During the past decade, some 4,000 men have been exposed while posing as combat warriors to fool women, scam federal benefits and reap undeserved praise. But the latest fake veteran to be uncloaked and convicted will carry an unofficial military rank to prison: “Captain Obvious.”

Pinellas Country Sheriff's Office

Danny Crane

Danny Crane, 32, earned that colorful moniker from the man — an actual wounded veteran — who used his two basement computers and a loose, national network of fellow amateur sleuths to unravel Crane’s lies and ultimately hand him to federal prosecutors. Crane, who lived in the Tampa area, was sentenced March 14 to one year and one day in federal prison.

“His uniform was all wrong. The discharge papers he posted online were wrong. His mannerisms were wrong. The only thing he had right were his tattoos. He was Captain Obvious,” said retired Army Staff Sgt. Fred Campbell, one of 10 veterans who operate a virtual detective agency called Guardian of Valor.

“For four months, I was eating, sleeping and crapping Danny Russell Crane. My wife was getting sick of hearing about it,” said Campbell, who lives in Tennessee and has paralysis on one side, sustained as a result of his military service. He is not paid for his online investigation work. “Most of these guys do it for the hero worship. They see the accolades veterans get. So they just wake up one morning and say, ‘Hey, I was a member of the Black Sheep Squadron!’”

Crane, who served less than three months in the Army — never in combat — conned the Department of Veterans Affairs out of $7,000 by claiming he was half blind, had once been shot in the back, suffered from Post Traumatic Stress Disorder and had 24 metal plates inserted in his face. In public, he routinely wore two Purple Hearts, a Distinguished Flying Cross and an Air Medal — none of them earned. Assistant U.S. Attorney Amanda Kaiser said Crane concocted the persona of “the most decorated man in Florida.”

“But in our world, the Danny Crane case is not unusual,” said Mary Schantag, a Marine widow who lives in Missouri and operates the Fake Warriors Project. Since launching that veteran-vetting venture on a shoe-string budget in 1998, Schantag said her nonprofit group — along with partners at similar sites — has revealed more than 4,000 hoaxers who falsely claimed military service or battlefield glory. It’s unclear how many of those 4,000 frauds later were prosecuted. A VA spokesman said such cases are not tracked by the agency.

“We had 22 phonies in 1998. I can get 22 in 48 hours right now,” Schantag said. “It’s all day, every day.”

Courtesy Guardian of Valor

When Danny Crane appeared in public wearing Ray Ban sun glasses and a Class A Uniform, veteran-hoax hunters knew he was almost certainly a fake. That look is not military protocol. Crane was sentenced earlier this month to a year in federal prison.

Yet she complained that federal and state agencies often choose not to pursue charges against the bogus veterans, saying: “The lack of prosecution and substantial penalties drives us all crazy.”

'Out of sync'
The Supreme Court last June struck down the federal Stolen Valor Act, which prohibited people from falsely claiming they had been awarded a military honor. A majority of justices ruled that invented battlefield brags should be protected by the First Amendment right of free speech. The behavior becomes criminal fraud, however, if the mock vets obtain money or gifts from charities or from the government by using their ruse.

Like Campbell, Schantag is intimate enough with military protocol to be able to quickly spot imposters who may post their boasts on social sites like Facebook or who show up to speak at veterans’ ceremonies. For example, Crane simultaneously wore a Class A Uniform and Ray Ban sunglasses, which Schantag called “out of sync.”

Courtesy of Mary Schantag

Before his passing last year, Chuck Schantag, a Marine corporal wounded in Vietnam, spent more than a decade working with his wife to expose fake veterans.

And like Campbell, she uses Internet background searches and files Freedom of Information Requests with government agencies to corroborate a suspicious veteran’s claimed history. She also taps her personal connections with Navy SEALS, Army Special Forces, even military chaplains to double check her detective work.

“We make sure everything is square before we put these guys out there as frauds,” Campbell said. “We make sure they are 100 percent full of crap before we say anything negative toward them. We don’t do it to say, ‘Ha, Ha, I just took this guy down.’ We do it for the 18- and 19-year-olds who have lost every limb on their body but still go on.”

Last year, Schantag’s husband, Chuck, a Vietnam veteran wounded in 1968, passed away. Ferreting out military scammers had become one of his life’s passions. He was trying to sniff out an apparent new fraudster when he died. That case remains under scrutiny.

“He wanted history to be right,” said his widow. “He was a Marine through-and-through. For every lying Marine we found out there, that guy was messing up his Corps.”

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It was a brazen and surprisingly long-lived scheme, authorities said, to help aspiring public school teachers cheat on the tests they must pass to prove they are qualified to lead their classrooms.

For 15 years, teachers in three Southern states paid Clarence Mumford Sr. — himself a longtime educator — to send someone else to take the tests in their place, authorities said. Each time, Mumford received a fee of between $1,500 and $3,000 to send one of his test ringers with fake identification to the Praxis exam. In return, his customers got a passing grade and began their careers as cheaters, according to federal prosecutors in Memphis.

Authorities say the scheme affected hundreds — if not thousands — of public school students who ended up being taught by unqualified instructors.

Mel Evans / AP

Princeton, N.J.-based Educational Testing Services writes and administers Praxis teacher certification examinations.

Mumford faces more than 60 fraud and conspiracy charges that claim he created fake driver's licenses with the information of a teacher or an aspiring teacher and attached the photograph of a test-taker. Prospective teachers are accused of giving Mumford their Social Security numbers for him to make the fake identities.

The hired-test takers went to testing centers, showed the proctor the fake license, and passed the certification exam, prosecutors say. Then, the aspiring teacher used the test score to secure a job with a public school district, the indictment alleges. Fourteen people have been charged with mail and Social Security fraud, and four people have pleaded guilty to charges associated with the scheme.

Mumford "obtained tens of thousands of dollars" during the alleged conspiracy, which prosecutors say lasted from 1995 to 2010 in Arkansas, Mississippi and Tennessee.

Among those charged is former University of Tennessee and NFL wide receiver Cedrick Wilson, who is accused of employing a test-taker for a Praxis physical education exam. He was charged in late October with four counts of Social Security and mail fraud. He has pleaded not guilty and is out of jail on a $10,000 bond. He has been suspended by the Memphis City Schools system.

Charlie Riedel / AP

In this photo taken Friday, Nov. 23, Neal Kingston, director of the Center for Educational Testing and Evaluation at the University of Kansas, talks about testing fraud in his Lawrence, Kan., office.

If convicted, Mumford could face between two and 20 years in prison on each count. The teachers face between two and 20 years in prison on each count if convicted.

Lawyers for Mumford and Wilson did not return calls for comment.

Prosecutors and standardized test experts say students were hurt the most by the scheme because they were being taught by unqualified teachers. It also sheds some light on the nature of cheating and the lengths people go to in order to get ahead.

"As technology keeps advancing, there are more and more ways to cheat on tests of this kind," said Neal Kingston, director of the Center for Educational Testing and Evaluation at the University of Kansas. "There's a never-ending war between those who try to maintain standards and those who are looking out for their own interests."

Cheating on standardized tests is not new, and it can be as simple as looking at the other person's test sheet. The Internet and cell phones have made it easier for students to cheat in a variety of ways. In the past few years, investigations into cheating on standardized tests for K-12 students have surfaced in Atlanta, New York and El Paso, Texas.

Still, most of the recent test-taking scandals involved students taking tests, not people taking teacher certification exams. Cheating scams involving teacher certification tests are more unusual, said Robert Schaeffer, public education director for the National Center for Fair & Open Testing.

Schaeffer notes that a large-scale scandal involving teacher certification tests was discovered in 2000, also in the South. In that case, 52 teachers were charged with paying up to $1,000 apiece to a former Educational Testing Services proctor to ensure a passing grade on teacher certification tests.

Teachers from Arkansas, Georgia, Louisiana, Tennessee and Mississippi took tests through Philander Smith College in Little Rock, Ark., in 1998. The college was not accused of wrongdoing.

Educational Testing Services also writes and administers the Praxis examinations involved in the Memphis case. ETS spokesman Tom Ewing said the company discovered the cheating in June 2009, conducted an investigation and canceled scores. The company began meeting with authorities to turn over the information in late 2009, Ewing said.

"These cases are rare, but we consider them to be very serious and something we have to guard against happening for all the honest test-takers, students and teachers," Ewing said.

Ewing said ETS observes test-takers and reviews test scores to try to root out cheaters. ETS also has received anonymous tips that have led them to cheaters, Ewing said.

Prosecutors in the Mumford case say he, the teachers and test-takers used the Internet and the U.S. Postal Service to register and pay for the tests, and to receive payment. The indictment does not say how much he allegedly paid the test-takers.

An experienced educator, Mumford was working for Memphis City Schools when the alleged scam took place. Authorities say Mumford defrauded the three states by making the fake driver's licenses.

"What happens at many testing centers is that a whole bunch of test-takers show up simultaneously, early on a Saturday morning, and the proctors give only a cursory look to the identification," Schaeffer said. "It's not like going through airport security where a guy holds up a magnifying glass and puts our license under ultraviolet light to make sure it has not been tampered with."

Mumford was fired after news of the investigation came out, and others, like Wilson, have been suspended. But at least three teachers implicated in the scandal remain employed with their school district.

Kingston, the university professor, said prospective teachers may not be confident in their knowledge base to pass the test. Or, the cheaters may believe they are smart enough to pass on their own but also know they are poor test takers.

Kingston said his research has shown that cheating on exams is getting more prevalent.

"The propensity to cheat on exams both through college and for licensure and certification exams seems to be increasing over time," said Kingston. "People often don't see it as something wrong."

The pressure of passing the test could make people do things they normally would not do. And it could take a while for authorities and test-taking services to catch up with the cheaters.

"When people come up with a new method for cheating, it takes some time for folks to figure it out, partly because this has been an understudied area in the field of assessment," Kingston said.

Nina Monfredo, a 23-year-old history teacher at Power Center Academy in Memphis, has taken Praxis exams for history, geography, middle school content, and secondary teaching and learning.

Monfredo, who passed all her tests and is not involved in the fraud case, said the exams she took were relatively easy for someone who has a high school education. She said some people use study aids to prepare, but she didn't. And she didn't feel much pressure because it was her understanding that she could take the test again if she did not pass.

"If you feel like you can't pass and you hire someone it means you really didn't know what you were doing," she said. "I think it would be easier to just learn what's on the test."

By Joe Eaton
Center for Public Integrity

Like a growing number of disabled Americans on Medicaid, Keith Foreman, a 57-year-old in Metropolis, Ill., qualified for a personal caregiver to help him with daily activities like dressing, shaving, and preparing meals.

Foreman, who prosecutors say suffers from a spinal injury, hired his girlfriend, Sheila McDonald, for the job. In 2011, McDonald received almost $5,000 from Medicaid for six months of care she provided to Foreman.

These personal care services, which are available in all 50 states, are designed to help the sick, elderly, and disabled remain in their homes — and out of expensive nursing facilities.

But Foreman was not living at home. During the days marked on McDonald’s timesheets, Foreman was housed in the Massac County jail in Illinois, serving time for forging a stolen debit card signature at a local liquor store.

Like Foreman and McDonald, who both pleaded guilty to charges of making false statements, unscrupulous beneficiaries and home health workers are increasingly targeting personal care services programs for illegal money-making schemes, according to a new federal report. Investigators say lax requirements for both caregivers and patients, along with poor state and federal oversight, has made the rapidly growing programs a lucrative target for fraud.  And this isn’t the first time they’ve issued such a warning.

Report faults federal oversight of state programs
A Health and Human Services Office of the Inspector General (OIG) report scheduled to be released Thursday faults the Centers for Medicaid and Medicare Services (CMS) for inadequate oversight of personal care services programs, whose costs are shared by states and the federal government, as is the norm for Medicaid.  The report, which brings together six years of OIG investigations and 23 reports on the topic, describes a program hindered by poor claims documentation, insufficient monitoring of claims data for fraud and waste, and a crazy-quilt of varied requirements for personal care workers in different states.

“Historically, CMS has left a lot of the responsibility for overseeing waste, fraud and abuse to the states,” said Christi Grimm, special assistant to the principal deputy inspector general. “As a result, we have 301 different sets of requirements for caregivers across the states.” 

Although some states mandate criminal background checks and licensing for home health workers, Grimm said others lack even the most basic requirements, including age minimums,

which has led to cases in which juveniles escape prosecution for fraud and abuse. Worker requirements are set by counties in a number of states, she added, which has led to a hodge-podge of rules that are difficult to enforce, and nearly impossible to monitor.

“We are asking CMS to step up to the plate,” Grimm said, and use its authority to regulate and monitor the state programs.

The report includes six previous OIG recommendations to CMS and state agencies which have gone unimplemented. In a 2008 report that found five states may have paid up to $11 million in error for personal care services during one quarter of 2005, OIG recommended that the CMS work with states to stop payments for personal care when patients were receiving care in institutions, not at home. The agency agreed with the recommendation, but according to the OIG, the work has not been completed.

In addition to asking the agency to address previous recommendations, the report offers four new goals for CMS to improve oversight and monitoring of state plans, including standardizing rules for personal care workers to set minimum age and education levels, and require criminal background checks.

The report, however, seems unlikely to spur the agency to follow the OIG’s specific suggestions..  In a written response, CMS — part of the Department of Health and Human Services — explicitly concurred with only one of  the OIG recommendations: that it should provide states with claims data to help root out cases in which beneficiaries are simultaneously receiving both institutional care and home health services.  In response to the recommendation on establishing federal guidelines for personal care workers, CMS pointed out there is a shortage of care attendants.

 “Personal care services are an important part of keeping people in their homes and out of nursing homes, which lowers costs and improves the quality of life of the patient,” said CMS spokesman Brian Cook. “We are working to protect personal care from fraud and abuse by promoting stronger training programs for workers who provide personal care, working with states on background check programs for these workers, and developing new data methods to analyze claims for potential fraud and abuse."

Grimm called the CMS response to the report unacceptable. “It’s not uncommon for CMS … to identify things on the horizon, or things they hope to do, but not necessarily commit to doing something,” Grimm said, adding that CMS’s efforts so far simply have not worked. “[CMS] has the authority to do what we are asking. It has not done it yet. And it hasn’t committed to doing it after reading our report.”

A wealth of opportunities
According to investigators, most fraud schemes in personal care services involve billing for care that was not provided or was not allowed. Self-directed programs, which allow beneficiaries to hire and manage their helpers, may be particularly vulnerable, but some prosecutions have also involved home health care agencies.

In January, for example, the owner of a Minnesota home health care company outside Minneapolis was sentenced to two years in prison for cheating Medicaid out of more than $650,000 in charges for personal care services. In March, the owner of Families First Home Health Care in Sparta, N.C., pleaded guilty to fraud and money laundering stemming from a scheme in which she billed Medicaid for personal care services she did not perform and split the proceeds with plan members.

“Fraud goes where the money is,” said Barbara Zelner, executive director of the National Association of Medicaid Fraud Units, which represents state law enforcement agencies that investigate Medicaid fraud.  After nursing homes, Zelner said, home health represents one of the larger slices of state Medicaid budgets.

Personal care services programs have grown quickly since a 1999 Supreme Court decision held that unjustified segregation of the disabled is a civil rights violation. The ruling led to increased spending for home health services; in 2011, Medicaid paid more than $12 billion for personal care services, up 35 percent since 2005, according to the OIG. Investigators say program fraud has kept pace. In 2010, state Medicaid fraud units investigated more than 1,000 cases involving personal care services, more than any other type of Medicaid service.

Not everyone agrees with the OIG’s views on personal care services.  In 2011, an OIG review of Medicaid claims for personal care services in New Jersey found that 40 percent should have been denied. Sherl Brand, president of the Home Care Association of New Jersey, which advocates for home health care providers, questions the OIG’s work, saying the agency often draw broad conclusions from examinations of a limited number of claims. “It is almost a bit ridiculous because of the extrapolation they do,” Brand said.

New Jersey home health workers face criminal background checks and certification and licensure requirements, Brand said. Personal care services programs save money, she said, in addition to helping disabled people live better lives. When New Jersey was faced with budget cuts, Brand said the association determined the average weekly cost for personal care services was $242 dollars a week, only slightly higher than the cost of a single day in a nursing home.

But as funding for the programs increase, fraud follows. Kirk Ogrosky, a former top federal health care fraud prosecutor who is now a partner at the Washington law firm Arnold & Porter, said home health has long been a hotbed of fraud, both in Medicaid and in Medicare. The fraud, he said, is not hard to uncover. Ogrosky recalled that after an extensive analysis of Medicare claims, he sent agents out to interview questionable beneficiaries. When the agents knocked on the doors, they often learned the person they were looking for was at work, Ogrosky recalled.  “That’s utterly preposterous,” he said, “since home health requires that you are homebound.”

In other cases, Ogrosky said, agents found that home health care agencies were filing claims for beneficiaries who did not live at the homes indicated on the claims. “One of my favorite stories is about a homeless guy we found,” Ogrosky said. “He didn’t even have a home to be homebound to.”

The Center for Public Integrity is a non-profit independent investigative news outlet. For more of its stories visit publicintegrity.org.

Portage County Sheriff's Office / AP

From left, Ronald Disher, Delores M. Disher and Charles T. Jost are accused of receiving $175,000 in Social Security benefits issued to Marie Jost, who was last seen alive 30 years ago.

Three family members have been charged with cashing the Social Security checks of a Wisconsin woman who has been missing for 30 years and who authorities suspect is dead.

Charges including theft and mail fraud have been filed against Charles T. Jost, 66, Delores M. Disher 69, and Ronald Disher, 71. They are the son, daughter and son-in-law, respectively, of Marie Jost, who would be 100 if she were alive today. The three made their initial appearances in Portage County Court in Wisconsin on Monday, WSAW-TV reported.

Marie Jost, from the Amhert Junction area in Portage County, was last seen about 30 years ago, and investigators say her body might be buried on her Amherst property.

On Monday, police brought in an excavator to dig deeper on the property but did not immediately find any remains.

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The sheriff’s office began an investigation after receiving a call from a Social Security Administration official on Aug. 30 saying that benefit checks mailed to Marie Jost’s home were being cashed by an unknown person.

Investigators went to the home and were met by Charles Jost, who said his mother wasn’t home and was on a trip with her other son, Theodore, who also hasn’t been seen since the 1980s, according to court records.

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A neighbor told an investigating deputy that he had lived in the neighborhood for the past 20 years and had never seen Marie Jost at the home in that time.

According to prosecutors, the three accused relatives had received $175,000 in Social Security benefits issued to Marie Jost, the mother of Charles and Dolores. Investigators said they found $9,000 in a fanny-pack in Marie Jost’s home and another $8,000 in a search of Disher’s home, according to WSAW.

NBC News' James Eng and The Associated Press contributed to this story.

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Steve Marcus / Reuters

A police car blocks the road Friday as federal and local law enforcement officials take artwork from a storage building in Boulder City, Nevada, in a seizure related to the arrest of German fugitive Ulrich Felix Anton Engler.

A German fugitive sought for five years in a Florida-based fraud scheme that netted more than $100 million has been arrested in Las Vegas, authorities said Friday.

Ulrich Felix Anton Engler, 51, was arrested for being in violation of U.S. immigration law, Immigration and Customs Enforcement officials said.

He is wanted on criminal charges filed in Mannheim and Hamburg, Germany, courts where he is accused of committing fraud on a repetitive and gainful basis, officials said in a prepared statement. If convicted, Engler faces up to 20 years in prison.

A fingerprint match from a Feb. 11, 2011, drunken driving case in which a Nevada Highway Patrol officer cited Engler, who may have used a different name at the time, helped U.S. Marshals track him down, The Associated Press reported.

“I hope Mr. Engler's victims in this case feel a measure of relief that Mr. Engler's fraud and long run are over and that he will soon face justice in Germany for his alleged crimes," said ICE Director John Morton.

The FBI and local police on Friday seized more than 1,000 pieces of artwork from a storage facility that Engler allegedly rented in Boulder City, about 25 miles east of Las Vegas.

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FBI Agent Patrick Turner in Las Vegas called the action an effort to recover proceeds on behalf of Engler's alleged victims.

Engler is accused of using a marketing company in Cape Coral, Fla., to build an Internet pyramid scheme. From June 2003 to December 2004, it collected almost $101 million from more than 3,500 investors in Germany, Switzerland and Austria, authorities said. Once the money reached the United States, investors lost access to it, they said.

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When the arrest warrant was issued in Germany, Engler was believed to have been living in Florida.

Last year, U.S. marshals and INTERPOL officials in Washington determined Engler was living in Nevada, where he was perpetuating his fraud schemes under a new identity, Joseph Miller, officials said.

He will be turned over to law enforcement officials in Germany, they said.

This article includes reporting by The Associated Press and NBC News' Jim Gold.

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Undated photo of Charles Zigler, whose mummified body was found in his friend's home on July 6.

A 72-year-old Michigan woman who authorities say kept the body of her longtime companion in her house for more than 18 months after he died is being charged with cashing more than $28,000 worth of his benefit checks.

The Jackson County prosecuting attorney’s office on Wednesday issued a warrant charging Linda Lou Chase with two counts of forgery.  

The mummified corpse of Chase’s 67-year-old housemate and companion, Charles Zigler, was found July 6 seated in a chair in the house. Jackson, Mich., police went to the home after getting a 911 call from one of Zigler’s relatives who became concerned after not being able to contact him.

An autopsy determined Zigler died of natural causes -- chronic obstructive pulmonary disease.

Police believe Zigler died around Christmas 2010 and his body had been left decaying in a cloth recliner chair in the living room since that time.

Prosecutors say Chase forged Zigler’s signature and cashed his monthly Social Security and pension benefits after his death. They also still are investigating whether he may have been receiving veterans’ benefits, too.

Though the maximum penalty for forgery is 14 years, it’s unlikely Chase will spend any significant amount of time – if any – behind bars because of her age and health.

“There’s no chance at all she get that kind of sentence. It’s a practical impossibility in this case,” Mark Blumer, Jackson County chief assistant prosecutor, said Thursday.

“It’s open to serious questions whether she would ever see the inside of a prison or jail. We want her to make restitution and see whether she needs some kind of mental help.”

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“This is a very unusual case,” Prosecutor Hank Zavislak said in a press release. “Given the circumstances it is clear a comprehensive mental examination is in order. I would expect that to be ordered as the case progresses.”

Chase will not be charged in connection with keeping her boyfriend’s body in her house for more than a year and a half.

“We researched the law in Michigan and found out there doesn’t appear to be statute that appropriately covers what she did or didn’t do with respect to the gentleman’s body,” Blumer said.

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Most of Michigan’s current laws concerning bodies deal with inappropriate disposition by a licensed mortician or removal to interfere with a criminal investigation.

“She literally did not move the body – so moving a body before the medical examiner could examine it doesn’t apply,” Blumer said.

Once a judge signs the warrant, Chase will be arrested, brought before the court and arraigned. A date for a probable cause hearing would then be set.

“This is a sad and unfortunate case on many fronts,” Zavislak said.

Previous stories:

911 call that led to body: 'Nobody's heard from him in quite a while'

Woman who kept friend’s body in house for 18 months: 'I didn't do it to be evil'

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Joe Klamar / AFP/Getty Images

Containers wait to to shipped on Long Beach harbor, California, on April 26. Three firms have been charged with fraudulently processing container shipments that contained clothing from China, cigarettes from India and Germany and packages of the Mexican cactus dish nopalitos through the port.

SAN DIEGO -- Prosecutors have charged three California companies with seeking to avoid paying $10 million in customs fees by bringing containers of food and other items to port and claiming they were destined for other countries, then selling the goods in the United States.

The criminal complaint unsealed by federal prosecutors in San Diego on Wednesday named eight people, including the president of the San Diego Customs Brokers Association, who are accused of being part of the scheme.

Goods in over 90 fraudulently processed container shipments included clothing from China, cigarettes from India and Germany and packages of the Mexican cactus dish nopalitos, officials with the U.S. Attorney's Office said.

It amounted to at least $100 million in products and $10 million in lost customs duties, they said. The complaint says the companies "facilitated" about $500 million in trade between the United States and other countries over the last five years.

The investigation "pulled back the curtain on a potentially costly fraud scheme operating in one of the world's busiest commercial centers," U.S. Immigration and Customs Enforcement Director John Morton told United Press International.

Cheaper prices
Because the goods were reported as simply passing through the Long Beach Port on their way to other countries, they were exempt from U.S. customs fees, prosecutors said.

The defendants "could sell more goods at cheaper prices and for greater profits than their law-abiding competitors, including domestic American manufacturers of these same products," the complaint read. 

The charges were brought against International Trade Consultants LLC and Tecate Logistics, based in Tecate, Calif., about 35 miles east of San Diego and immediately north of the Mexican border. The third company, M Trade Inc., is based in Los Angeles.

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Among the eight people charged -- including the owners or operators of the companies -- some lived in southern California and some were in Tijuana, Mexico.

Local business leader among those charged
One of the accused, Gerardo Chavez, is president of the San Diego Customs Brokers Association and the owner of Tecate Logistics and International Trade Consultants, prosecutors said.

Calls to M Trade and International Trade Consultants were not answered, and an employee at Tecate Logistics declined to comment. The defendants will have their first court appearance on Thursday in federal court in San Diego.

Messages left for the Customs Brokers Association late Wednesday evening were not immediately returned.

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All the defendants were charged with conspiracy to defraud the United States, which carries a maximum penalty of five years in prison if convicted.

Some of the defendants were also accused of importing goods by means of false statements and obstruction of justice.

Reuters and The Associated Press contributed to this report.

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N.J. Sex Offender Internet Registry

The poster child of sex offenders who altered their digital identity is Fran Kuni, who changed his name to Jamie Shepard and was able to get a job as a U.S. Census worker in New Jersey before being busted by a mom who recognized him when he knocked on the door of her home.

Nearly one in six convicted sex offenders is using sophisticated techniques invented by identity thieves to avoid their legally mandated registration requirements, a new study has found. These digital absconders might be able to avoid post-incarceration restrictions by living near schools and playgrounds, and could possibly gain employment working with children.

The study, conducted by Utica College and funded by the U.S. Justice Department, estimates that roughly 92,000 of the 570,000 registered sex offenders across the country are systematically manipulating their names, birthdays, Social Security numbers and other personal identifiers so they can live as they want while appearing to satisfy court-imposed or statutory restrictions.

"These are offenders who are flying under the radar and authorities don't know it," said Don Rebovich, the Utica professor who directed the study. "The authorities really don’t have the resources to keep on checking on these people. Offenders find where the vulnerabilities are in the system and exploit them."

These digital absconders create two obvious problems. Communities expend energy and resources dealing with offenders who aren't really there -- local police knock on doors and send notices to warn neighbors; public listings are published on the Internet. And sex offenders live where they please as normal adults, without any protective measures kicking in.

"In the worst-case scenario, by thwarting registration requirements, they could potentially have easier access to children," said Staca Shehan, director of case analysis at the Center for Missing and Exploited Children, who is familiar with the study. "(In) those jurisdictions that have residency restrictions that would not allow (offenders) to live within distance of a school, daycare or park, (they) could avoid that type of requirement."

While the study found that an average of 16.2 percent of sex offenders manipulate their identities nationally, some states fared worse: Louisiana, Washington, D.C., Nevada, Tennessee and Delaware all had digital absconder rates of higher than 25 percent.

Officials in Tennessee, Nevada and Delaware challenged the study's conclusions and complained that they had not been contacted by the researchers for additional information that might have clarified the results; officials in the other states did not immediately respond to requests for comment.

'Strategic' manipulation
Shehan said there are generally two kinds of sex offender absconders: those who simply fail to keep their records current, and hope they fall through the cracks; and those who are more systematic in their evasion, intentionally altering their identities so they can circumvent the restrictions. 

"That takes a lot more thought," she said. "They are much more strategic about what they are doing ... and so that's much more concerning."

In one celebrated case of sex offender identity manipulation, a convict named Frank Kuni changed his name to Jamie Shepard and was able to get a job as a U.S. Census worker in New Jersey. Kuni was recognized by a mom after he knocked on the door of her Pennsauken home, and he was later sentenced to three years in prison. Kuni’s case attracted national headlines because of the fear it created surrounding temporary Census workers.

The Utica study, believed to be the first attempt to quantify these more strategic absconders, was conducted by Utica College's Center for Identity Management, set up to examine a variety of identity issues in the digital age. Rebovich is director of the center.

It's well known that some sex offenders neglect their registration requirements, dropping off the grid and accepting only cash-paying jobs to remain hidden. But the Utica study found something more subtle, and perhaps more disturbing -- sex offenders who appear to be satisfying their registration requirements while living a digital double life.

In a parallel survey of 223 law enforcement agencies from 46 states, Utica found that awareness of ID-theft style registry evasion was low -- only 5 percent of respondents said they knew of an identity manipulation case within their jurisdiction. 

And nearly 40 percent of the agencies responded that they had zero absconders, suggesting some law enforcement agencies are unaware of the problem.

The power of the Utica study lies in the use of sophisticated algorithms developed by private firm ID Analytics, a fraud-fighting company used by many large banks and other financial institutions. ID Analytics receives more than 1 billion credit applications and other credit-related events from clients every year. It uses sophisticated software to track the behavior of identity thieves across the credit system, and can find fraud that individual firms miss. It knows, for example, if a criminal uses a systematic series of birthdays or addresses on a set of credit card applications at various banks in an attempt to evade fraud detection. The ID Analytics tool has enough data that it can generally tell the difference between honest typographical errors and systematic fraud attempts. 

ID Analytics ran sex offender data through its massive database of credit-related events, and found evidence of rampant identity manipulation among the offenders.

Kristin Helm, a spokeswoman for Tennessee's sex registry, challenged the study's findings, saying that fewer than 1 percent of that state's sex offenders are absconders. Criminals have always used false identities to try to evade police, but law enforcement systems are geared to handle that issue, she said. "Fingerprints obtained by law enforcement identify individuals regardless of a name or Social Security number," she said, adding that names sometimes change for legitimate reasons, too, such as marriage. 

But Stephen Coggeshall, chief technology officer for ID Analytics, said his technology is well-versed in screening out mundane reasons for identity changes and finding patterns that specifically indicate active evasion is taking place.

"This goes way beyond typos," he said. "These are people who have slightly adjusted or substantially adjusted their personally identifiable information for a reason. They are actively doing so, and we are observing them use these aliases relatively recently."

Nevada spokeswoman Julie Butler also questioned the validity of the study, which she had not seen. She said that Nevada uses fingerprints to track sex offenders, so identity manipulation techniques would be ineffective.

"Our registry is fingerprint-based. We don't base it on date of birth, or Social Security number, or name," Butler said. "They can put down their name as whatever and we still have them in the database."

But Coggeshall responded that even in states which use fingerprint identification, an identity manipulator would only be discovered when trying to engage in an activity – such as becoming an elementary school teacher – which triggers a fingerprint evaluation. 

"In general it doesn't help you track where they are or if they're living under an alias at an unregistered location," he said. "It can help to find sex offenders as they enroll in certain groups, but many … groups don't routinely fingerprint new enrollees."

SSNs connected to multiple people
Two years ago, using this tool on a database of Social Security numbers, ID Analytics found that rampant evidence of identity theft: 5 million SSNs were connected to three or more U.S. adults in credit applications, and 140,000 were associated with five or more people, indicating almost certain fraud. The tool can also track individual identity manipulators, as ID Analytics calls them, as they attempt various frauds across an array of credit issuers.

This tool was turned on the sex offender registry problem at the invitation of Utica College in Utica, N.Y., beginning last year. ID Analytics took a large sample -- nearly 100,000 -- of the 570,000 active registered sex offender records and ran them through its credit application database, looking for signs of manipulation.

The findings were disturbing. In Louisiana, the study found, nearly two-thirds of offenders' records showed signs of manipulation. Rebovich theorized that Louisiana's problem might stem from the aftermath of Hurricane Katrina, which gave some people a golden opportunity to drop off the grid.

Officials in Louisiana did not immediately respond to requests for comment.

In many cases, the study found, the steps criminals take are subtle -- changing an address from "440 Monroeville Road" to "434 Monroeville Road," for example. In fact, in the majority of cases, digital absconders were much more likely to move across town than across the country. Absconders who fake their address are six times more likely to remain in the same state than to cross state lines, the study found, and 90 percent of those who remain in state stay within 40 miles of their original registered address. In many cases, the data shows, those addresses belong to a family member. That might allow absconders to show up on a moment's notice at their registered address in case local police do a random check, Rebovich said.

But the address change could also allow them to apply for jobs and housing they would otherwise be unable to qualify for, he said.

While half of the manipulations involve bad addresses, plenty of other types of evasion are going on, the study found. One subject studied had five names, three Social Security numbers and four dates of birth, for example.

About 10,000 offenders had used at least four different Social Security numbers, Rebovich said. The evidence indicates this was usually done to evade the court registration requirements rather than commit financial identity theft, the study found.

One reason sex offenders seem to get away with evasion is that registration requirements are set by states and vary widely. In some states, convicts merely send updates through the U.S. mail to state officials, and are subjected to little, if any, verification. In others, officers try to check on sex offenders, but ofter are assigned hundreds, or even thousands of offenders, to track.

In other states, such as Florida, there are strict requirements and frequent random inspections, Rebovich said. That shows up in the data -- Florida's digital absconder rate is about half the national average, at 9.4 percent.

The study was funded by the Justice Department's Bureau of Justice Assistance, which plans on issuing a comprehensive report later this fall. Requests for comment from the Department of Justice went unanswered.

'System is never going to be perfect'
Shehan, of the Center for Missing and Exploited Children, said she didn't believe that the potentially high rate of digital absconders means the entire sex offender registry program is broken. In fact, she said the situation has improved since passage of the Child Safety and Protection Act of 2006, which instituted some national standards on offender registries.

Still, she said it's important that states move to biometric identifiers, such as fingerprints, to maintain more accurate records of offenders and their whereabouts.

"Criminals are constantly thinking of ways to beat the system," she said. "The system is never going to be perfect."

Rebovich is hoping the study will spur new methods for checking up on sex offenders, including techniques that would seem familiar to those who work in financial fraud. In a model developed by Utica and ID Analytics, offenders could be given a score, similar to a credit score, which would rate the likelihood that identity manipulation was occurring. 

"We are trying to develop a predictive model," he said. "So we can turn it into an alert system, so states can do this in real time, if they want to."  

Coggeshall said such an alert system would have helped police track down Frank Kuni before he was able to get a job with the Census Bureau.

"In retrospect, we know there are things we would have been able to observe" he said.

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