The number of victims in the identity theft scheme that targeted Asian Texans has grown to more than 5,000, and authorities have made an arrest in an investigation that spans the country, Texas Department of Public Safety officials told The Dallas Morning News on Friday.
The scam began when the state unknowingly sent thousands of driver’s licenses to an organized crime group, a mistake that has been blamed on weaknesses in the state’s online systems.
Officials expect the six-figure ripoff figure to grow and more arrests to follow. Here’s what we know:
Was the state hacked?
No. Licenses are ordered through a portal on Texas.gov operated by the Texas Department of Information Resources. State officials have said the issue stemmed from security problems on the website, including a payment system that did not require a billing ZIP code or card security code.
The bad actors used stolen personal data to gain access to Texans’ accounts and ordered duplicate driver’s licenses in their names. The state then unwittingly shipped the Texan’s driver’s licenses to “a Chinese organized crime group based in New York working in a number of different states,” according to DPS. The stolen IDs were used to withdraw large amounts from the victims’ bank accounts, open credit cards and buy luxury cars.
The scheme was identified in December, department officials have said, and victims were not notified for months because of the criminal investigation, a move which has led to criticism from state lawmakers and advocates with ties to the Asian American community.
How many people were affected?
The number of Texans known to be affected has grown to at least 5,132, DPS said Friday, and additional victims continue to be identified. The vast majority of the victims are of Asian descent.
The department is still working to contact all the victims. DPS began notifying victims in February via letter, in which the state said it would issue replacement licenses at no cost. As of last week, DPS said more than 4,900 people have been alerted by letters, which are also available in Chinese, Japanese, Korean and Vietnamese.
DPS has identified about $680,000 in losses, though officials say they expect that amount to rise as victims continue to come forward.
Who is behind the scheme?
Authorities have said a sophisticated Chinese organized crime group based in New York is behind the scheme and that the investigations span multiple states.
Some perpetrators have been caught on surveillance footage in banks, but they wore face masks and the tellers did not make them remove the masks to confirm the IDs they presented.
The IDs were primarily sent to addresses in Georgia, Oklahoma and New York, DPS said, and they’ve been found across the country and even at a Canadian ski resort. So far only some of the driver’s licenses have been recovered. More than 600 were found by police in a Smyrna, Tenn., hotel.
Who is the suspect in custody?
DPS revealed Friday that its first arrest in the case came earlier this month. The suspect, Tony Cao Li, was extradited from New York on Friday, and DPS officials expect more arrests to follow.
Not much is publicly known about the 35-year-old man, who faces several felony charges for breach of computer security and fraudulent use or possession of identifying information. But his arrest sheds light on the extent of the scheme.
Li and a woman gave false information to a Chase bank teller near Salt Lake City in February, according to arrest documents. Authorities found five duplicate Texas driver’s licenses on them. He was also connected to illegally duplicated licenses found in Oklahoma.
Li had used the IDs to buy luxury vehicles in Colorado and Utah, including a $123,000 Mercedes and a Porsche Cayenne, an affidavit said.
He was arrested April 12 in Flushing, N.Y. — a place where large batches of the Texas driver’s licenses had been sent, DPS officials said.
What is Texas doing to strengthen security?
Authorities have searched through more than 1.5 million driver’s license transactions from the past year, officials said, and have strengthened security measures since the breach.
DPS officials said if someone orders many duplicate licenses to the same address, the transaction is flagged. The Department of Information Resources has also begun requiring credit card security features like CVV or ZIP code authentication for all transactions.
How can you protect your identity online?
In 2022, consumers reported losing nearly $8.8 billion to identity theft scams, up 30% from the previous year, according to the Federal Trade Commission.
Monica Horton, spokeswoman for the Better Business Bureau in Dallas, recommended consumers frequently review their accounts and credit cards.
Using strong passwords, freezing your bank account immediately after suspicious transactions and not clicking on any malicious links on social media are some ways to safeguard your personal information.
Staff writers Noor Adatia, Hojun Choi and Allie Morris contributed to this report.
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