For almost two-and-a-half years, an identity theft ring run by a man known as "Big Head" defrauded hundreds of people, including Federal Reserve Chairman Ben Bernanke.

On August 7, 2008, Bernanke's wife Anna had her purse stolen off the back of her chair in a Starbucks in Southeast Washington, D.C.

News of the theft and its relationship to Chairman Bernanke was first reported by Newsweek.

"Identity theft is a serious crime that affects millions of Americans each year," Bernanke said in a statement provided by a Federal Reserve spokesperson. "Our family was but one of 500 separate instances traced to one crime ring. I am grateful for the law enforcement officers who patiently and diligently work to solve and prevent these financial crimes."

On August 13, 2008, according to the affidavit filed by a postal inspector who helped investigate the case, a man named George Lee Reid entered a Bank of America in Hyattsville, Maryland and proceeded with a scheme known as a split deposit transaction.

"The split deposit transaction is a transaction where the co-conspirator first makes a deposit into one victim's account by writing a personal check to that victim account from another identity theft victim's bank account," explains U.S. Postal Inspector William J. Aiello in his affidavit. "The purpose of this deposit is to falsely inflate the victim's account balance and/or identify the specific account number. This deposit would then be followed by a series of counter withdrawals, check-cashing, or electronic withdrawals."

Among other transactions, Reid deposited $900 into the bank account of an identity theft victim identified as "K.N." using a fraudulent check linked to the Bernanke's joint checking account at Wachovia, according to the affidavit. He also cashed two $4500 checks.

Reid was charged in Washington D.C. with identity theft in October, 2008, in connection with the fraud committed against Ben and Anna Bernanke. According to the affidavit, Reid confessed his involvement and said that he had made as much as $50,000 in a single day since beginning this type of fraud in 2006.

Newsweek reports that charges against Reid were subsequently dropped and that there's an outstanding arrest warrant for Reid, whose whereabouts are unknown.

"Big Head," otherwise known as Clyde Austin Gray Jr., a leader of the identity theft ring, pleaded guilty to bank fraud charges in Virginia last month.

A significant break in the investigation occurred in September, 2007, when a dutiful FedEx employee in South Holland, Illinois refused to send a package from Leonardo Darnell Zanders, an alleged member of the identity theft ring, because it violated corporate policy -- the package's return address listed the FedEx facility rather than the sender's address.

"Zanders immediately left the facility leaving the packages behind," the affidavit states. "A supervisor for FedEx opened the packages in accordance with its corporate policies and procedures prior to contacting FedEx security and law enforcement. The packages contained stolen personal checks, identifications, bank cards, credit cards, and other similar documents. The packages also contained counterfeit military identification cards and driver's licenses."

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