Immigration crackdown raises identity-theft risk

Thu May 12, 2011 2:25pm EDT

* Immigration enforcement spurring demand for stolen IDs

* Recent busts signal trend

By Lisa Baertlein

HEMET, Calif, May 12 (Reuters) - In 2008, California tax authorities sent Miguel Chavez a letter saying he failed to file a return on income earned at Ashley Furniture Industries. But Chavez never worked there.

Chavez since discovered at least 12 occasions when people used his name and Social Security number to get work, and his plight may be a cautionary tale.

Employers, increasingly double-checking would-be workers because of a nationwide crackdown on illegal immigration, may inadvertently be fanning demand for stolen documents -- with all the consequences that befall victims of identity theft, from tax and credit problems to trouble with the law.

"People who are here without status and are desperate to work have resorted to co-opting documents that are legitimate," said Michael Wildes, an immigration attorney and a former federal prosecutor.

Chavez, 46, is all too familiar with the havoc identity theft creates. Three years after the discovery, he is still trying to clear his name. His credit is in a shambles and he worries that the people using his information could get in serious legal trouble, putting him at risk of arrest.

"At first I was upset, then I was worried, then I was frustrated and overwhelmed," said Chavez, a Mexico-born, legal U.S. resident.

SECURITY BREEDS INSECURITY

Stricter immigration enforcement -- along with tighter post-Sept. 11 national security -- is making it harder for undocumented workers to use their real names and a fake or stolen Social Security number to get a job. [ID:nN12256565]

U.S. immigration agents have been targeting employers rather than workers since 2009, and high-profile crackdowns like the probe at Chipotle Mexican Grill (CMG.N) have prompted more employers to adopt E-Verify, a government database recommended, but not required by U.S. Immigration and Customs Enforcement (ICE). [ID:nN20201127] [ID:nN20183536]

Beyond that, Arizona and a few other states require all employers to use E-Verify to vet prospective employees.

While E-Verify will flag names and Social Security numbers that do not match, it is not very effective at ferreting out workers who assume the identity of a legal worker.

Brock Nicholson, the ICE special agent in charge of Georgia and the Carolinas, said an increase in identity theft "will probably be a logical outcome" of increased verification.

"People learn what we look for and they do things to try to avert that," Nicholson said.

An ICE investigation in his area last month resulted in the federal indictment of managers at a McDonald's Corp (MCD.N) restaurant franchise in Savannah, Georgia. They were accused of selling stolen identities of U.S. citizens to illegal workers, whom they then hired.

In March, county sheriffs in Arizona arrested more than two dozen people as part of an identity theft bust at Pei Wei PFCB.O restaurants in the Phoenix area.

TAX MAN CALLING

Identity theft victims accounted for 3.5 percent of the U.S. population last year, and the thieves chalked up $37 billion in costs, according to Javelin Strategy & Research.

Experts focus on the financial impact of the crime and do not study the link between the estimated 11 million illegal immigrants living in the United States and the country's roughly 8 million identity theft victims.

If the user of a stolen identity is not opening new accounts or making major purchases, victims tend to be in the dark until they hear from the tax man, said Phil Blank, senior analyst for security, risk and fraud at Javelin.

"Then you have the problem of proving it really wasn't you," Blank said.

Chavez, who suspects his identity was stolen when he refinanced a mortgage in 2005, had exactly that experience when he contacted the employers of his law-breaking doubles.

"I had no voice. Every time I told them it wasn't me, they said 'prove it,'" said Chavez. "I've done everything I can do, other than visiting the companies themselves."

Illegal immigration is a hot-button issue in the United States, but employers, lawyers, citizens and illegal immigrants agree on one thing -- the current system is not working.

An attorney for Ashley Furniture Industries, employer of a Miguel Chavez, told Reuters the company uses E-Verify and that it is not solving the problem of illegal immigration.

"This is the tip of the iceberg. Can you imagine the mess you're going to have when people start drawing Social Security?" Ashley attorney Bruce Kostner said. "It's appalling to me that nothing is being done to address this."

President Barack Obama this week issued an impassioned call for immigration reform in a speech at the U.S.-Mexican border, but that is no consolation for Chavez, who said he cannot renew his permanent residency card until his problem is fixed.

"The issue of immigration and identity theft is going to be a complex one for a long time," said Jay Foley, executive director of San Diego-based Identity Theft Resource Center. (Reporting by Lisa Baertlein. Editing by Robert MacMillan)

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