Identity theft cases on the rise in N.D.: Applying for credit

When Gerald and Georgann Swits struck up a friendship with Thomas O'Meara, the Fargo couple thought he would help them save money on prescriptions.

O'Meara, owner of Winnipeg Discount Drugs in Moorhead, ordered prescriptions in Canada for Georgann at reduced prices and saved her hundreds of dollars.

Then in April 2004, the couple agreed to a business partnership with O'Meara to open a second store in Edina, Minn.

"He seemed like a nice fellow, as far as we knew then," Georgann, 87, said last week. "He said, 'You put in $10,000 and I'll put in $10,000 and we'll have a goldmine.' "

Instead, the money-making deal marked the beginning of events leading to a felony charge accusing O'Meara of identity theft for credit cards tied to the business. In his defense, O'Meara said the couple authorized the cards and simply don't remember.

"It's a far cry from identity theft," he said. "I was very straightforward to them about the credit cards."

Police and prosecutors, though, aren't convinced. Detective Jim Shaw, who worked on the case for Fargo police, said O'Meara may have started the partnership in good faith but became desperate for money and applied for credit using 89-year-old Gerald Swits' name.

Nationwide, identity theft costs businesses and consumers billions of dollars each year. The trend appears to be growing in North Dakota, where the number of cases charged by prosecutors has risen every year since 2003.

"I'm confident in saying that only a small amount of identity thefts are reported," said Parrell Grossman, director of the consumer protection division in the North Dakota attorney general's office.

North Dakotans filed 49 identity theft complaints with the attorney general's office in 2005, the first year officials began officially tracking the crime.

Most cases aren't reported to the state, but to local law enforcement, Grossman said. And the majority of victims have their information stolen by thieves who obtain the data electronically, he said.

Prosecutors can file felony charges when they suspect someone has stolen another person's identity. The statute for "unauthorized use of personal identifying information" has been used more frequently in recent years.

Statewide, prosecutors filed 28 charges statewide in 2003. The number jumped to 47 in 2004 and 51 in 2005, state court records show.

During the 2005 session, North Dakota legislators strengthened identity theft laws, including stiffer penalties for criminals, to protect consumers.

"As this crime continues to increase, we'll see more protection and enhanced penalties," Grossman said. "The consequences (for victims) are so serious and so long lasting."

Minnesota lawmakers plan to address identity theft crimes when they meet in March.

A May 2005 FBI report on financial crimes said identity theft is considered one the fastest-growing crimes in the United States, emerging as a dominant white-collar crime.

People who steal others' identity often do so to facilitate other fraud crimes involving credit cards, checks and mortgages.

"You just can't trust anyone," Shaw said. "You never know who is going to take your information and use it."

A study by the Federal Trade Commission on identity theft showed 4.6 percent of U.S. consumers were victims in 2002. Businesses and consumers suffered $52.6 billion in losses, while more than half of victims reported someone taking over existing credit cards.

A year into their business venture with O'Meara, the Swits said they called police to report identity theft by their partner.

The call to police came after a US Bank official called the Swits about an online credit application and told them they likely were victims of identity theft.

A Fargo police investigation found that two credit cards - with nearly $30,000 in accumulated debt - and two more applications for credit were made using Gerald Swits' name, Social Security number and birth date, and business information from Winnipeg Discount Drugs.

"They are silent partners so I didn't tell them every month what was going on with the business," O'Meara said. "I guess I'll have to get them up on the stand. It's obvious what's a signed application."

The Swits told police they never authorized the cards, a claim O'Meara dismisses.

"For them to come back a year and a half later and say they never authorized it, it's convenient forgetfulness on their part," O'Meara said.

In an interview with Fargo police, O'Meara said Gerald Swits signed for two credit cards for Winnipeg Discount Drugs. The drug store owner later gave police a copy of the contract with the Swits.

Shaw's report said one card application appears to have Swits' signature, but someone applied for the second card using the Internet. The Swits don't have a computer in their home.

O'Meara denied applying online for two more cards before confessing to police that he was playing "the interest game" in which he wanted to transfer balances from existing credit cards to new ones charging less interest.

Billing statements were sent to Winnipeg Discount Drug until credit card companies placed fraud alerts on the accounts. O'Meara said he made monthly payments on the cards, a sign that he wasn't trying to defraud the Swits.

The officer investigating the case said it's clear Gerald Swits didn't know O'Meara used his personal information.

"It is also apparent to me that Gerald Swits could be easily taken advantage of because of his age and mental capacity," Shaw wrote in one police report.

Even before calling Fargo police, Georgann Swits said she had concerns about the business.

To start, Georgann said she wrote a $10,000 check for half-interest in the new store. A week later, she wrote another $1,000 check to cover O'Meara's portion and asked him to sign a promissory note agreeing to pay her back.

But the couple said they quizzed O'Meara about the business soon afterward and checked with the Edina landlord where the store was to open. The landlord told them O'Meara hadn't paid rent for the store.

"Then I got a little worried," Georgann said. "I wondered if we were getting scammed."

O'Meara, 50, said he spent $4,000 for advertising and $2,000 for equipment at the new store, but the business didn't take off. He offered to split commission from his Moorhead store to help them recoup their money.

"The only thing she seemed concerned about was how much money she was making," O'Meara said. "It was always, 'More money, more money.' Rather than being out their money, I brought them into this store."

When O'Meara received commission checks from Canadian Rx Connection, he'd give them to Georgann to deposit. In turn, she wrote him checks for half, police records show.

Georgann said she also loaned O'Meara $1,200 for bail after Moorhead police arrested him for drunken driving last April 9.

"We still trusted him at that point," said Gerald, a World War II veteran who moved to Fargo in the 1940s.

The ensuing Fargo police investigation prompted prosecutors to file a charge against O'Meara for using Gerald Swits' name, Social Security number and birth date to obtain credit cards.

O'Meara, who is scheduled to appear in court Jan. 26 on the identity theft charge and on an unrelated count for writing a bad check through his business, said he's repaid the loans from the Swits.

He said the couple continue to earn commission from the Moorhead store.

But the Swits said they haven't received any money from O'Meara since November and only recouped about $6,000 of the more than $12,000 they gave him. The Swits and O'Meara haven't spoken since last June.

In addition to Fargo police, Moorhead investigators looked into complaints with the business. Moorhead Police Lt. Bob Larson said they've received at least seven complaints from customers who paid for prescriptions, but didn't receive their medications.

Clay County prosecutors decided not to file charges because O'Meara reimbursed his customers. Letters declining charges state that prosecutors couldn't prove intent by O'Meara, Larson said.

O'Meara said last week his supplier had troubles filling orders. Winnipeg Discount Drugs has switched suppliers and hasn't had problems since, he said.

"I'm not out to take anyone's money," O'Meara said of all the complaints. "It makes me look like a bad guy, and I'm not a bad guy."

Readers can reach Forum reporter Steven P. Wagner at (701) 241-5542