by Alison Storm | 08/6/10

These days, crooks are getting very creative. They're figuring out ways to steal identities, cash in on faulty insurance claims and now, create credit. According to a report by the Associated Press Federal prosecutors charged two people for helping three others create false credit histories so they could secure millions of dollars worth of mortgage loans. Officials with the US Attorney's Office says this case is unique because it's the first time people have been charged with giving others false credit histories. "Credit history fraud poses a significant threat to our financial institutions and undermines our economy," US Attorney Beth Phillips said at a news conference, according to the Associated Press. "Using a false Social Security card or in any way misrepresenting your financial history is a crime. It is a significant crime with significant penalties."

Those charged in the case are 48-year-old Karen Washam-Hawkins of Carson, California and 38-year-old Gerald William Bartlett of Tampa, Florida. They face charges of conspiracy to defraud the US government and interstate transportation of funds obtained through fraud. Officials say neither of the offenders have attorneys.

So how did the crime work? According to official paperwork, the woman sold fake social security numbers to a California man and two others in the Kansas City area. Bartlett than improved the credit scores attached to those fraudulent social security numbers by using his companies, South Florida Management Group and Consumer Financial Group, by submitting phony account information to credit bureaus. The men then used those fake numbers to buy six new homes valued at more than $2.7 million, according to prosecutors and the Associated Press.

The scam turned out to stem from another illegal operation uncovered by authorities earlier in the year which involved 18 people buying 25 upscale  homes in a Kansas City suburb. "Local FBI agents dug deeper into a mortgage fraud scheme that resulted in a multimillion dollar loss in the Lee's Summit area," Phillips told the Associated Press. "By digging deeper into that mortgage fraud scheme, investigators uncovered a second scheme, a credit history fraud scheme that was operating in the shadows of the mortgage fraud scheme."