Judge favors plaintiffs in theft-of-identity case.

A federal judge in Texas awarded damages and attorney fees to a retired couple whose identities were "stolen" by a former bank employee who opened 21 bogus credit accounts in their names and racked up more than $50,000 in bills. (McBride P. McBride, No. H-95-1037 (S.D. Tex. Oct. 2, 1995).

The plaintiffs contended that the defendant--a former loan analyst at a Houston bank--obtained their personal and financial information by using the bank's credit reporting terminal to tap into their credit report. Armed with information from the report, including their Social Securiyv numbers and their financial account information, the alleged defrauder opened bank, gas, and other credit accounts in Melvin and Loretta McBride's names. The defendant's name is Bertram McBride (no relation).

The McBrides discovered the fraud in 1993 when they started receiving collection calls on unpaid accounts they had never opened. They spent the next to years dealing with duped creditors, credit bureaus, and collection agencies--trying to convince them that they had not opened the bogus credit accounts and that inaccurate information was being reported about them.

Plaintiffs' lawyer David Szwak of Shreveport, Louisiana, said that when the McBrides began calling the creditors, credit bureaus, and collectors, they discovered that the fraud had actually begun in 1988. "The defrauder initially paid the fraudulently obtained accounts in order to build up available credit on which he intended to default," Szwak said. "In essence, he built up their credit and then took them to the cleaners."

The McBrides asked local and state law enforcement officials to investigate but were ruined down because theft-of-identity and credit fraud crimes do not fall within their jurisdictions. Frustrated, they contacted Sen. Phil Gramm (R-Tex.). He contacted the U.S. Secret Service, which does have jurisdiction and is an enforcement arm of the U.S. Attorney's Office.

The Secret Service conducted an initial investigation to determine who was responsible for the crimes but declined to take further action--despite having a signed confession from Bertram McBride--because the losses were not significant enough to meet their "threshold" criteria for further investigation or criminal prosecution.

Szwak said the Secret Service and the U.S. Attorney's Office generally do not prosecute theft-of-identity crimes or credit fraud unless the number of accounts opened and the total losses are extremely large. Typically, 20 or more accounts must be affected, he said, with losses totaling 100,000 or more. (Judge Awards $1.45 Million in Texas Theft-of-ID Case, Privacy Times, Oct. 15, 1995, at 1.

After hearing testimony in the case, U.S. District Judge David Hittner made the unusual move of ordering the Houston U.S. Attorney's Office to reopen the criminal investigation into Bertram McBride's activities and toke action.

"Judge Hittner asked me if Bertram McBride had been prosecuted," Szwak said. "When I told him the U.S. attorney had a signed confession but declined to prosecute because the case didn't meet his office's fraud threshold, he picked up the courtroom phone, called the U.S. attorney, and ordered him to handle the case immediately."

Szwak said the judge's riding "shows that the real victim in credit fraud is the person whose credit report is destroyed by the duped creditors, collectors, and bureaus. The credit report is wielded like an ax to the neck of the victim.

"The fact that the U.S. Attorney's Office typically does not prosecute these cases unless the losses meet an arbitrary standard is an incentive to thieves," Szwak said.

Szwak has also filed a separate civil lawsuit in Dallas federal court against 13 credit bureaus, banks, department stores, and collection agencies for defamation, violations of privacy, and violations of the Fair Credit Reporting Act in connection with the McBrides' case.