TIAA-CREF case raises concerns on hiring

Secret Service to probe temp worker's actions

STELLA M. HOPKINS
Staff Writer

Pension giant TIAA-CREF's use of a Charlotte temporary worker who is a convicted criminal showcases the shortcomings of employee background checks at a time of growing worry about identity theft and terrorism.

On Thursday, the U.S. Secret Service talked with TIAA to begin investigating whether Sonia Howe committed a crime last fall when she downloaded customer information to her personal laptop -- another in a recent string of privacy breaches nationwide. TIAA has said there was no improper use of that data.

TIAA fired Howe from its big Charlotte center in November, after learning of her federal conviction in what authorities have called the nation's largest insurance scam.

TIAA says it relied on the staffing firm that provided the worker to conduct the background check. That firm had hired another company, which says the staffing firm asked it to do a county-level search, not the more expensive search for federal convictions.

"That's ridiculous," said Judith Collins, director of Michigan State University's Identity Theft Crime and Research Lab. "If a background check is to be done, it should be a national background check, and furthermore, background checks do not reveal everything."

The TIAA case raises questions of who is responsible for ensuring employees are properly screened, how extensive background checks should be and how to balance the cost of screening with the need for security. Congress is pressing for better consumer protection following recent high-profile data breaches, including Charlotte-based Bank of America Corp.'s loss of computer tapes with the personal information of about 1.2 million government employees.

Those breaches also have companies clamoring for help with information security issues.

"We're getting more and more inquiries from companies," said Dan Paulson, the acting special agent in charge of the U.S. Secret Service's N.C. operations. "Companies are more in tune now as to the potential breaches of their information and are concerned about safeguards they can put in place to protect themselves and their clients."

The agency investigates such crimes, often in conjunction with other law enforcement. Paulson said Thursday the agency and other law enforcement will be working with TIAA.

"We will make ourselves available to all appropriate authorities looking into the activities of this contract worker," TIAA spokesman Glen Weiner said.

The TIAA incident was first reported in Newsweek's April 25 edition.

How the saga unfolded

Howe, who has used multiple names, started work at TIAA in Charlotte on Sept. 27.TIAA handles retirement and other financial services for about 3.2 million people and is one of the nation's largest financial-services companies, managing more than $340 billion in assets.

Howe's work in TIAA's information technology department included coding and running reports. The work gave her access to customer information. Weiner said her access was limited to the accounts of fewer than 100 people.

Eleven days before Howe started at TIAA, she was sentenced for her high-level role in the scheme orchestrated by Connecticut businessman Martin Frankel to swindle insurers out of more than $200 million. She prepared bogus monthly statements used as assurance that the assets were safe.

Howe was arrested on charges of fraud and money laundering in 2001 in Charlotte, where she apparently came to live in 1996. Federal court papers show her name at the time as Sonia Howe Radencovici. She pleaded guilty and was convicted in 2002, according to the U.S. Attorney's Office in Connecticut, which handled the case.

Nearly two years lapsed before her sentencing. Her attorney could not be reached to say where she was during that time or why she sought work before beginning her four-year sentence in January. She is serving time, as Sonia Howe, in the same West Virginia prison where Martha Stewart served her sentence.

Howe lost her job at TIAA after a co-worker recognized her and told company officials. TIAA later fired Howe's supervisor for what Weiner has called "failure to properly supervise." The supervisor's attorney, Darryll Bolduc, says that on April 8 he filed a federal whistle-blower action on behalf of the supervisor. Bolduc said Thursday the filing alleges that TIAA allowed a criminal access to customer information and that it didn't have the proper internal controls.

As of Thursday, Weiner said he had not seen the complaint but that the company had conducted a thorough investigation and is confident it has taken appropriate action.

Search history

TEK Systems provided Howe to TIAA. The Maryland staffing firm is one of more than 20 TIAA uses to provide information-technology workers.

TEK works extensively with Kroll Background America, based in Nashville, Tenn. for employee screening. Kroll, a well-regarded screening agency, is part of Kroll Inc., a New York consulting firm.

TEK asked Kroll to run a check on Sonia Dix Radencovich, said Mike Rosen, Kroll Background's executive vice president. That name is not among those that court documents list for Howe. Newsweek used the name Sonia Radencovich.

TEK requested what is known as a county search, Rosen said.

Kroll confirmed the Social Security number TEK provided matched the name. Then the agency used credit bureau reports to identify counties where the woman had an address during the past seven years, including locations in North Carolina and Ohio, and checked criminal court records for each of those counties, Rosen said.

Rosen and Rick Quinn, a TEK executive, said customers in the staffing industry typically request county checks.

Rosen and Quinn, citing federal privacy and other laws, wouldn't say whether the search revealed other names or criminal records for Howe. However, Quinn said that TEK would not place a person if "we had any indication of a criminal record." He also said the firm is evaluating its procedures since the incident.

"With the string of identity issues ... everybody is much more sensitized," he said. "Even with a few people getting through the system, that's unacceptable."

Cost an issue in searches

Identity theft is one of the nation's fastest growing crimes, affecting millions of people a year and costing billions of dollars. Michigan State's Collins and other experts say stolen wallets, burglaries and other such acts account for a minority of cases.Employees with authorized access to information are "the biggest threat to information security," said Evan Hendricks, editor of Privacy Times, a newsletter he started in 1977.

Collins also heads a Michigan State program started in 1999 to work with businesses to prevent identity theft and similar breaches. When conducting background checks, she said she has never relied solely on a county search. Workers handling sensitive customer information, such as financial accounts, should be among those most likely subject to broader scrutiny.

John Snider Sr., owner of a Charlotte screening company, encourages clients to search beyond counties but some don't want to pay the extra fees. Snider, whose Network Research Systems works with schools and large companies, said checks can include a wide range of sources, from sexual predator databases to Interpol.

"The technology and the capabilities we have, but we do what companies want," said the former longtime Charlotte police officer. "They're trying to balance cost and security."

Collins advocates strong checks as one tool but stresses the need for honesty tests and other screening techniques. She questioned why TIAA didn't require a more stringent check.

"TIAA-CREF is really the one who is responsible ... for knowing how their employees are selected and who selects them," she said. "They are the people holding the personal information."

TIAA has about 5,600 workers. Charlotte, its largest installation, has 2,000 workers and serves as a national contact center and handles insurance products and mutual funds.

TIAA won't comment on what it knew about the nature of TEK's background checks because of possible litigation, Weiner said. The company has now directed all firms providing contract employees to have background checks conducted through a single source. The screenings also are more comprehensive now, including a federal check, Weiner said.

When hiring directly, Weiner said people are subject to "a comprehensive background check that includes county, state, federal, drug and other checks."

The Cost of Checks

Criminal background checks are the most common, and costs vary. A county-level search checks counties where a person has had an address, usually for the past seven years, as reported by credit bureaus.

Charlotte's Network Research Systems said searching one county costs $10 to $12, but it's infrequent that a person has had an address in only one county. Federal checks are $14 per district, and there are 12.

Kroll Background America said county checks average $50 per person. Adding federal checks costs $20 or more, per district.

For $280, Network Research offers a package that includes its proprietary national criminal search, civil courts, driving record and international records.

In-depth searches, typically used only for potential top executives, can cost $2,000 and far more.

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