WINONA, Minn. — A federal investigation has led agents to a pair of 22-year-old foreign-exchange students in Winona who are suspected of being part of an identity theft ring based in Vietnam, according to court records and fraud investigators.
A Star Tribune report based on court documents unsealed Dec. 29 and interviews with investigators said the ring has used the stolen identities of many Americans to fleece retailers out of millions of dollars.
“It’s a big one,” Jason Calhoun, a fraud investigator with the Rosetta Stone language software company who has been working on the case with federal agents, told the newspaper. Court records indicate the two students contributed to about $1 million fraudulent credit card orders for Rosetta Stone software.
Investigators claim the Winona State University students collected nearly $1.25 million in illicit funds by controlling more than 180 eBay accounts and more than 360 PayPal accounts, according to court documents.
Much of the money was then wired to accounts in Vietnam and Canada, according to investigators. While the government claims it has probable cause linking the students to crimes of wire fraud, identity theft and money laundering, neither of them has been charged with a crime.
The details of the investigation are contained in an affidavit filed by Daniel Schwarz, an agent with Homeland Security Investigations in Minnesota. The affidavit was used to obtain and execute a search warrant in November for the students’ apartment in Winona.
Schwartz wrote that the rings involve a network of computer hackers, sellers of stolen identities and financial information, fraud managers and middle men, money mules and shippers. The members communicate through a secure website.
Investigators claim the fraudsters used fake Internet addresses, posed as eBay sellers using stolen identities and offered heavily discounted prices for popular items like software, video games, textbooks and Apple iTunes gift cards.
But they didn’t actually have the goods. So when someone bought the products on eBay using a credit card or PayPal account, the fraudsters collected the money and ordered the merchandise — at full price — from third-party vendors using stolen identities.
The goods were then shipped to the eBay buyers, and victims got billed for products they neither ordered nor received. After they protested, the banks issued “chargebacks” to the vendors.
Susan Higginbotham, 49, a special education teacher in Bagley, was among the victims. She found that someone had stolen her identity in January when she started getting mail from banks welcoming her as a new customer.
“Sometimes there were seven, eight in a day. This happened over a number of days,” Higginbotham said. Then came some bills from eBay for trades she hadn’t made. She hired a pre-paid legal services company to help sort out her problems.
One of the suspected students recently won an award as an outstanding biochemistry student at Winona State.
Thomas Nalli, a chemistry professor at Winona State who has worked closely with one of the students, said he couldn’t understand how the student had time to do the alleged crimes.
“He spends all of his time studying,” Nalli said. “I hope none of it is true.”
Immigration officials declined to comment to the newspaper on the immigration status of the students, noting that the matter is part of an “ongoing criminal investigation.”