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In 1999, after federal agents began watching the day-to-day operation of the Russian identity theft network in San Francisco, a satellite theft operation caught their attention, one that they'd heard referenced on tape.
Dortch received word that a Russian couple had been using stolen credit cards at a Smart & Final store on Seventh Avenue. The woman got away, but her husband was caught by police, who notified the feds. The postal inspector thought he recognized the 58-year-old man from a taped conversation among Igor Kogan and his associates. This man, Dortch figured, was the one they called dedko (Russian for grandfather), someone who drove a white Jeep and, supposedly, was involved in credit card theft in north Marin and Sonoma counties.
More investigation led to the Quality Market on Irving Street near 15th Avenue, a part of San Francisco's Sunset District where Russian and Chinese immigrant communities overlap. As it turned out, Boris and Betya Kogan (no relation to Igor Kogan), who operated the market, were attempting to use stolen credit cards to buy cigarettes and other supplies from Smart & Final (along with furnishing their own household). The cards belonged to residents of Glen Ellen and Santa Rosa.
On March 17, 1999, a contingent of federal and local investigators split up, one team heading for the market and another for the Kogans' Richmond District home on Geary Boulevard. But Boris Kogan left the house before the cops were ready to enter, so they followed his car as he picked up a shopper and then drove to a Beverages and More store in Colma, where he was arrested. The shopper he'd picked up had a familiar face. Dortch had interviewed her, and watched her in action on tape. She was among the highest paid of the shopper profession, reportedly because of her ability to throw angry fits, boldly asking store clerks to call security on her behalf and engaging in other antics that nearly always resulted in a successful return, refund, or purchase of illicitly bought merchandise.
Meanwhile, the other group of agents entered the Quality Market and arrested 46-year-old Betya Kogan, who, according to court records, told investigators that she did not have a purse with her when they asked if she had identification. In Russian, she told a store clerk to "go to the back and bring only my wallet from my purse, and bring it here." But this time there was a problem. Court records say Fred Ponomarenko, an investigator with the San Francisco District Attorney's Office, happened to be standing next to Betya, and he understands Russian quite well.
In her purse, agents found a bundle of 15 stolen credit cards wrapped in their mailers, along with slips of paper containing personal information on the card owners. When police accompanied a handcuffed Betya to get her car keys from the store safe, they found another surprise: a semiautomatic handgun on its top shelf.
Boris and Betya Kogan were released on bail shortly after their arrests. Six months later, the San Francisco Examiner featured Betya and the market on the cover of the paper's Epicure section, in a story that explained how Russian Jewish immigrants were bringing new culture to San Francisco.
The following December, Betya pleaded guilty to felony charges of receiving stolen property, and Boris pleaded guilty to misdemeanor burglary. They were both sentenced to three years' probation.
Despite the wealth of information they'd gained by following and taping Igor Kogan and other members of his Russian crime network, investigators remained stumped on one particular question: How were the thieves gaining access to the accounts? Somehow, they were managing to get new, stolen credit cards authorized for use.
Of course, there were hints. A few of the shoppers federal agents managed to interview made reference to bigger players in the crime network, players who had mysterious connections who authorized stolen cards. There were rumors that shadowy government officials and corporate insiders played a role in the scam, and that a mysterious 800 number was used in the process.
Finally Dortch interviewed a lower-level thief who'd been busted for shopping with a stolen credit card. Among her belongings was a small slip of paper on which an 800 telephone number had been scrawled. Dortch called the number, and found himself talking to Backcheck, an investigations company in Texas that also did business as a public records research firm called Biosearch.
Accompanied by a Texas Ranger, Postal Inspector Dortch called on the firm, located in a nondescript office in a nondescript strip mall in San Antonio. Biosearch was owned by Daniel Coonan, a former Air Force officer, who, after retiring from military service, began a private investigative firm specializing in background checks for businesses in California and Texas.
Coonan was apparently operating under the mistaken impression that his firm was doing a lot of business for a group of European businessmen who dealt with real estate investments and required background information as part of title searches. Because these supposed businessmen had problems paying their bills at one point, Biosearch had set up a system that allowed them to pay through a deposit-only account at Bank of America.