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Health club credit card theft: a national crime problem.

During the FBI's investigation of the Yugoslavian, Albanian, Croatian, and Serbian (YACS) commercial safe burglar groups, (1) investigators discovered a specialized theft crime problem perpetrated by some of these offenders. The crime pattern involved the theft of credit cards from the lockers of unsuspecting health club members while they exercised. Victims included both men and women. The thieves then used the stolen credit cards, sometimes within hours of the theft, to obtain cash at casinos. An examination of this crime problem, which persists today, can help investigators understand the modus operandi (MO) of these unique credit card thieves and offer some recommendations to help prevent thefts in the future.

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Overview

Beginning in the early to mid 1990s, those law enforcement agencies principally involved with investigations of criminal activity inside casinos began noticing an increase in the use of stolen credit cards to obtain cash from the cash-advance merchants in the casinos. The interesting common denominator in these investigations was that many of the credit cards used in the scam had been stolen from health club lockers. Investigators noted that the persons caught passing the cards were primarily of Yugoslavian or Albanian descent. The thieves' chance for successfully avoiding capture was aided by the fact that cardholders often did not notice the theft of the card until they received the monthly billing statement weeks after the actual theft. Victims would check their wallets and notice, for the first time, the credit card missing, but would be uncertain as to when or where the theft occurred. For example, a businessperson from Florida on a trip to New York stays at a hotel in Bergen Country, New Jersey. The hotel recommends a local health club that the person uses for a workout. The businessperson signs in as a dayuse guest, and, during that time, someone steals a credit card from the person's wallet. Afterward, the businessperson returns to Florida and, several weeks later, discovers unauthorized charges on one credit card. This represents the typical situation that confronts victims of these thefts as they report it to authorities.

Modus Operandi

Law enforcement reports, postarrest interviews, analysis of evidence obtained from search warrants, and intelligence gathering have made it possible to describe a typical health club credit card theft scenario. A group of between four to six thieves goes to a health club. At least one of them will be a member, sometimes under an alias, of the club the group targeted for locker thefts. Other coconspirators may sign in as guests of the member or may sign in on a dayuse basis. These thieves also target health clubs offering 1-weekfree, trial memberships. While the thieves usually do not all enter at the same time, they probably find the sign-in procedures familiar through previous surveillance. Undoubtedly, all of the thieves possess counterfeit identification in a fictitious name so as not to arouse suspicion if a health club employee asks for identification. Moreover, because guests entering health clubs also may have to sign a guest book or log, thieves often pay the nominal day-use fee in cash. They believe that health club employees keep this fee for personal use and do not record when guests come to use the facilities.

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Once the thieves enter the locker room, they separate into prearranged roles. At least one person will act as a "blocker" and lookout at the main entrance to the locker room. Other thieves will target certain lockers and will carry various "shims"--extremely thin pieces of metal cut to a small size--to "shim" open the combination padlocks on the lockers. A skilled "shimmer" can open these padlocks faster than a person who uses the combination. The shimmer may have the additional assistance of another blocker who may use the locker next to the targeted one to further screen the shimmer's efforts. The shims are so sharp that thieves usually wear bandages or pieces of tape to protect their fingers.

After opening the lock, the thieves carefully avoid disturbing the contents in the locker, looking only into the member's wallet to find any credit cards. They remove one or two of the credit cards, preferably from a wallet with many credit cards,

and note the name, address, and date of birth on the driver's license, but never take any cash. They replace the wallet exactly as they found it to avoid arousing any suspicion when the member returns to the locker. Thieves normally target several lockers at the health club, and more than one person usually shims at the same time. Thieves generally steal 15 to 20 credit cards either from one health club or from multiple health clubs before moving to the next phase of the scam.

Counterfeit Identification Manufacture

The next phase involves the thieves producing counterfeit identification to match the name on the credit card. In the early vintage of this scheme, thieves most commonly made counterfeit, non photo New Jersey driver's licenses to use at Atlantic City casinos. They employed these nonphoto licenses as backup identification (ID) that they would show inside the casinos to tellers who requested ID before providing cash to the person holding the credit card. More recent trends involve making counterfeit, color photo driver's licenses from different states. Thieves modified their MO after the casinos became aware of the nonphoto New Jersey licenses and began requiring photo ID as backup identification. Also, the thieves expanded their target area to include health clubs located in states without casinos. This required the thieves to manufacture counterfeit driver's licenses from many states.

The thieves always must know in advance exactly which person will serve as the "signer" inside the casino. Obviously, that same person's photo must appear on the counterfeit driver's license. Laptop computers, color scanners, and color printers have facilitated the production of such counterfeit documents. (2) The thieves usually complete the matching ID within a short time and then plan their travel to the casinos. If the casinos are nearby, they generally travel by car or van. If the casino is far away, the thieves, using aliases, fly on commercial aircraft. They never use stolen credit cards to purchase airline tickets when they fly to a distant location to steal or to pass credit cards.

The Casino Connection

Before using the cards at the casinos, the thieves, now a group of 10 to 15 people, make sure that the health club members have not reported the theft of the cards. To accomplish this, the thieves typically stop at a gas station/convenience store and buy a few gallons of gas at a self-service pump or make a small purchase at a gift shop in or near the casino. (3) If a problem arises, the thieves feign any knowledge and purchase the gas or gift with cash and then destroy the card. The thieves check all stolen cards prior to entering a casino.

The large group of thieves now breaks into smaller teams to begin passing the cards inside the casinos. This reduces the risk of detection by casino gaming commission law enforcement authorities or by private security personnel inside the establishment.

Casinos use different merchants to provide the cash-advance service. Essentially, a card holder uses the machine by inserting or swiping the credit card and then entering the desired amount of money. The service adds a small fee to that amount and, as long as sufficient credit remains on that credit card, generates a receipt. The card holder takes the receipt to a nearby teller window where the teller has received a similar approval for the transaction. The teller matches it with the receipt handed by the customer and asks to see the credit card, as well as backup ID, before giving the requested money, less the fee, to the customer.

The health club locker thieves who use the same service at the casino, but with stolen credit cards, do not know how much credit is available on a particular card. The thief may have to try different amounts, reducing the amount requested each time, before obtaining approval. Investigators can retrieve computerized records regarding these transactions and usually will find multiple attempts to obtain cash. Thieves may use the same card at different casinos until they reach the credit limit for that card. During this phase, the thieves maintain contact with each other through pagers and cell phones.

The Profit Split

The thieves split the profits in thirds: the person who steals the card, the one who makes the counterfeit ID, and the "signer," or the person who passes the card, each receive one-third of the profits. If a thief fulfills two of the roles, that person will get two shares. Groups of more than 10 persons using 20 to 30 stolen cards have made $60,000 to $100,000 in only 1 weekend in Las Vegas. Thieves involved in this criminal activity are well organized and experienced interstate criminals. After completing the scam, the thieves return to the New York metropolitan area.

Recent Trends

While stealing thousands of credit cards and reaping millions of dollars worth of currency, some thieves appeared repeatedly in the same casinos. As law enforcement became more aware of the identity of the known credit card thieves, new perpetrators, or "fresh faces," have begun to actually pass the cards in the casinos. The known thieves usually are nearby, but not at the teller window with the conspirator who is obtaining the cash. Currently, the Yugoslavians and Albanians in these schemes appear to be using Romanians without arrest records to pass the cards. Further, even though the greater travel distance to Las Vegas can be a risk to the thieves from New York, Las Vegas offers many more casinos compared with Atlantic City and, therefore, proves enticing to the credit card thieves. Although credit cards were stolen primarily from New Jersey and New York in the early stages of these crimes, the theft of cards from health clubs in states all across America has blossomed. In addition, more and more states are establishing casinos within their borders, and it is only a question of time before these casinos become victimized as well.

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Detection Problems

Detection problems fall into three basic categories: health club, credit card company, and casino. Health club security measures vary greatly. They rarely have any videotape to record persons entering the club and, for obvious reasons, employ no closed-captioned television inside the locker rooms. Some fitness centers do not use photo membership cards to identify their members. Others merely ask members to say their four-digit number upon entering the club. Some may not require day guests or trial members to show photo identification to gain admittance to the club. Several clubs have no small, secure valuables lockers (located behind the front desk) for use by members who then, because of a lack of these type of lockers, have to store their wallets in a typical locker in an unsupervised locker room.

Credit card companies vary in their internal controls and "flags" programmed into their computer software. One convicted thief admitted that he generally stayed away from one credit card because the company's employees monitored the use of the cards more closely and were apt to call a cardholder if unusual activity occurred, even if the card was not reported stolen. Such preventive action could derail the scam because the delay in the discovery of the theft of the card provides the thief with a greater window of opportunity to exploit whatever credit remains on a particular card.

The delay in the discovery of the theft of the card also has the detrimental spillover effect of hampering investigators as they try to find evidence of the person who used the card in the casino. Companies who operate the cash-advance service in the casinos may only keep their teller window videotapes for 1 or 2 weeks at a time before recording over them. Investigators found that in some cases, the videotaped transaction, which would clearly show who passed the stolen credit card, had been erased due to the passage of 4 to 6 weeks since the actual theft occurred. It is possible that thieves who know which cash-advance companies maintain the videotapes for the shortest period of time actually may target those companies when passing the stolen credit cards. Further, thieves also have used the assistance of employees who work behind the teller window area while they pass the credit cards.

Countermeasures

Prospective members touring a health club consider the fitness equipment, programs, and cost of membership before deciding to join. However, they also should assess the security features at the facility. The presence of the small valuables lockers, located immediately behind or next to the front desk, for the storage of a wallet and keys can reduce the chance of any credit card theft. A convicted thief advised that if the health club had those small valuables lockers near the front desk, his group did not even try to steal any credit cards from the locker room. The thieves just went to a different health club that did not use those type of lockers. Persons should ask the health club manager how the club handles day-use guests, such as guests from local hotels or conventions or other visitors. They should determine if guests are required to show a photo ID and if the front desk makes a copy of the ID. If people already belong to a club that does not offer lockers near the front desk, they should try to get in the habit of quickly checking their wallets immediately after getting dressed before leaving the health club, making sure that all credit cards are present, particularly those cards that are toward the back of the stack of cards. If one is missing, they should immediately notify local police and the credit card company. The credit card company may be able to help police apprehend the thieves should the thieves try to use the card. The credit card company should remain especially alert for any attempt to use the card to obtain a cash advance at a casino.

In addition, the management at the health club needs to know about the theft because other members undoubtedly had credit cards stolen at the same time. If the health club has a computerized system, such as a bar-coded ID card shown on the way into the club, the manager may be able to contact other members and advise them to check their wallets.

Because a relatively small group of criminals is responsible for the majority of this national crime problem, law enforcement agencies, particularly those that recently have made their first arrests of persons involved in these type of thefts, should contact law enforcement agencies covering Atlantic City and Las Vegas casinos. Agencies new to these scams can e-mail a color arrest photo to those law enforcement agencies having more experience with these credit card thieves. This prompt networking may help correctly identify the arrestee who could be assuming a false identity. If this contact is done quickly, the arrestee's correct identity could be known before arraignment. Also, some agencies have photos of individuals who have passed stolen cards but do not know their identities. Therefore, the recent arrest in one jurisdiction may identify the unknown suspect in another agency's theft case.

Local crime prevention officers should take time to meet with health club managers within their jurisdictions to advise them of this criminal pattern and to discuss their clubs' security measures. Police responding to any suspicious person or vehicle call in the parking lot of a health club should consider the possibility that the suspicious person or vehicle may participate in these type of thefts. Police officers should note any bandages or tape on the suspicious person's fingers and the existence of any "shims," credit cards not in the name of the person, or a "prop" gym bag that contains dry clothing because these thieves do not exercise or shower at the targeted facility.

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Conclusion

As more health clubs open and as additional states begin licensing casinos, health club credit card thieves will continue to have ample opportunity to perpetrate their interstate fraud. The enticement to make thousands of dollars will keep a steady flow of interested recruits into this unique criminal specialty.

However, small changes in the personal habits of members following workouts, along with improvements in security both at fitness centers and at the cash-advance merchants inside casinos, could help prevent thefts or, with prompt discovery of the theft, could help thwart the successful passing of the card inside a casino. Further, increased vigilance by credit card company watchdogs looking for suspicious credit card activity coupled with enhanced networking by those law enforcement agencies principally involved in investigating crime within the casinos ultimately could lead to a dramatic reduction in profits for these interstate criminal gangs.

Endnotes

(1) For additional information, see Richard A. Ballezza, "YACS Crime Groups: An FBI Major Crime Initiative," FBI Law Enforcement Bulletin, November 1998, 7-12.

(2) Evidence seized after execution of federal search warrants in the New York area corroborate the thieves' use of these techniques.

(3) Reports have surfaced that some thieves even have a toll-free telephone number similar to those used by merchants calling to check on a particular credit card.

Special Agent Ballezza serves in the Hudson Valley resident agency of the FBI's New York office
COPYRIGHT 2003 Federal Bureau of Investigation
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Author:Ballezza, Richard A.
Publication:The FBI Law Enforcement Bulletin
Date:Nov 1, 2003
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