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Insider stole Countrywide applicants' data, FBI alleges

August 02, 2008|E. Scott Reckard and Joseph Menn | Times Staff Writers

The FBI on Friday arrested a former Countrywide Financial Corp. employee and another man in an alleged scheme to steal and sell sensitive personal information, including Social Security numbers, of as many as 2 million mortgage applicants.

The breach in security, which occurred over a two-year period though July, was one of the largest in years, experts said.

The insider was identified as Rene L. Rebollo Jr., 36, who had worked as a senior financial analyst at Full Spectrum Lending, Countrywide's subprime lending division. He was arrested at his home in Pasadena and charged with unauthorized access to a financial institution's computers.

Authorities also arrested Wahid Siddiqi, 25, at his home in Thousand Oaks. Authorities alleged that he was a reseller of Countrywide data.

"Some, perhaps most, and possibly all the names were being sold to people in the mortgage industry to make new pitches," U.S. attorney's spokesman Thom Mrozek said.

Rebollo's attorney, Michael V. Severo of Los Angeles, could not be reached for comment. Rebollo appeared in court Friday afternoon and was released on $80,000 bond.

Siddiqi was being held on a fraud charge pending a court appearance Monday, and prosecutors did not know whether he had a lawyer.

In an affidavit filed in federal court, the FBI said Rebollo had voluntarily described the scheme. Rebollo said he would charge $400 or $500 for batches of thousands of "leads" -- personal and account information that presumably would help outside loan agents solicit new mortgages from the Countrywide applicants, some of whom had been denied loans by the Calabasas company.

Authorities said they didn't know whether any of the information had been used for outright fraud, such as identity theft.

Rebollo would copy information on about 20,000 customers at a time on Sunday nights by using a Full Spectrum computer that did not have the same security features that other machines in the office had, according to the affidavit by FBI Special Agent Richard P. Ryan.

At that rate, the U.S. attorney's office said, Rebollo would have compromised up to 2 million customer profiles for about 2.5 cents each -- an astonishingly small amount considering the importance of the material. Mortgage leads are among the most expensive for sale because of the potential payoffs to intermediaries when loans are made.

In April, online mortgage broker LendingTree Inc. filed a suit claiming that two of its former employees gave prospective brokers unauthorized access to information on potentially millions of clients. The FBI is investigating that case as well, but authorities said the two were unrelated.

Social Security numbers alone generally fetch dollars, not pennies, since they can be used to open new bank accounts.

"It's the potential for new-account fraud that arises when Social Security accounts are compromised," said Beth Givens, director of the nonprofit Privacy Rights Clearinghouse. "That's the most serious kind of financial identity theft," because large amounts can be involved and the fraud is more difficult to detect than it is on preexisting accounts.

"This guy obviously didn't do his homework. He doesn't know the value of these on the black market," she said.

Givens said the breach was among the 10 largest involving sensitive information in the last 18 months.

A January 2007 breach at retailer T.J. Maxx exposed 45 million credit card numbers. Six months later, Certegy Check Services Inc. lost information on 8 million accounts to an insider. In March, the Hannaford Bros. supermarket chain reported the theft of data on more than 4 million accounts.

In the most recent case, Countrywide detected the breach and alerted federal authorities, according to Suzy Martin, a spokeswoman for the company, which was acquired by Bank of America on July 1.

On July 15, Rebollo voluntarily turned over to the FBI a flash drive he used to download the information and a personal computer, according to Ryan. The agent said in his affidavit that he pulled up about 40 spreadsheets at random from the flash drive.

"I observed large quantities of names associated with several columns of numeric data," Ryan wrote. "These columns contained telephone numbers, addresses and Social Security account numbers. Each spreadsheet contained several thousand lines of data."

Rebollo's attorney later called to say Rebollo had revoked permission for the FBI to search the drive and computer, and the searches stopped "pending further discussions regarding Rebollo's potential cooperation in the investigation," Ryan said.

A criminal complaint against Rebollo said that he earned about $65,000 a year at Countrywide and had opened a personal bank account for holding what he estimated to be up to $70,000 in proceeds from Countrywide data sales.

The complaint said Siddiqi sold computer discs containing data on Countrywide customers to a witness working for the FBI, taking in $4,000 for about 38,000 customer profiles.

During the housing boom, Countrywide was the nation's largest mortgage lender and competed in all segments of the home-loan business, including subprime loans for high-risk borrowers. Subprime lenders aggressively courted these borrowers, hoping to persuade them to refinance their mortgages and replace them with new loans that featured low initial "teaser" interest rates.

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scott.reckard@latimes.com

joseph.menn@latimes.com

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