Channel 2 Action News investigation found that taxpayers ultimately pay for the financial fraud these fake documents could be used for.
Channel 2 investigators went undercover to see how easy it was to get to get fake financial documents.
For only $50 a producer bought an envelope full of legitimate looking W2s and paycheck stubs off CraigsList. The documents had the producer’s real name, but the seller made up everything else on the paperwork.
Channel 2 investigative reporter Aaron Diamant showed the documents to forensic accountant David Sawyer to get his take on their authenticity.
“These documents, they look pretty authentic,” Sawyer said.
Authorities explained to Diamant it is not illegal to produce, sell or buy these documents. A page long disclaimer in the envelope of documents Channel 2 purchased called them “novelty” items.
U.S. Attorney John Horn said documents like these are really only used for one thing.
“It’s hard to imagine what a legitimate purpose would be for obtaining that kind of financial documentation,” Horn said.
Prosecutors and investigators told Diamant they’ve seen fake documents in a variety of fraud schemes: mortgages, bank loans, car financing, and even apartment leases.
“Would this really fool a big mortgage company?” Diamant asked Sawyer.
“Because they have so much documentation to process, it could and that’s scary,” Sawyer replied.
Although schemers risk arrest for committing the fraud, everyday citizens are the ones paying for these financial crimes.
“Every citizen who at some point is going to ask for a loan or credit from a financial institution, this type of fraud makes that more expensive,” Horn said.
And, according to the banks, fraud makes things more complicated to honest customers.
“We’re asking for additional ID, maybe some additional documentation that we wouldn’t have had to ask for many years ago,” said Wells Fargo senior vice president Wendy Lawrence.
She admits fraudsters force banks to put even their best customers under a microscope, and that cost could be passed on to consumers.
“The taxpayers should be outraged,” said FBI Special Agent Steve Emmett.
Diamant showed Emmett a small slip of paper attached to the document purchased by Channel 2 investigators. It appeared to list the woman who identified herself as the seller of the documents as the human resources contact for a company called Bonner Services, the company listed on the pay stubs and W2s.
Emmett said if sellers are supplying verification for the W2 and pay stubs, it makes these documents much more than novelty items.
“That’s a crime,” Emmett said. “They are conspiring to commit a fraud.”
Channel 2 set up another buy with this Craigslist seller, but an associate who said his name was Tyson showed up to deliver the envelope of documents.
Tyson told Diamant he was just delivering the documents for a friend, not producing or selling them.
“Do you know people could use these documents to commit fraud?” Diamant asked the man.
“I don’t know what’s in the documents,” Tyson said.
After Diamant showed Tyson the contents of the envelope he was delivering, more novelty financial documents, he said he was surprised.
“Well, I have to sit there and have a word with her, but I won’t do it anymore. That’s for sure,” Tyson said.
But as long as fake documents help perpetuate financial crimes, everyday citizens will continue to pay the price.
“The only way the banks are going to be able to make up the stagger for these losses is to raise the fees and the interest rates. That affects us all,” Sawyer said.