New Account Fraud ExamplesReal in Theory… & in Practice
High-Profile Examples of New Account Fraud
Imagine this: a new customer signs up and makes a few small purchases. You think they’re a regular buyer. But months later, they max out a credit card and disappear, leaving you with criminal fraud chargebacks that you can’t fight back against.
This is just one of the many ways new account fraud can play out. In this chapter, we’ll walk through some real-world examples of new account fraud so you can see firsthand how these schemes unfold and the damage they can cause.
New Account Fraud
In this guide, we’ll take a closer look at new account fraud. We’ll talk about what it is, how it works, and how prevalent it is. We’ll also provide real-life case studies and examine how you can detect and prevent your business from falling victim to account creation scams.
Georgia Man Sentenced to Over 7 Years in Prison for New Account Fraud
In August 2022, 41-year-old Atlanta resident Corey Cato was sentenced to 94 months in federal prison for his role in a national fraud ring that created fake accounts with financial institutions.
Beginning in 2017, Cato stole Social Security numbers (SSNs) from various victims, most of whom were children. He then combined these real SSNs with fictitious names, birthdays, and fake ID documents to open bank and credit card accounts at financial institutions. Cato acquired numerous lines of credit using these fraudulent means.
Cato and other members of the fraud ring then used these “unlawfully obtained credit cards to fund their lifestyles.”
After dealing more than $1.9 million worth of losses to the individual victims and banks he targeted, Cato and his co-conspirators were identified and apprehended by Homeland Security Investigations. In May 2022, he pleaded guilty to “one count of conspiracy to commit financial institution fraud and one count of aggravated identity theft.”
In addition to his prison sentence, Cato is also required to pay $1,908,481 in court-ordered restitution.
New York Man Sentenced to Up to 12 Years in Prison for Account Creation Scam
In January 2023, 46-year-old Suffolk County resident Adam Arena was sentenced to between four and twelve years in prison for his role in a new account scam that caused more than $1 million worth of losses to several financial institutions.
As early as August 2018, Arena stole personal identification information from victims and used them to create synthetic identities. According to a press release from the Suffolk County District Attorney’s Office, he and other co-conspirators created “more than 20 synthetic identities… in Suffolk County to fraudulently obtain loans and credit card accounts from 19 different financial institutions.”
Arena is already in federal prison for his role in this and other financial crimes, including a million-dollar Paycheck Protection Program (PPP) fraud scheme he perpetrated during the Covid-19 pandemic. Along with his additional prison sentence, he has been ordered to pay $523,000 in restitution.
