Local 2 Investigates identity theft inside Houston electric companies

Police believe employee stole social security number of woman with same last name

HOUSTON – If you've got electricity, your personal information could be in jeopardy. Local 2 Investigates has discovered millions of us may be providing financial information to identity thieves without knowing it.

When you set up a new electric account, you're required to provide your social security number to the electric company. In the end -- you have no idea who you're talking to.

Keshia Cherry, 35, was an associate customer service representative at CenterPoint Energy until she was terminated the same day Local 2 broadcasted this story. It was her latest job in the electricity industry.

Local 2 Investigates confirmed she also worked for Gexa Energy, StarTex Power and MegaEnergy. Police believe she stole the social security number of a woman by the same last name while at MegaEnergy in 2011.

Keshia used Andrea Cherry's social security number to open an electricity account at a home she was renting near Houston's Medical Center, said police.

The victim only discovered it when Keshia Cherry skipped on the $553 electric bill and the delinquent account appeared on Andrea Cherry's credit report.

"I started with a credit score of over 800," Andrea Cherry told consumer expert Amy Davis. "With one negative report, it went below 700."

The one delinquent account meant Andrea couldn't refinance her Kingwood home. When Andrea Cherry discovered her identity-theft suspect worked inside the electric industry, she knew the consequences were more dire for all Houstonians.

"She's working for a major energy company in Houston," said Andrea. "She has access to 4 million-plus people's personal identification information."

Local 2 and police contacted CenterPoint Energy. It suspended Keshia Cherry's access to customer information.

Cherry was hired in Jan. 2013.A CenterPoint spokesperson said they checked all accounts that Cherry had access to and determined that no customer information was compromised.

CenterPoint Energy said "protecting sensitive customer information is a top priority."

All of Cherry's former employers declined Local 2's request for an on-camera interview, but StarTex and Gexa emailed statements, posted at the end of this article.

MegaEnergy was bought out by TXU in January. TXU said it bought only MegaEnergy's customers and not its employees; so it had no information on Cherry's employment.

When Local 2 visited her Humble home in late April, Cherry pretended we had the wrong person.

"Ok, so Keshia, where do you work now?" Davis asked the woman who answered her front door.

"My name is not Keshia," she replied.

"Ok. Who are you?"

"I'm not Keshia. And you have a camera at my doorstep unauthorized, so I'm about to call the police."

Less than two weeks later, that same woman, identified as Keshia Cherry, was arrested by Houston police. She's charged with fraudulent use of identifying information.

But electric insiders told Local 2 the fraud is larger than just one rogue employee.

StarTex Power researched its own customer records and found about 150 accounts opened with stolen social security numbers. It notified customers who were at risk, filed a police report with the Houston Police Department, and informed the Texas Public Utility Commission.

In an email Local 2 Investigates obtained from the PUC, a StarTex executive called the scam "pervasive."

Insiders said after those stolen security numbers are obtained, con artists then set up at flea markets and malls offering electricity to strangers with no credit check for a flat fee. The scammers pocket the cash and use the stolen socials to set up the accounts.

"We're kind of always behind the 8-ball in these cases," explained HPD Sgt. John Shirley, who works in the Financial Crimes division.

Shirley said most accounts are set up online. It's as easy as typing in someone else's social security number with the address where you want electricity.

"A criminal takes advantage of lax internal controls in a company and that's where they're kind of intelligent," Shirley said. "They'll look for the holes."

"Is it too easy to set up an electric account just using someone else's social?" Davis asked Direct Energy's Senior Vice President Rob Comstock.

"No, I don't think that's the case," said Comstock.

Direct Energy has an investigator on staff whose sole job it is to search customer data for social security numbers used on multiple accounts, a red flag that points to identity theft.

Direct Energy notified 76-year-old Dorothy Ham last year when it discovered her social security number was connected to six accounts providing electricity to apartments in Houston and homes in Rosharon and Richmond.

Just when Ham thought she got the identity theft straightened out, she was contacted by StarTex Power in Jan. 2013 letting her know it found dozens more accounts opened up with her social security number.

When she pulled her credit report, it showed Ham owed $4,358 to various electric companies for service she never set up.

"I never have written a hot check. I never have missed a note on anything," Ham told Davis. "It's important to me because I did not do that."

Preventing the theft is difficult because electric companies require a social security number to set up electricity accounts. The best way to catch the fraud as early as possible is to check your credit report at least once a year, even if you don't suspect your identity has been stolen.

When an electric company checks your credit before it establishes service, it is noted on your credit report. If you see that an electric company that you didn't authorize checked your credit, you should contact that company's fraud department to find out who was using your social security number.

You are entitled to a free credit report from each of the three credit bureaus once a year. Click here to find out how to get the free reports.

Statement from Gexa Energy:

"Gexa Energy recognizes the importance of protecting our customers' information, and we respect and appreciate the trust our customers have bestowed upon us to protect their data. In today's ever changing technological environment, we also recognize the importance of on-going evaluation and proactive modification of processes to ensure we continue to carry out our commitment to be dedicated stewards for our customers. Gexa Energy appreciates this opportunity to reiterate our commitment to excellence by maintaining high standards of quality in all that we do every day."

Statement from StarTex Power, a Constellation Company:

"StarTex Power (a Constellation company) first learned of this matter anecdotally from weekly discussions with other retail providers through a trade association (TEAM). There was a discussion last fall of an alleged scam in which consumers were approached at flea markets and shopping malls and told they could get electric service without credit checks for a fee. The fraud ring would then call retail electricity providers and attempt to establish service using stolen personal information, such as name and social security number. We conducted an internal investigation to determine if StarTex had been affected by this and when discrepancies were discovered the company assembled the details, notified police and also sent a letter to consumers it believed may have been affected as well.

The company asked the Houston PD to open an investigation into potentially unlawful activity related to the matter. That investigation is ongoing and the company has cooperated and provided information requested by authorities.
We have increased internal security measures by implementing systems and procedures that identify the phone numbers used to make these improper enrollments so they cannot be used again for this purpose. The company also implemented a system that alerts customer care if an attempt has been made to enroll more than one account with the same social security number. There are legitimate reasons this may occur, e.g., landlords who offer all bills paid for tenants, parents enrolling multiple children, etc. The system in place today identifies those requests and they are handled on a case by case basis to ensure verification of the applicant's information. The company did not attempt to collect any amounts from accounts established fraudulently."

Statement from CenterPoint Energy:

"CenterPoint Energy complies with all federal laws concerning identity theft and maintains a Customer Identity Theft Program to prevent, identify, and mitigate ID theft. The program includes employee training on identifying "red flags" of ID theft, and on processes to report ID theft incidents. We also fully investigate all potential incidents of ID theft and, if we verify that a customer was a victim of such an incident, we write off the account and take appropriate action to mitigate the impact on the customer. "

About the Author:

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.