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Police Charged Owners, Managers and Employees of Seven Joliet, Illinois
 Area Hotels with Selling Credit Card Numbers

By Hal Dardick, Chicago TribuneMcClatchy-Tribune Business News

Nov. 3, 2006 - Police charged 10 owners, managers and employees of seven Joliet-area hotels Thursday with selling credit card numbers of guests in a scam that authorities said could be going on across the country.

The arrests were made as about 50 officers, including FBI forensic computer experts, executed search warrants at the hotels, all part of national chains, though their corporate parents were not implicated.

In some cases, the forensic experts copied hard drives. In others, they took the computers.

The arrests were part of Operation Sleep Over, an ongoing investigation that began four months ago when police arrested a man involved in the scam who then became an informant for the Will County Sheriff's Department, officials said.

"Anyone who stayed there was a potential victim," State's Atty. James Glasgow said of the seven hotels. "And it looks like it was open season."

The informant, who has a gambling problem, bought about 10,000 credit card numbers from one Joliet-area hotel and thousands from others in the six years before his arrest, Sheriff Paul Kaupas said.

After his arrest, he went to work for detectives, buying about 150 credit card numbers while wearing a wire, Kaupas said.

"It is stunning how easily this informant was able to steal the financial identities of consumers from across the country simply by cultivating relationships in the hospitality industry," Glasgow said. "From what we have learned here, this criminal scheme can easily be repeated anywhere in the country."

The informant knew of similar scams in other cities and states and learned the theft technique from someone outside the area, Kaupas said.

Authorities declined to describe it as a ring. The hotel owners "didn't necessarily know what the others were doing," Glasgow said.

The state's attorney said he hoped the arrests would get the attention of consumers, credit card companies and the hospitality industry. He stressed those arrested were franchise owners and no one working for the corporations has been implicated. "I have not heard of hotels selling credit card numbers," said Assistant Illinois Atty. Gen. Deborah Hagan, who heads the Consumer Protection Division but was not involved in Thursday's operation. She found the arrests of hotel owners particularly troubling. "If the owner is in on it, there's no safeguarding in the world that is going to work," she said.

In 2005, nearly 256,000 Americans reported being the victims of identity theft, according to the Federal Trade Commission. Of those, 26 percent were the victims of credit card fraud, either because their accounts were "taken over" or, more frequently, because personal information was used to open a new account.

In Illinois, there were 11,137 identity theft victims. At a rate of 87.3 victims per 100,000 people, Illinois ranked 10th in the nation.

As identity theft has grown in recent years, legislators have passed laws at the state and federal levels that call for more time behind bars for offenders.

In Will County, the credit card numbers--along with names and toll-free numbers used to determine how much credit was left on each card--were sold in batches of 10 for between $1,000 and $5,000, officials said.

In some cases, the sellers gave the buyers extra credit card numbers in exchange for plasma TVs for hotel rooms, bought on credit through fraud, officials said.

Buying from stores, via telephone and through the Internet, the informant purchased items valued at between $500 and $15,000 on each card, Kaupas said. He sometimes used credit to buy the numbers, the sheriff said.

Typically, he would sell items he purchased at steep discounts to finance his gambling, authorities said.

"He couldn't make enough money or get enough money because of his gambling," said Sheriff's Detective Edward Hayes, who helped lead the investigation.

Those who sold the numbers relied on "time lapse and geographic distance" to avoid detection, Glasgow said.

The numbers they sold often belonged to people who lived in another state, and the numbers were sold as long as a year after they were used at the hotels. "To track them became next to impossible," he said.

Among the hotels searched was a Holiday Inn Express, 411 S. Larkin Ave., Joliet, where two owners and two employees were arrested.

Owners John Rhee, 62, of the 8600 block of Timber Ridge Drive, Burr Ridge, and John Seo, 54, of the 500 block of Sheridan Road, Glencoe, were each charged with multiple counts of identity theft, unlawful use of an account number with intent to defraud and computer fraud.

Rhee denied the charges against him.

"I did my best with my work," he said. "I'm not sure what happened here."

Police were armed with 12 arrest warrants and executed 10. An 11th defendant was expected to turn herself in Thursday night, and the 12th remained at large. All face the same charges and, if convicted, could be sentenced to 7 years in prison.

Police arrested the owners of two Super 8 hotels. Suresh Shah, 54, of the 100 block of Pelican Bay, Roselle, owns the Super 8 at 3401 Mall Loop Drive, Joliet; and Virendra Patel, 55, apparently lived at his Super 8 at 1730 McDonough St., Joliet.

hdardick@tribune.com

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Copyright (c) 2006, Chicago Tribune

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