[fc-discuss] Financial Cryptography Update: Identity is an asset. Assets mean theft ... and Trade!

[iang@iang.org]

 Financial Cryptography Update: Identity is an asset.  Assets mean theft ... and Trade! 

                             June 07, 2005


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https://www.financialcryptography.com/mt/archives/000493.html



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This is a good article.  It describes what happens when you make a
simple number the core of your security system.  If you control the
number, it becomes valuable.  If it becomes valuable then it will
either be stolen or traded.  Valuable things are assets - which means
trade or theft.

In this case we we see the trade, and this sits nicely alongside the
identity theft epidemic in the US:  all there because the system made
the number the control.

All security is based on assets.  Perversely, if you make a number the
core of your security system, then it becomes an asset, thus adding one
more thing to protect, so you need a security system to secure your
security system.

The lesson is simple.  Do not make your security depend on a number. 
Identify what the asset is and protect that.  Don't protect stuff that
isn't relevent, elsewise you'll find that the costs of protecting might
skyrocket, while your asset walks off unprotected.

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 (Info Dept, Tue Jun  7 13:06:05 2005)
Some Immigrants Are Offering Social Security Numbers for Rent
By EDUARDO PORTER

Published: June 7, 2005

TLALCHAPA, Mexico - Gerardo Luviano is looking for somebody to rent his
Social Security number.

Mr. Luviano, 39, obtained legal residence in the United States almost
20 years ago. But these days,
back in Mexico, teaching beekeeping at the local high school in this
hot, dusty town in the
southwestern part of the country, Mr. Luviano is not using his Social
Security number. So he is
looking for an illegal immigrant in the United States to use it for him
- providing a little cash
along the way.

"I've almost managed to contact somebody to lend my number to," Mr.
Luviano said. "My brother in
California has a friend who has crops and has people that need one."

Mr. Luviano's pending transaction is merely a blip in a shadowy yet
vibrant underground market.
Virtually undetected by American authorities, operating below the radar
in immigrant communities
from coast to coast, a secondary trade in identities has emerged
straddling both sides of the
Mexico-United States border.

"It is seen as a normal thing to do," said Luis Magana, an
immigrant-rights activist assisting farm
workers in the agriculture-rich San Joaquin Valley of California.

The number of people participating in the illegal deals is impossible
to determine accurately. But
it is clearly significant, flourishing despite efforts to combat
identity fraud.

Hundreds of thousands of immigrants who cross the border from Mexico
illegally each year need to
procure a legal identity that will allow them to work in the United
States. Many legal immigrants,
whether living in the United States or back in Mexico, are happy to
provide them: as they pad their
earnings by letting illegal immigrants work under their name and
number, they also enhance their own
unemployment and pension benefits. And sometimes they charge for the
favor.

Martin Mora, a former migrant to the United States who these days is a
local politician preparing to
run for a seat in the state legislature in next October's elections,
said that in just one town in
the Tlalchapa municipality, "of about 1,000 that fixed their papers in
the United States there might
be 50 that are here and lending their number."

Demand for American identities has blossomed in the cracks between the
nation's increasingly
unwelcoming immigration laws and businesses' unremitting demand for
low-wage labor.

In 1986, when the Immigration Reform and Control Act started penalizing
employers who knowingly
hired illegal immigrants, most employers started requiring immigrants
to provide the paperwork -
including a Social Security number - to prove their eligibility to
work.

The new law did not stop unauthorized immigrant work. An estimated 10
million illegal immigrants
live in the United States today, up from some 4 million before the law
went into effect. But it did
create a thriving market for fake documents.

These days, most immigrants working unlawfully buy a document combo for
$100 to $200 that includes a
fake green card and fake Social Security card with a nine-digit number
plucked out of thin air.
"They'll make it for you right there at the flea market," said David
Blanco, an illegal immigrant
from Costa Rica who works as an auto mechanic in Stockton, Calif.

This process has one big drawback, however. Each year, Social Security
receives millions of W-2
earning statements with names or numbers that do not match its records.
Nine million poured in for
2002, many of them just simple mistakes. In response the agency sends
hundreds of thousands of
letters asking employers to correct the information. These letters can
provoke the firing of the
offending worker.

Working with a name linked to a number recognized by Social Security -
even if it is just borrowed
or leased - avoids these pitfalls. "It's the safest way," said Mario
Avalos, a Stockton accountant
who every year does tax returns for dozens of illegal immigrants. "If
you are going to work in a
company with strict requirements, you know they won't let you in
without good papers."

While renting Social Security numbers makes up a small portion of the
overall use of false papers,
those with close ties to the immigrant communities say it is
increasingly popular. "It used to be
that people here offered their number for somebody to work it," said
Mr. Mora in Tlalchapa. "Now
people over there are asking people here if they can use their number."

Since legal American residents can lose their green cards if they stay
outside the country too long,
for those who have returned to Mexico it is useful to have somebody
working under their identity
north of the border.

"There are people who live in Mexico who take $4,000 or $5,000 in
unemployment in the off season,"
said Jorge Eguiluz, a labor contractor working in the fields around
Stockton, Calif. "They just lend
the number during the season."

The deals also generate cash in other ways. Most identity lending
happens within an extended family,
or among immigrants from the same hometown. But it is still a
hard-nosed transaction. Illegal
immigrant workers usually earn so little they are owed an income tax
refund at the end of the year.
The illegal immigrant "working the number" will usually pay the real
owner by sharing the tax
refund.

"Sometimes the one who is working doesn't mind giving all the refund,
he just wants to work," said
Fernando Rosales, who runs a shop preparing income taxes in the
immigrant-rich enclave of Huntington
Park, Calif. "But others don't, and sometimes they fight over it. We
see that all the time. It's the
talk of the place during income tax time."

Done skillfully, the underground transactions are virtually
undetectable. They do not ring any bells
at the Social Security Administration. Nor do they set off alarms at
the Internal Revenue Service as
long as the person who lends the number keeps track of the W-2's and
files the proper income tax
returns.

In a written response to questions, the audit office of Social
Security's inspector general
acknowledged that "as long as the name and S.S.N. on an incoming wage
item (i.e., W-2) matches
S.S.A.'s record" the agency will not detect any irregularity.

The response noted that the agency had no statistics on the use of
Social Security numbers by
illegal immigrants. It does not even know how many of the incorrect
earnings reports it receives
every year come from immigrants working unlawfully, though immigration
experts estimate that most
do.

Meanwhile, with the Homeland Security Department focused on terrorism
threats, it has virtually
stopped policing the workplace for run-of-the-mill work violations.
Immigration and Customs
Enforcement arrested only 450 illegal immigrants in the workplace in
2003, down from 14,000 in 1998.

"We have seen identity fraud," said John Torres, deputy assistant
director for investigations. But
"I haven't heard of the renting of identities."

Immigrants on both sides of the transactions are understandably
reluctant to talk about their
participation.

A 49-year-old illegal immigrant from Michoacan who earns $8.16 an hour
at a waffle factory in
Torrance, Calif., said that she had been using a Social Security number
she borrowed from a friend
in Mexico since she crossed illegally into the United States 15 years
ago. "She hasn't come back in
this time," the woman said.

There are risks involved in letting one's identity be used by someone
else, though, as Mr. Luviano,
the beekeeping instructor, learned through experience.

Mr. Luviano got his green card by a combination of luck and guile. He
says he was on a short trip to
visit his brother in California when the 1986 immigration law went into
effect and the United States
offered amnesty to millions of unauthorized workers.

Three million illegal immigrants, 2.3 million of them from Mexico,
ultimately received residence
papers. Mr. Luviano, who qualified when a farmer wrote a letter avowing
he had worked for months in
his fields, was one. Once he had his papers, though, he returned to
Tlalchapa.

He has entered the United States several times since then, mostly to
renew his green card. But in
the early 1990's, concerned that long absences could put his green card
at risk and spurred by the
chance to make a little extra money, he lent his Social Security number
to his brother's friend. "I
kept almost all the income tax refund," Mr. Luviano said.

Mr. Luviano decided to pull the plug on the arrangement, however, when
bills for purchases he had
not made started arriving in his name at his brother's address. "You
lend your number in good faith
and you can get yourself in trouble," he said.

But Mr. Luviano is itching to do it again anyway. He knows that Social
Security could provide
retirement income down the line. And there's always the tax refund.

"I haven't profited as much as I could from those documents," he said
ruefully.

Copyright 2005 The New York Times Company
http://www.nytimes.com/2005/06/07/business/07immigrant.html

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