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.
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