Computer Theft Endangers Calif. Firm's Clients

A Santa Rosa tax accounting firm is alerting thousands of clients that their private financial records may be in jeopardy after a key computer was stolen from the office, the Santa Rosa (Calif.) Press-Democrat reported.

Terry Brown, owner of Tax Service Plus, said a computer containing the records of his firm's 3,000 to 4,000 clients was missing when he arrived at work March 7 and found a back door broken open.

He said he's notifying clients by letter what actions they should take to protect themselves against anyone who tries to use the stolen information to open a fraudulent credit account.

But Brown acknowledged that may not be enough to stop other problems because of the theft of personal Social Security numbers, addresses and all other information contained in tax returns that date back to 2004.

"I'm sure a lot of those people are a lot more ingenious in ways to use that information than I am," he said.

Letters notifying customers who had his firm prepare 2006 tax returns began arriving by mail Saturday. Brown said the last letters, sent to those with 2004 tax returns, are being mailed now.

The break-in - Brown suspects someone used a crowbar to break open the back-office, steel fire door - has angered many of his customers, whom Brown said have called to "say this is the last day they will darken my door."

"A lot of people are really stressed about it," he said. "It's just horrible."

Among the angry and stressed is local resident Kathy Graham, who spent four hours Monday canceling credit card accounts, checking her credit status and dealing with bank accounts for herself and her two teenage children, the Press-Democrat reported.

"I'm really upset," she said. "They (thieves) have my phone number, my Social Security number, my address, even my signature.

"You can think of a thousand scenarios how these people might use that information," Graham said. "It's scary."

What angers her even more is Tax Service Plus wasn't equipped with a burglar alarm system, something Brown said he plans to correct.

"That just blows me away," said Graham, who said if she knew there wasn't that level of security, she wouldn't have done business with Brown's company the past four years.

Brown said he expects he'll face a substantial loss in customers, a base of clients he's developed over 15 years.

"The way our business has grown over the years is through word-of-mouth, that we have done a good job, and now this," he said.

The letter Brown mailed, basically a form letter recommended by the Federal Trade Commission to deal with such situations, urges customers to notify one of three national credit card bureaus of the theft and have them put fraud alerts on individual accounts.

Asked if he or his insurance company will cover the costs of clients to protect against fraud and identify theft, Brown said, "At this point I am not prepared to answer that."

But Brown has his own thoughts about the break-in.

"It appears it was by someone who's been in this office before," he said.

He said six other computers containing confidential financial information were left alone. But the one that was stolen was the backup computer that contained all the information stored in other computers, he said.

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