It identified people whose credit had been compromised as true victims. His-torically, with financial crimes such as bank fraud or credit card fraud, the victim identified by statute was the person, business or financial institution that lost the money. Often, the victims of identity theft—whose credit was destroyed— were not recognized as victims.
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2)
It established the Federal Trade Commission (
FTC
) as the
one central point
of contact
for people to report all instances of identity theft. This collection of data on all ID theft cases allows for the identification of systemic weaknesses and the ability of law enforcement to retrieve investigative data from one central location.
3)
It provided
increased sentencing potential
and enhanced asset forfeiture provisions. These enhancements help to reach prosecutorial thresholds and allow for the return of funds to victims.
4)
It closed some loopholes in federal law by making it
illegal to steal another
person’s personal identification information
with the intent to commit a violation. Previously, only the production or possession of false identity documents was prohibited.
In April 1999, representatives from 10 federal law enforcement agencies, five banking regulatory agencies, the U.S. Sentencing Commission, the National Association of Attorneys General and the New York State Attorney General’s Office met with the FTC to share their thoughts on what the FTC’s complaint database and a related consumer education booklet should contain.
In November 1999, the
FTC opened the consumer
hotline
and began adding complaints to the resulting
ID Theft Clearinghouse
. Law enforcement organizations nationwide who were members of the Con-1 2 8
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sumer Sentinel Network (the FTC’s universal fraud complaint database) gained access to the Clearinghouse via a secure Web site in July of 2000.
The Clearinghouse provides a comprehensive picture of the
nature, prevalence and trends
of identity theft. In 2000, the first full year of operation, the FTC
entered more than 31,000 consumer complaints into the database; in 2001, that number grew to more than 86,000. In 2002, it was nearly 200,000.
Since the
inception of the Clearinghouse
, 46 separate federal agencies and 300 and six different state and local agencies have signed up for access to the database. Among the agencies represented are over half the state Attorneys General as well as law enforcement from a number of major cities—including Baltimore, Dallas, Los Angeles, Miami, San Francisco and Philadelphia.
According to Howard Beales, Director of the FTC’s Bureau of Consumer Protection: The Clearinghouse is essentially a
tool for
criminal investigators and prosecutors
.
The U.S. Postal Inspection Services, the United States Secret Service, the SSA, the Department of Justice and the IACP [International Association of Chiefs of Police], along with many other agencies, are outstanding partners in this effort, consistently communicat-ing the availability and advantages of the Clearinghouse to their colleagues…
Recognizing that investigating identity theft often presents unique challenges, the FTC in
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conjunction with the Secret Service, DOJ and IACP planned and directed training seminars for state and local law enforcement around the country.
One critical point, though: The FTC doesn’t have investigative or other direct law enforcement powers.
Violations of the Identity Theft Act are
investigated
by federal agencies
such as the U.S. Secret Service, the FBI and the U.S. Postal Inspection Service, and prosecuted by the Department of Justice and local law enforcement agencies like police, sheriffs and state troopers.
In his May 2001 congressional testimony, Bruce Townsend—the Special Agent in charge of the Secret Service’s Financial Crimes Division—described the ways that it works with various law enforcement agencies on ID theft cases: Our investigative program focuses on three areas of criminal schemes within our core expertise. First, the Secret Service emphasizes the investigation of counterfeit instruments.
By counterfeit instruments, I am referring to counterfeit currency, counterfeit checks—both commercial and government—counterfeit credit cards, counterfeit stocks or bonds, and virtually
any negotiable instrument
that can be counterfeited. Many counterfeiting schemes would not be possible without the compromise of the financial identities of innocent victims.
Second, the Secret Service
targets organized
criminal groups
that are engaged in financial crimes. Again we see many of these
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groups, most notably the Nigerian and Asian organized criminal groups, prolific in their use of stolen financial and personal information to further their financial crime activity.
Finally, we focus our resources on
community impact cases
. The Secret Service works in concert with the state, county and local police departments to ensure our resources are being targeted to those criminal areas that are of a high concern to the local citizenry.
Further, we work very closely with both federal and local prosecutors to ensure that our investigations are relevant, topical and pros-ecutable under existing guidelines.
J U R I S D I C T I O N A L C H A L L E N G E S
Cooperation among law enforcement agencies can be a tricky issue; often, turf battles erupt over which agency should lead an investigation in a given place.
Cooperation is especially important in ID theft cases
because ID thieves routinely operate in a multi-jurisdictional environment. In other words, they may
steal personal information in one state and then use
it in another. Or they may use the Internet to buy
items—further blurring the location of the crime.
This has created problems for local law enforcement who generally respond first to criminal activities. By
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working closely with other federal, state and local law enforcement, as well as international police agencies, the Feds—especially the Secret Service, FTC and FBI—have been able to provide a comprehensive
network of intelligence sharing
, resource sharing and technical expertise that bridges jurisdictional boundaries.
Anecdotes tell the story. For example, a grand jury
in Florida reported that some of the state’s law enforcement agencies were reluctant to take identity
theft complaints and don’t generate reports in some
cases.
Funding, too, is a roadblock to enforcement. A deputy district attorney in Los Angeles County, Calif., told the U.S. General Accounting Office (GAO) that there were
not enough prosecutors
to handle the county’s identity theft cases.
The GAO heard similar complaints from a supervisor in the Consumer Fraud Division of the Cook County (Ill.) State’s Attorney’s Office, the second largest prosecutor’s office in the nation. The supervisor said more money was needed to
train local police agencies
on how to handle cases involving multiple victims and voluminous documents.
A chief deputy attorney in Philadelphia said that “given competing priorities and other factors, there is little incentive” for police departments in Pennsylvania to spend money on identity theft probes.
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W H A T L A W O F F I C E R S S A Y
In his May 2001 congressional testimony, Joseph Cassilly—the State Attorney for Harford County, Maryland—described the jurisdiction problem: One of the major problems of state law enforcement has nothing to do with technology but is basic
jurisdiction and cost efficiency
. The majority of frauds and thefts are under $100,000 and usually involve parties resident in different states. The federal authorities have little interest in cases under $1 million—so most of the caseload will naturally fall to the states. But will a prosecutor be willing or have the resources to extradite on a $5,000 theft case?
So, the local police department is the
first responder
to the victims once they become aware that their personal information is being used unlawfully. Then, when evidence points to a multiple-state crime…or the involvement of the U.S. Postal Service…the local cops will hand the case to the Feds.
On the other hand, credit card issuers and other financial institutions usually contact local Secret Service field offices to report possible criminal activities.
The
partnership approach
to law enforcement is exemplified by financial crimes task forces located throughout the country. These task forces pool personnel and technical resources to maximize the expertise of each participating law enforcement agency.
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The Feds also work with private-sector groups (especially in the banking and financial services industries) on preventive and investigative programs.
In the early 2000s, the main cooperative law enforcement entity was the
Identity Theft Subcommittee
of the Attorney General’s White Collar Crime Council. This group, which is made up of federal and state law enforcement, regulatory and professional agencies, meets regularly to discuss and coordinate investigative and prosecutorial strategies as well as consumer education programs.
In his July 2002 congressional testimony, Dennis M.
Lormel—Chief of the FBI’s Terrorist Financial Review Group—described the FBI’s approach to investigating and prosecuting ID theft: [T]he FBI, along with other federal law enforcement agencies, investigates and prosecutes individuals who use the identities of others to carry out violations of federal criminal law. These violations include bank fraud, credit card fraud, wire fraud, mail fraud, money laundering, bankruptcy fraud, computer crimes and fugitive cases. These crimes carried out using a stolen identity make the investigation of the offenses much more complicated. The use of a stolen identity enhances the chances of success in the commission of almost all financial crimes. The stolen identity provides a cloak of anonymity for the subject while the groundwork is laid to carry out the crime. This includes the rental of mail
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drops, post office boxes, apartments, office space, vehicles and storage lockers as well as the activation of pagers, cellular telephones and various utility services.
Lormel also made a point that many law enforcement types admit more quietly—but many victims of ID theft see as a problem: The Federal Bureau of Investigation does not view identity theft as a separate and distinct crime problem. Rather, it sees identity theft as a
component of many types of crimes
that we investigate.
The FBI would rather battle things like terrorism and
drug import—and deal with ID theft as a byproduct of those. However, it’s helpful to remember that
the Secret Service considers ID theft a higher priority
in its own right.
Richard J. Varn—Chief Information Officer for the State of Iowa—offered some remedies to common jurisdictional problems in his April 2002 congressional testimony:
There is a crying need for coordination at each level of government and between levels of government on identity security on technical standards and systems and in policy making. It is not yet clear what the best options or mix of options are for this coordination. Some possible choices include:
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•
Interstate
compacts
; •
Intergovernmental agreements; •
Standards development through recognized standards bodies; •
Coordination of information technology system architecture, development and operation; •
Federal funding for
enhanced
life document systems
and driver’s license issuing processes, systems and cards; •
Legislative and executive
coordination
of the funding, development, enhancement and implementation of identity security programs and systems within and among each level of government;
•
Establishment of a
single point
of contact
and coordination for various federal initiatives; and •
Creation of formal or informal federal, state and local groups to coordinate technical and policy activities and exchange information.
T H E M A Y 2 0 0 2 I D T H E F T S W E E P
In May 2002, U.S. Attorney General John Ashcroft announced the completion of a national “sweep” of
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ID theft prosecutions. The sweep involved 73 criminal prosecutions against 135 individuals in 24 districts over a couple of days.
Justice Department officials noted that the sweep was the first part of a
two-pronged strategy
by federal law enforcement to combat identity theft. The second prong involved efforts to strengthen existing federal identity theft criminal statutes.
The sweep was a good example of cooperation between the Feds and law enforcement agencies at the
state and local levels.