Participants in the scheme would create synthetic identities by associating a

stolen Social Security number with a different name, address and date of birth. The
stolen Social Security numbers belonged to individuals with no existing credit
history or those who were unlikely to be monitoring their credit history, such as
children, recent immigrants, deceased individuals, elderly individuals, and
incarcerated individuals.

In furtherance of the scheme, Arena created shell corporations that then falsely
reported the synthetic identities to the credit reporting agencies as though they
were customers of the corporations, thus providing the synthetic identities with
corporate tradelines that further boosted their credit ratings. Arena fraudulently
backdated the information to make it appear as though the synthetic identities had
good credit histories over the course of several years

Step 1 – Create Fake Identities To perpetrate their scheme, the fraudsters began by
creating synthetic identities. They would make up social security numbers, use
mail drops and then create fake utility bills to convince banks that they were real
individuals that lived at a particular address.

Step 2 – Boost the Credit Profile To facilitate the scheme they went into sleeper
mode on the cards. They would make small purchases over time and pay off the cards
monthly. As they built a good payment history across multiple credit cards using
the false identity they would receive progressively higher and higher credit limits
. This practice of credit boosting is popular among synthetic identity thieves as
it allows them to get more credit on the fake

This practice of credit boosting is popular among synthetic identity thieves as it

allows them to get more credit on the fake then they would otherwise qualify for.

Step 3 Bust Out Phase – Run up the Cards and Loans Finally, they would Run up large
loans using the false identity. The higher the fraudulent credit score, the larger
the loans that the defendants could obtain. These loans were never repaid, and the
defendants reaped the profits.

The Bust Out phases in some cases were assisted with the use of booster payments
which were fake payments that would effectively fool the card issuer into releasing
the available credit line to the fraudsters. Once the checks bounced, the
fraudsters could be 300% or 400% over limit.

They created dozens of sham companies that did little or no legitimate business,
obtained credit card terminals for the companies, and then ran up charges on the
fraud cards. To accept payments in the form of credit cards, a business must
establish a merchant account with an entity known as a merchant processor. The
merchant processor provides the business with equipment to process credit cards,
receives payments from credit card companies for credit cards run at the business,
and deposits those payments, minus a fee, into the business’ bank account. When the
merchant processors shut down accounts operated by the conspirators for fraud, they
would apply for new terminals and create new companies.

The sham companies also served as “furnishers,” providing the credit bureaus with
false information about the credit history of numerous false identities of people
who purportedly worked at or owned the sham companies.

They Leveraged TradeLine Provider Services

To manipulate the identities, the fraudsters used black market tradeline providers
as well. The black market providers would add the identities as authorized users on
other real individuals accounts or in some cases even send fake documentation to
credit bureaus to add primary tradelines to the fake credit profiles.

https://podcasts.apple.com/us/podcast/cash-app-accused-of-enabling-fraud-fact-or-
fiction-w/id1530461089?i=1000607305381