.2 million worthless checks are accepted for payment every day,” Owens said. That’s fewer than 1 percent of the 180 million written in the United States daily but enough to amount to a very expensive problem.

Its cause lies in the rapid spread of personal computers and desk-top publishing. A decade ago, producing convincing counterfeit checks required offset printing equipment and a fair degree of skill.

Now, all that’s needed is a laser scanner to capture an original check, a personal computer to alter the data and a quality laser printer. Total cost: less than $5,000.

Bankers are using technology to fight technology. Research in “biometrics” is focusing on a variety of sophisticated equipment that can verify identification using voice patterns, the iris or retina of the eye and hand and face patterns.

In the meantime, some of the nation’s biggest banks are demanding that noncustomers affix thumb prints to checks presented for cashing, said Boris Melnikoff, senior vice president of the Atlanta-based Wachovia Corp.

First Union Corp. of Charlotte, N.C., has expanded its program of requiring thumb prints from non-customers after tests in Florida, Georgia and South Carolina cut monthly check fraud losses there by 40 percent.

Consumer advocates say thumb-printing won’t deter organized gangs and suggest the real purpose of the policy is to drive the more than 12 million American families who have no checking accounts into high-fee check-cashing stores.