James K. Kallstrom, the FBI assistant director who led the investigation of the crash of Trans World Airlines Flight 800, will retire from the agency and join MBNA Corp.
In 27 years with the Federal Bureau of Investigation, Mr. Kallstrom, 54, helped bust Mafia leaders and terrorists. Starting next month at MBNA he will crack down on credit card fraud as senior executive vice president for risk management.
"Jim is a highly qualified executive who has managed large departments in the FBI," said Peter H. Frank, a spokesman for MBNA, the second-largest bank credit card issuer. "He has a history of working with technology and data security, but most important, he has a history of being a very fine executive."
Mr. Kallstrom will be the most celebrated of a long line of senior law- enforcement officials who have crossed over into financial services, particularly into credit cards, where fraud is a $1 billion-a-year problem.
"It's a very clear path for many of us," said Susan Sylstra, executive director of the International Association of Financial Crimes Investigators of Novato, Calif. (The group, which acts as an information clearing house for industry crime-fighters, changed its name this year from the International Association of Credit Card Investigators.)
Mr. Kallstrom became a familiar face to millions over the last year and a half through numerous news conferences and television appearances associated with the Flight 800 explosion.
The assistant FBI director in charge of its New York division, Mr. Kallstrom was recruited by MBNA vice chairman Jules Bonavolonta, a former FBI agent who joined the Wilmington, Del.-based card company this year. Mr. Kallstrom will report to Mr. Bonavolonta, Mr. Frank said.
Mr. Bonavolonta is the author of a 1996 book "The Good Guys: How We Turned the FBI 'Round-and Finally Broke the Mob." In it he described working alongside Mr. Kallstrom to bring down Mafia honchos like John Gotti. Mr. Bonavolonta would strong-arm informants into helping him infiltrate the Mob, while Mr. Kallstrom led the squads that did the bugging and wiretapping.
Mr. Kallstrom served as a Marine Corps captain during the Vietnam War and joined the FBI in 1970. His expertise in surveillance led him to play a key role in major spy and drug-trafficking cases.
FBI Director Louis J. Freeh said in a statement that Mr. Kallstrom was "one of the first persons in the FBI to warn that emerging telephone technologies could cripple use of court-authorized electronic surveillance."
On Capitol Hill, Mr. Kallstrom has sided with the law-enforcement establishment in arguing against strong data encryption technologies on grounds that they could hinder investigations. Many bankers as well as encryption advocates have been critical of that government posture.
Richard Lefler, senior vice president of worldwide security at American Express Co. and a former Secret Service agent, said Mr. Kallstrom bring MBNA "an excellent understanding of the technical developments affecting the financial services industry."
His areas of strength include "encryption, security on the Internet, and new technology features for financial products," Mr. Lefler said.
Allan Trosclair, a vice president of fraud control at Visa U.S.A. who previously worked for the FBI, said MBNA would also benefit from Mr. Kallstrom's experience in the glare of the spotlight.
In risk management jobs, "the ability to manage big crisis situations is definitely a strong point," Mr. Trosclair said.
Ms. Sylstra, a former police detective who held security and fraud detection posts at Wells Fargo & Co. and AT&T Universal Card Services, said Mr. Kallstrom would help MBNA conduct "intelligence-gathering from the street."
The Secret Service and FBI investigate much of the nation's credit card fraud, so it is not surprising that people from those agencies end up in banking. Others who work in security and risk management include George Clow of Visa International (who once headed the FBI's Unabom investigation) and Joel S. Lisker of MasterCard International.
Aside from Mr. Kallstrom and Mr. Bonovolonta, MBNA in October tapped William J. Esposito, an FBI agent for 33 years who ran the Cleveland and Baltimore offices, for a senior security job.
With more than $40 billion of credit card receivables, MBNA has been hailed as the industry's top performer, with profits growing consistently and chargeoff and delinquency rates well below norms.
Because of its success, "MBNA has always been willing and able to attract top talent from diverse organizations," said Moshe A. Orenbuch, senior research analyst at Sanford C. Bernstein & Co. in New York.
