In the realm of identity theft and fraud, criminals are constantly finding new ways to exploit vulnerabilities in systems. One such scam, orchestrated by Matthew Cox and Fridman, involved the creation of synthetic identities and led to a staggering $11 million in illegal gains. Let’s dive into the details of this elaborate con and understand how it unfolded.
Contents
The Birth of Synthetic Identities
The masterminds behind this scam took a multi-faceted approach to creating synthetic identities. They utilized real names and information, mixed with fabricated elements, to craft these fake personas. Homeless individuals were even involved, providing a foundation of real people for the scam. By obtaining birth certificates, they gained access to Social Security numbers, a crucial component in forging these identities.
Exploiting the Credit System
Once they had the necessary information, the scammers would select any name they desired, even if it didn’t match the last name of the individual. Armed with a Social Security number and a new name, they would apply for credit cards, knowing they would initially be denied due to the lack of credit history. However, these denials came with an offer for a secured credit card, which allowed them to build credit by making payments.
The Emergence of Synthetic Identities
As they made regular payments, the scammers meticulously cultivated credit profiles for the synthetic identities. They discovered that credit bureaus didn’t generate credit scores for these new identities until approximately a year had passed. This knowledge fueled their efforts. They continued creating more synthetic identities, known as “phantom borrowers” at the time but now commonly referred to as synthetic identities.
The Lucrative Business Model
Once they had a collection of these synthetic identities with established credit profiles, the scammers began exploring ways to monetize them. While some fraudsters might opt for simple credit card fraud, Cox and Fridman had grander ideas. They saw an opportunity in leveraging the pristine credit histories of these synthetic identities to obtain mortgages for properties.
The Property Flipping Scheme
Their next step was to purchase properties at low prices, renovate them, and sell them at a higher value. Instead of selling to legitimate buyers, they chose to sell these properties to their synthetic identities. The identities had immaculate credit histories, providing lenders with a false sense of security. By inflating the values of the properties through manipulated appraisals, they secured large mortgages in the names of the synthetic identities.
Unraveling the Scam
As the scammers continued their operation, amassing millions of dollars, they began defaulting on the loans and credit cards. This triggered collection efforts from the banks and credit card companies. However, they had a clever strategy to divert attention and stall legal actions. They would create fictional news articles about severe accidents involving their synthetic identities, claiming that they were in comas and no longer able to work. These fabricated stories, along with additional misdirection tactics, bought them time.
The Fallout
Ultimately, Cox and Fridman’s multi-million dollar scam came crashing down when the FBI caught wind of their activities. Despite involving a substantial number of individuals, including lenders, real estate agents, and other professionals, the extent of the fraud was not fully known by all parties involved. Cox and Fridman were the masterminds behind the scam, orchestrating a well-coordinated network of fraudsters.
FAQs
Q: How did Cox and Fridman create synthetic identities?
A: Cox and Fridman used a combination of real and fabricated elements to craft these synthetic identities. They obtained birth certificates and Social Security numbers, allowing them to create new identities with real names but sometimes mismatched last names.
Q: What did Cox and Fridman do with these synthetic identities?
A: They leveraged the established credit profiles of the synthetic identities to secure mortgages for properties. By inflating property values through manipulated appraisals, they obtained large mortgages and profited from the difference between the loan amounts and the actual property values.
Q: How did Cox and Fridman evade detection?
A: They employed various tactics to divert attention and stall legal actions. One notable strategy was creating fictional news articles about accidents involving their synthetic identities, claiming they were in comas and unable to work, providing a plausible excuse for the defaulting loans and credit cards.
Conclusion
The Cox and Fridman scam serves as a cautionary tale in the ever-evolving world of fraud and identity theft. Their ability to exploit vulnerabilities in the credit system and manipulate property values was impressive, albeit criminal. As technology continues to advance, it is crucial to remain vigilant and safeguard our personal information, knowing that fraudsters will persist in finding new ways to exploit our digital lives.
