(This column was published in the North Shore News on Dec. 15, 1999)


Organized crime a threat to banking system

By Leo Knight

ORGANIZED crime in this country took a substantial hit last week in Toronto.  


A two-year investigation involving the RCMP and police forces from Ontario and Quebec, dubbed Project Osada II, resulted in the take down of 37 significant players in the Eastern European or Russian "maffiya." But, unfortunately it is but a mere drop in the bucket of filth that is organized crime in this country.  


At the same time police were trying to warn the public about debit card fraud being done by elements of Asian organized crime, primarily the Dai Huen Jai or Big Circle.  


On the surface the two events might seem to be unconnected, but the debit card warning came as a result of a seizure made in October during the Osada II project. Police seized two machines which are essentially tampered-with versions of the ordinary keypads we all use daily at stores.  


The keypads allow the consumer's PIN to be recorded and stored in the unit for an eventual upload into a computer. This is combined with a "skimmer" which reads and records all the information contained about you on the magnetic stripe on your debit or credit card.  


A Toronto newspaper then duly reported the entire debit card system had been compromised which caused Supt. Ben Soave, the RCMP chief organized crime investigator in Ontario, to deny this was the case at a hastily-called news conference.  


Soave called the incident "isolated" and said the system was inherently safe. No doubt this was prompted by the Canadian Banker's Association whose collective bowels must have turned to ice when the news broke in the Toronto media.  


Unfortunately, this is only guesswork by the police. Information about debit card readers has been circulating for some months now.  


I know of a case in Calgary, which occurred at the beginning of October, where a female student used her debit card at an electronics store at seven o'clock in the evening. By seven the next morning her bank account was being accessed at ATMs, in restaurants and other retail outlets.  


When she brought the matter up to her bank, she was referred to the Calgary police who were of little assistance since the amount involved was under $5,000, an unofficial benchmark for busy police departments and large Mountie detachments in fraud cases.  


Because she was a student who worked part-time to get through university, she didn't lose much money in relative terms, but to her it might well have been thousands. It took her two months of fighting with the bank to get reimbursed, a decision that was only made last week.  


In the early part of the summer, the Canadian Banker's Association issued an alert about the hand-held "skimmers" referred to by Soave at his press conference.  


The information was provided in a document destined for law enforcement agencies only. Presumably the bankers didn't want you to know about the danger organized crime poses to public confidence in our banking system.  


But the document clearly demonstrates that what Soave referred to as "isolated" is anything but. The bulletin refers to a "skimmer" seized by an Asian Investigation Unit in Toronto. The skimmer is not much bigger than a pager. It is designed to be worn on a belt, in a waiter's waistband or in any one of a hundred ways.  


Let me quote from the banker's bulletin: "This skimming device is manufactured solely for the purpose of reading, capturing and transmitting full magnetic stripe data obtained illegally from legitimate credit and debit cards.  


"These pocket skimmers are capable of capturing hundreds of pieces of credit/debit card account data ... this data can be sold or encoded on a counterfeit card within hours without the knowledge of the legitimate card holder."  


Here's how the scam works.  


The gang member approaches a store clerk, a waiter or a gas station attendant, someone who generally speaking doesn't make that much money. The person is given the skimmer and told to swipe as many customer cards as possible through it over the course of a shift.  


Later, when the skimmer is given back to the gangster, the employee is given cash for each number swiped. Depending on the type of card, it can be as much as $50 for the swipe of a gold credit card. Easy money for someone making $8 or $10 an hour. And how easy is it for the employee to swipe your card into a skimmer?  


How often do you give your credit card to a waiter? Or your debit card to a gas station attendant? How often do you actually pay attention to what that person does or indeed, how often are you not even in the same part of the room as your card, such as in a restaurant or a pub?  


One of the interesting points of all of this is the clear demonstration of the globalization of organized crime. The apparent co-operation between the Dai Huen Jai and the maffiya is a sign of the new order of things. Profits go up if the gangsters aren't at war with each other. The gangsters are beginning to realize this.  


Asians gangs will do business with Hells Angels. In Quebec the Angels are in bed with the Irish mob and the Italians. The Russians, perhaps the most ruthless of the lot, will do business with anyone.  


Police intelligence reports indicate that the Eastern European crime groups are involved in murder, extortion, drug trafficking, counterfeiting, prostitution, money laundering, organized immigration fraud and tobacco and weapons smuggling. Nice resume.  


For far too long the politicians of this country have ignored the threat of organized crime. Primarily because the citizenry aren't really bothered by it, believing it doesn't affect the average Joe.  


But it does. As evidenced by what happened in Toronto, organized crime activity threatens our very banking system and the police and the bankers are very nervous about it. So too, should you be.  


Consider that the next time you hand your Visa card to a waiter.






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