July 22, 2010, 10:01 PM — Just days after Colorado officials warned businesses about scammers who are forging corporate identities to commit financial fraud, an official in Georgia said the same has been happening in that state as well.
As in Colorado, scammers have been taking advantage of a loosely protected online registration system at the Secretary of State's Office to alter and use business registration data to open fraudulent lines of credit and merchant accounts.
The Duluth Police Department has so far prosecuted two such cases, where the loss to banks and financial institutions have been more than $6 million, said Fran Foster, a detective with the department's Criminal Investigations Division.
Both cases have involved individuals associated with the music industry and both cases include numerous conspirators, though only the main players have been targeted, she said.
One of the cases is currently under federal indictment and involves the owner of a music production business who is believed to have orchestrated more than $5 million in fraudulent transactions, affecting several financial institutions including American Express and SunTrust Bank.
In all, the individual and his group of over 100 people are believed to have misused the identities of about 3,900 individuals and businesses, Foster said.
The other case involves a 90s-era singer who served a year in prison recently on identity theft charges. He is believed to have stolen and used the identities of 149 individuals and about 200 companies to make fraudulent transactions totaling more than $1.2 million.
Both individuals took advantage of the relatively open business registration system at the Georgia Secretary of State's office to forge corporate identities, Foster said.
"Here in Georgia, if I want to be the new CEO of Coca Cola, all I have to do is to go online to the Secretary of State's site to the section where you can change registration information," Foster said.
"You change the information, pay $30 and then within a week you are the new owner of Coca Cola. There's no verification," Foster said.
A new e-mail verification system that alerts business owners about online registration information changes has been implemented recently and could make it harder for unauthorized changes to be made as easily as before, she said.
The forged corporate identities were used to obtain bank loans, and lines of credit which were then used to make millions of dollars in fraudulent transactions. Many of the transactions involved the purchase of high-end automobiles such as Cadillac Escalades, BMWs and even one Bentley, Foster said.
The thefts in Colorado are very similar to those reported by Colorado's Secretary of State and its Attorney General a few days ago.