What Happened in Vegas...

In April 2005, local entrepreneur Robert J. Maynard Jr. was beyond broke.

At 43, with an ex-wife and two kids, he told the government in his bankruptcy filing that he had $20 in his pocket and $15 in the bank. He was hundreds of thousands of dollars in debt.

Maynard, a Valley native and former Marine, had seen some success in the late 1990s as the founder of Internet America, an early Internet service provider. He had owned a nice home in Ahwatukee with expensive cars in the driveway. He had bragged he would retire at age 35. Those days were gone.

Still, Maynard was optimistic. He'd been through this before. He's the type who jumps back up after a fall — one of those edgy entrepreneurs who always seem to be on the verge of great success or great failure.

His first personal bankruptcy was in 1990, and he had filed again in 1994 for one of his failed companies.

But even as his finances sunk to new depths, his next big business venture was taking off. Drawing on his experience in credit repair and with the Internet, Maynard dreamed up a service that would protect people against the dreaded crime of identity theft.

Lifelock, as his new company would come to be called, began offering services to the public the same month in 2005 that Maynard filed still another bankruptcy.

LifeLock's primary service is nothing you can't do yourself. If you think someone has stolen your identity, you can call one of the three major credit bureaus, TransUnion, Experian or Equifax, and place an electronic red flag, called a fraud alert, on your account.

Here's how it works: The credit bureaus make money by selling information about you that helps lenders determine whether you're going to cheat them out of money if they give you a loan. Now, imagine a scraggly meth head trying to open a line of credit in your name at Circuit City to buy an HDTV because he stole your boss' laptop, which had all your personal data in it. When Circuit City calls one of the credit bureaus to check you out, there's a fraud alert on your account. Circuit City is supposed to use the contact information on the credit bureau's account to notify the account holder of the impending purchase. If everything goes according to plan, the meth head goes home empty-handed.

The catch: Every 90 days the credit bureau erases fraud alerts on the account. That's because fraud alerts are a headache to lenders like Circuit City — commerce would move like molasses if every account was red-flagged.

Customers pay LifeLock $10 a month to call a credit bureau every three months and put a fraud alert on an account. By law, if one bureau is notified, it must alert the other two. LifeLock also offers insurance. If a customer becomes a victim despite the service, LifeLock says it will pay losses (if the claim holds up to scrutiny) of up to $1 million. The company says that has happened only three times, and the costs were far less than the million-dollar limit.

LifeLock was an immediate hit. The news media scrambled to meet Maynard and his business partner, Todd Davis, pimping them like crime-fighting superheroes.

Maynard claimed he got the idea for LifeLock after spending a week in jail in 2003. The pair have told his story ever since as a frightening example of what can happen to victims of identity theft. The details vary slightly in articles and television news reports, but the story goes something like this:

A few years ago, Maynard answered a knock on his door in Phoenix one morning to find five deputies holding a warrant for his arrest. They accused him of failing to pay back a $16,000 casino loan to the Mirage in Las Vegas and, despite his protests, hauled him off to the Maricopa County Jail. Maynard had not even been in Vegas when the casino made its loan. One of the guys who stole Maynard's identity and the casino's money is now doing time for murder. Maynard was released after seven days, but he spent more than $20,000 and countless hours on the telephone trying to clear his name. While sitting in his jail cell, he came up with the plan for LifeLock so other people could avoid being victimized by identity thieves.

It's a story that stokes the public's worst fears of identity theft, a crime that induces a state of near-paranoia in many of us. Though not a crime of violence, victims are left feeling violated, even when financial losses are small. Nationwide, the problem is immense, costing at least $50 billion a year and forcing consumers, businesses, and governments to become more savvy in trying to prevent it.