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Lose yourself: Cloning IDs without victims knowing

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Celia Moore was an Oregon landlord who was renting a room to retired police officer Kenneth Don Morsette. He said he had just divorced his wife of 35 years, and the process had been so ugly that he was hoping to avoid being discovered by her. There was only one problem—the man wasn't Morsette. He was former attorney John Donald Cody, and he was a fugitive.

Ever since allegedly defrauding his clients in the 1980s, Cody, who had military intelligence training, had assumed multiple identities, all those of living, breathing people. As Bobby Thompson, he claimed his fraudulent charity for Navy veterans raised $100 million, according to 2009 tax returns.

His audacity didn't end there. He became a high-profile political donor, at one point gaining enough access to be photographed with former President George W. Bush. All this was possible through the criminal practice of "identity cloning."

Identity theft, which involves draining someone's bank account and maxing out their credit cards, is a familiar crime to many people, and according to expert Robert Siciliano, it's typically a "one-shot deal" motivated by financial gain that lasts only until the victim finds out what's going on. Identity cloning, on the other hand, involves assuming another's identity, often without the victim finding out.

"[Criminals] live and function as an individual on purpose, often to evade law enforcement," he said, likening it to a criminal's "own form of witness protection." These criminals live fully functioning lives with relative normalcy, maintain lines of credit, open bank accounts and pay bills, Siciliano said. They can hide in plain sight and stay undercover without living in seclusion, he said.

"I guarantee you right now that there are people in this country and Canada that have been living and functioning as others, and have been doing it for more than half their lives," Siciliano said.

In 2010, The Globe and Mail in Toronto reported that the identity of a Canadian man named Donald Fiedler had been in use by an identity cloner for more than a decade. This provided a nasty shock for the real Donald Fiedler, who applied for a passport only to be told that he already had one. The imposter pleaded guilty and said that his name was Peter Michael Filitz, but because he was such a capable cloner, prosecutors were unable to verify that this was actually his name.

Catching these imposters is a complicated process that involves doing police work in reverse. Bill Boldin and a team of U.S. Marshals were tasked with tracking down Bobby Thompson, and the process was convoluted, to say the least.

"Normally when we get a fugitive case, a police agency comes to us and says, 'Go find this person,'" Boldin told CNBC's "American Greed." "Well, in this case they said, 'Go find a person. We don't know who he is.'"

Siciliano described three ways that identity cloners usually get caught. They carry proof of multiple identities at once, they commit a crime while already living under a cloned identity, or they get recognized in person. Cody succumbed to the first two endgames when he cloned the identities of men living on a Navajo reservation and when he committed money laundering, racketeering and theft as Bobby Thompson. But not one person ever recognized him.

According to Charles Strozier, practicing psychoanalyst and history professor at John Jay College, maintaining multiple identities is a highly stressful enterprise requiring great motivation. He cited dissociation as the key factor in complete immersion into a different identity.

"Changing your name, identities, accounts, cheating, lying, keeping everything separate … doesn't work well in terms of leading a relatively normal life," Strozier said. However, it works well for criminals, he said.

"You can easily slip into it with a pattern of criminality because you begin to lose the motivation for trying to live a life with a whole self," he added.

Dissociation of this degree only works with criminals like Cody, who gained success from possessing alternate selves, Strozier said. He explained that a deeply dissociative individual who is involved in criminality "is proving to be very productive, very useful and very adaptive in a psychological sense."

Read MoreCreating aliases on the run: John Donald Cody utilized multiple fake identities featuring real people's names to keep authorities off his trail.

The story of John Donald Cody will be told on the season finale of "American Greed", Sunday, Aug. 17 at 10 p.m. ET/PT.