CHAPTER THREE – THE USE OF INTELLIGENCE IN WHITE COLLAR CRIME ENFORCEMENT

Curriculum Technology

Objectives

Identify the relationships between trust, respectability, risk, and white collar crime
Recognize the differences between white collar and conventional crime offenders
Recall the images associated with white collar crime

Introduction

The use of intelligence information, whether through formal or informal processes, is an integral part of any investigative effort. Essentially, intelligence is the process by which new information is added to that already possessed and made available to operational personnel when and where they need it, to educate investigators, to detect crime, trigger investigations, and to positively affect the course and outcome of an investigation. The intelligence process may be limited to the store of knowledge in the heads of individual investigators where information on suspects and their activities is retained and accumulated. Alternatively, the process may be formalized and structured into an intelligence system in which the accumulated knowledge of many individuals is written down, pooled and shared. The latter is by far the more useful model.

THE FUNCTIONS AND PURPOSE OF INTELLIGENCE

The purpose of an intelligence system, then, is to serve investigators as the single, best source of accumulated information on specific offenders and their activities. The underlined words must be stressed. Too often, the intelligence process constitutes little more than an accumulation of information, a formal dumping ground for disparate bits of data concerning individuals. No matter how formalized, such a process does not represent a bonafide intelligence system, for an intelligence system must be more than an accumulation of information. It must be the best available source of such information. And in order to be so, the system must have three basic characteristics. First, it must establish criteria by which information offered can be evaluated for inclusion. This is to prevent the inclusion of specious and unreliable information which would affect the reliance investigators can place in the system. Second, the system must have a basic organization and analytic structure into which information can be fitted and interpreted. Thus, new information should not merely be added to a system, but rather should be related to that already existing and serve to either augment, supersede, or invalidate previous knowledge.

Finally, the system must have a well-defined protocol by which conflicting information is reconciled and out-dated or invalid information is purged. Maintenance and upkeep of an intelligence system must be continuous in order to assure that it remains the most reliable and accurate information source available.

The use of intelligence systems in white collar crime enforcement is not as well-developed an art as in other enforcement areas. Partially this is because the white collar offender has not attracted as much attention as have traditional offenders, but it is also due in part to a misapprehension of the value of intelligence to white collar crime enforcement. Brief consideration of the basic functions of intelligence, however, will demonstrate its usefulness in the white collar crime area.

Intelligence has essentially three functions: identification; detection; and education. Each is discussed below.

The Identification Function of Intelligence

Probably the most frequent use of intelligence is for the purpose of identifying known and active offenders. By maintaining files that document the personal appearance characteristics, fingerprints and mug shots of such individuals, such systems attempt to quickly identify “whodunit” when particular events occur. In white collar crime enforcement, however, the question of “whodunit” rarely needs to be asked. “Whodunit” is generally clear. The bigger questions are: what was done? (for example, was a crime committed, or a civil wrong inflicted, or was there merely the exercise of poor judgment by a victim); to whom was it done? (for example, how many victims are there, who is the victim); how was it done? (what specific acts, of what character and by whom made the events occur); and where was it done? (the jurisdictional issue). Each of these questions is interrelated to the others. For example, where a white collar abuse takes place (for example, whether in the province of federal or local authorities) may make the difference between its being a crime or a civil wrong. The number of victims may determine whether a criminal fraud or civil wrong can be proved, etc.

The major point is that the identification function of intelligence is relatively less important in white collar crime enforcement, being largely overshadowed by questions of greater significance. Agencies, then, which understand this and which are most familiar only with this function of intelligence are likely to disregard its usefulness in white collar crime. To do so is to ignore the other functions of intelligence where its greatest promise lies for white collar crime enforcement efforts.

The Detection Function of Intelligence

Closely related to identification is the detection function of intelligence. Normally this function occurs as the result of structured surveillance efforts which record the movements and associates of offenders and thereby attempt to anticipate emerging criminal activities, head them off, or provide a basis for going forward in an investigation when anticipated events occur. For example, the reported sighting of two known safe burglars casing a jewelry exchange can result in staking out of the premises with the hope of intercepting the anticipated crime of burglary. Alternatively, the reported sighting, when combined with a subsequent burglary at such location, provides a firm basis for investigation of the crime.

Because the white collar offender’s activities are not so readily anticipated in detail, there is a tendency to overlook the value of the detection function of intelligence vis-a-vis the white collar offender. The mere sighting of a known land fraud artist at a particular location does not have the same informative power as in the burglary example described above. However, such information when combined with a more generalized surveillance of the economic and business environment may be powerful indeed. Thus newspaper advertisements telling of fantastic property investments and announcing a public meeting for interested investors may signal the need for specific enforcement attention.

Intelligence systems which document the methods and means of white collar offenders allow investigators to interpret seemingly unrelated and/or trivial events in proper perspective. Thus investigative significance can be given to suspicious activities of unfamiliar subjects, as well as to those of previously identified intelligence subjects, a factor of substantial importance in a crime area where criminals frequently operate through corporate or other business fronts. Investigators can be helped to determine when altogether proper acts, such as the rental of office space, may really be preparatory steps in the perpetration of a fraud. And most important, a basis is provided on which the investigator’s gut feelings of suspicion can be focused, interpreted and acted upon.

The Education Function of Intelligence

The education function of intelligence has two dimensions, those of continuity and analytic power. Of the two, the continuity dimension is probably best recognized and understood. It is quite clear, for example, that a well-developed intelligence system provides a continuity to agency functioning that would not exist otherwise. Thus, agencies which maintain effective intelligence systems do not experience major information losses on the death or retirement of active investigators. Instead, their knowledge, expertise and experience is preserved for the use and benefit of those who follow. Similarly, new investigators do not have to start at square one in confronting major offenders, but rather can begin from a solid information base provided by those who preceded them.

The manner in which the education function of intelligence provides analytic power is less well-appreciated, but is especially important in the area of white collar crime enforcement. As has been noted at many points in this book, white collar crime is extremely complex. It cannot be capsulized in a few statutory definitions nor can its scope and parameters be easily identified and studied. This is because white collar crime is not a discrete set of easily described acts but rather a vital and dynamic process by which theft is subtly perpetrated.

The intelligence objective, then, is to capture the process in the vitality and dynamism of the activities of those known to perpetrate white collar crime. If this objective can be achieved it should be possible not only to better anticipate the course of current activities but to reconstruct events that have already taken place. Without a composite source of information, a white collar enforcement effort is poorly equipped to face the white collar offender or to interpret the widely varied schemes he perpetrates. It is clear that a white collar crime enforcement effort can benefit from a sound intelligence system. This is particularly true when the education and detection functions of intelligence are clearly understood and appreciated. The discussion following provides guidelines for the design and content of a white collar crime intelligence system which can assist in assuring that such a system conforms to the basic definition of being the single, best source of accumulated information on white collar crime.

DESIGNING A WHITE CRIME INTELLIGENCE SYSTEM

The basic rule that should guide the design of a white collar intelligence system is that it be arranged for maximum utilization. Two features of a white collar intelligence system are likely to affect its use, and thus its ultimate value. The first of these is the system1s design. The simpler the basic design of a white collar intelligence system, the easier it is to develop and maintain it and the more likely it will be to experience constant use. Overly complex systems discourage use, taking more time to access properly than the investigator has available, or too much time relative to the perceived benefits offered.

The second feature relevant to the use a white collar intelligence system will receive is the extent to which it is directly and easily accessible to the investigative effort it is designed to enhance. No matter how well designed an intelligence system, if it is divorced from the investigative function benefitting from it, it soon becomes little more than a repository for dust rather than for vital information. Utilization is positively increased, then, where an intelligence system is operated and maintained by the unit having investigative and enforcement responsibility for the subjects about which it is concerned. A white collar intelligence effort, if it is to be undertaken at all, must be made a functional responsibility of the white collar crime unit itself rather than integrated as part of a general intelligence function.

Those best able to make decisions about an intelligence system, then, are its ultimate users. In this sense, textbook blueprints for intelligence files can only provide ideas, not precise designs that will serve everyone best. Still, there are some basic decisions that must be made in developing a system that will affect its ultimate design. These are discussed below.

Investigative versus Intelligence Files

Quite clearly, there is a difference between investigative and intelligence files. Investigative files represent focused efforts linked to a specific crime known or believed to have been committed. Intelligence files, on the other hand, reflect general investigative efforts associated with an offender, offender group or entity concerning illegal activities known or suspected over a period of time. Obviously, investigative and intelligence efforts are related to each other, but rarely are they filed together. Generally, investigative units, not just those concerned with white collar crime, maintain separate investigations files both for the entire unit and by each investigator described earlier. In addition, the investigative work of a unit is filed historically with separate places for investigations which are past and completed, those closed, and those which are on-going. Intelligence files are also separately maintained, generally using an alpha arrangement by the subject’s name, but are not subject to a historical separation through filing. Instead, intelligence files are kept intact and made subject to update and purging procedures which insure their maximum utility.

Investigative and intelligence functions cannot be independent of each other. In fact, the strength of an intelligence system depends upon the operational relationship it bears to investigative efforts and the extent to which it is continuously updated to reflect the existence of new investigative efforts which concern file subjects. An intelligence system divorced from operational reality of an investigative unit may be a beautiful file, but have little value. The point to remember is that, while the two efforts are intertwined, rarely are the two files joined in one and a unit that decides to develop an intelligence system must expect to have at minimum, two sets of files.

Who Should Be Subjects of Intelligence Files?

Another decision which will affect the design of an intelligence system is the determination of who will and who will not be regarded as an intelligence subject. This determination is critical from both a policy and a utilization standpoint. With respect to policy, the criteria for entry to an intelligence file may determine the legal permissibility of the activity and the degree of privacy to be accorded the files. From a utilization perspective, the size of the file, as determined by the number of subjects, may affect its value. Thus, too many listings may transform the intelligence files into a garbage file or telephone book rather than a useful investigative tool.

Several questions should be answered by a unit developing a white collar crime intelligence system:

Will all offenders who have been the subject of an investigation be included in the intelligence system?

Will all offenders who have been the subject of a complaint be included in the intelligence system?

Will offenders who have not been the subject of official action by the unit be included in the intelligence system?

If the answer to any or all of the above is no, what criteria will be used to decide whether subjects are to be included in the intelligence file?

There are no pat answers to these questions. Some units may decide to make all subjects of investigations a part of the intelligence file, but to exclude subjects of complaints that do not lead to investigations. Others may require that a series of complaints be received against an offender or group before inclusion in the intelligence system. Still others may make a qualitative decision to include subjects on the basis of the scheme alleged and harm done to victims regardless of official disposition of a case. Once again, the major point to be made is that this decision-making process must be thought through and anticipated and clear guidelines established. Agency legal counsel should be consulted with respect to these issues, since they are currently the subject of substantial legislative and judicial attention.

How Comprehensive Will the Intelligence File Be?

Closely related to who will be the subject of an intelligence file is the nature and comprehensiveness of materials contained in that file. Beyond policy and utilization questions noted above, office space may affect the number and size of files that are possible for the unit. Lack of space may require that a central filing system include as much information as possible, regardless of qualitative differences existing between file entries.

Where space is not a particular problem an important design question arises concerning the comprehensiveness of a central intelligence file versus reliance on supplementary files for additional information. Usually supplementary files are specialized and contain only one type of information, a mugshot file or an alias file, for example. The burden introduced by the use of supplementary files is that they must be cross-referenced with the relevant central files. The advantages of supplemental files are that many “dead” entries (in the sense of mere cross-references) can be eliminated from a central file; that they are relatively easy to update and maintain; and that they permit specific information searches to be done in specialized files rather than requiring entry to a large and more general central file.

Some units prefer to maintain a separate alias file, for example, where a name can be quickly searched and reference to a central file discovered. Others feel that the several steps involved in such a process discourages file use. Once again, the decision on central file comprehensiveness is best made by those who will use the system. There is no right answer, and unit preference should prevail.

A Simple Intelligence System Design

Once the above decisions have been made, it should be stressed that they need not be cast in stone. Indeed a unit will certainly want to modify its system once it has had some experience with it. Flexibility should be built into the system. The intelligence system described in this chapter is a simple one. It is one designed to be well within the capacity of even the smallest of units and does not envision implementation within any specific agency structure. It is based on the assumption that a unit will need at least three sets of files: investigations files (past, closed and on-going); a complaint file (past, closed and on-going); and a central intelligence file. It does, however, also allow for the situation in which supplementary alias, business name, mugshot or other files may also be used as part of an integrated intelligence system. Since it is expected that both investigations and complaint files will have a predetermined format, the discussion following focuses on the intelligence file itself and the intersection of this file with these other files. The design presented here uses a master card as the cover sheet(s) for the central intelligence file and therefore calls this file a master card file. The idea behind the master card is that it provides summary offender information to a user of the system without requiring him or her to wade through an entire file. It also allows, as will be discussed, for several arrangement options of the central file. Although most of the discussion following concerns information necessary to the master card itself, the kinds of information indicated also reflect the major content of its accompanying file.

INFORMATIONAL INPUTS OF A WHITE-COLLAR INTELLIGENCE SYSTEM

White collar offenders present great potential as intelligence subjects but that does not make development of an intelligence system regarding them and their activities an easy task. This is because although the white collar thief has a well-developed and defined manner of operating, his basic scheme is subject to innumerable variations. This makes his activities far more challenging to probe than those of the average thief. There may, for example, be only a limited number of ways to gain entry to a premises, or to open a safe, but the ways in which an advance fee scheme may be perpetrated are limited only by the imagination of the perpetrator. Because white collar offenders are capable of Cl large number of “variations on a theme,” the compilation and analysis of information regarding them can be complex indeed.

At the same time, however, there is a simplicity to the activities of the white collar thief that derives primarily from the fact that the offender himself is an important component of his modus operandi. Whether it be the studied glibness of the swindler, the unrelenting persuasiveness of the con-man, or the manipulative influence peddling of the corrupt public official the personal characteristics of the white collar offender play an important role in advancing his activities. As Such, they become distinct and unmistakable hallmarks of his activities regardless of how many variations on a theme he perpetrates. They are the composite of what might be called his or her “style.”

Because style is something of an indefinable quality, it is easy to complicate it. But to do so is to miss the realization that the white collar thief’s style is his least changing feature and the one quality easiest to learn about him. The simplicity of style for many such offenders is often their most marked characteristic and the one by which their handiwork is best recognized.

It should be noted that the master card file described below can consolidate and perform some of the same functions as the files described in the section regarding Information Process Flow.

But how does one communicate “style,” particularly for intelligence purposes? The first step is to understand what style really is, for it is nothing more than the personal application of available tools to effect a particular fraud or deception. Knowing the tools of the white collar offender, when combined with a knowledge of how and to or against whom they are used, constitutes a good, substantive definition of his style.

Even a relatively simple intelligence system relevant to the white-collar offender must take into account both the complexity of his activities and the simplicity of style. The master card file system suggested here is designed to do this. It includes a front sheet with a summary profile of the offender or offenders in question (the Master card) and indicates other files in which more detailed information is available. The specific items discussed below should be included in summary form on the master card and can be treated more extensively in the master file itself. At minimum, the master card and its accompanying file should contain the following kinds of inputs:

Information bearing on usual or primary fraudulent activity;

Information bearing on personal background and characteristics; and

Information bearing on style of operating.

Each of these is discussed below.

Fraudulent Activity of the Offender or Offender Group

A key item in a master card intelligence system is an indication of the dominant fraudulent scheme or activity in which a white collar offender or offender group engages. Generally, this item will consist of a broad categorization of the type of crime preferred by the white collar thief.

It might, for example, consist of a notation such as advance fee schemes, land fraud, bait advertising, repair fraud, etc. Under this heading, additional information relating to known variations of a general scheme used by the offender should be included together with a notation indicating the source of the information and/or where additional information may be available. Thus, for a land fraud operator, an entry covering dominant scheme or activity might be prepared as follows:

DOMINANT SCHEME

KNOWN VARIATIONS

Investment Opportunities (Maine seacoast properties)

“Retirement Paradises” (South- West desert sites)

Land Fraud

SOURCE OF INFO

Prior investigation – J. Cronin, Investigator

John Rodgers, N.Y. Atty. Gen. Office

ADDITIONAL INFO AVAILABLE – file #2967

Correspondence file under “Rodgers”

In this example, the offender’s variations of land fraud schemes are characterized by the manner in which he presents them to potential victims, for example, as an investment opportunity. Similarly, the bait used to lure victims is indicated, here “Maine seacoast properties.” In the second item, the language used by the offender to describe his bait, for example, “retirement paradises” is used in the file since it best characterizes the scheme and may be used again in the future.

The first source line item above is identified as having been the subject of a prior investigation of the unit generating the file. The user of the file is told not only who the previous investigator was but is also directed to an investigations file (I-file) for additional information. The second line item consists of information received from another agency and directs the user to a correspondence file for additional information. In both cases, the master card entry attempts to communicate basic information clearly and concisely while at the same time assisting the user in acquiring additional information. This is the function of the master card system since it avoids having an investigator read through voluminous notations on a subject in whom he is not interested; rapid access to the major activity of the offender and known variations used should enable the investigator to easily determine whether or not the subject noted is one in which he has an interest.

Personal Characteristics and Background of the Offender

A second item integral to a white collar offender master card file relates to the personal characteristics and background of the offender. Because the white collar thief often confronts his victim directly or is well-known to the investigator, personal appearance data is usually available and can be given in some detail. Minor changes in personal appearance can and should also be noted, such as the addition of a mustache or glasses, for example. Generally, the white collar offender does nat attempt to disguise himself, so that while his activities may change his basic appearance can be expected to remain constant. Thus, it is often on the basis of victim descriptions of the offender that new entries to the above category, for example, “dominant scheme or activity,” can be made.

The background of the white collar offender can also provide useful information to the investigator. Depending upon the nature of the offender (an ad hoc or abuse of trust violator, for example), he is likely to have roots in the community and be employed. Where his scheme relates to his employment or business, information relating to his business affiliations will be helpful. In the first instance (where the white collar thief is an employee), such information may identify individuals who may be usefully interviewed in an investigation. Where he owns a business, the nature of the offender’s business may suggest additional remedies as against an offender, such as the seeking of an injunction against his pursuit of specific business practices.

But even if the white collar offender is not rooted in one place, he may have a background of employment which contributes to his skill as an offender. Prior experience as an insurance salesman, for example, may equip to advantage a white collar thief engaged in investment swindling.

RACE/SEX:

HEIGHT:

VOICE TONE: MANNER:

PLACE OF BIRTH:

M.l

BUSINESS ADDRESS

BUSINESS OR OCCUPATION:

PRIOR EMPLOYMENT HISTORY:

WEIGHT:

HAIR

Knowing the specific skills of the offender (which he may have legitimately acquired) may explain not only the schemes in which he is likely to engage but also the tactics to which he may revert in perpetrating them. Legitimately acquired skills, then, may constitute an important element of the white collar thief’s “style” providing him with the language and mien of a reputable profession or occupation.

Master file card information relating to the personal characteristics and background of the white collar offender should include such entries as the following:

PERSONAL CHARACTERISTICS & BACKGROUND:

DOB:

CHANGES IN APPEARANCE:

[Include mugshot or refer to mugshot file #.]

PERMANENT ADDRESS:

KNOWN SKILLS OR PROFESSIONAL COMPETENCE:

KNOWN ASSOCIATES: [Should include financial associations, if member of gang should indicate position within gang.]

The Offender’s Style

A final component important for inclusion in a master card file for a white collar intelligence system concerns the “style” of the offender. We said earlier that style is really nothing more than the personalized application of a particular scheme of fraud. Style can still, however, be a difficult offender characteristic for an intelligence system to verbalize and communicate. In characterizing the white collar offender’s style, then, it is helpful to describe those modus operandi components contributing to it. We will describe four here as illustrative of the style of white collar criminal activities. There are undoubtedly others that the experienced investigator may add or find useful and revealing. The four style elements described below are: (a) the legitimate tools used by the offender to initiate and consummate his scheme; (b) the illegitimate tools used by the offender; (c) the characteristics of the victims against whom he acts; and (d) the approach he uses to identify and contact said victims.

Legitimate Tools

White collar offenders are often quite astute in the use of legitimate devices and tools to advance their schemes. Such a tactic produces two broad effects. First, the legitimacy of the tool or device itself often contributes to a false perception that the offender himself is reputable. Second, the use of tools which by themselves are not illegal often complicates the investigation of and case-building against the white collar thief. The “stuff” of his crimes may be “legal,” though the totality of his acts may be totally illegitimate. The summing up of individual, technically legal acts into an illegal whole is far more difficult for an investigator than is the documentation of individual, illegal acts in support of overt criminal activity.

The legitimate tools used by the white collar offender will vary widely with his access to specific devices. A public official, for example, may have the capacity to utilize many of the trappings of his position (stationery, office space, etc.) to exude a facade of legitimacy to the activities he proposes. His use of such tools may even create the impression that his acts are “authorized” in some manner by those with greater position and power. Other white collar offenders may use the good reputation of various trade journals, newspapers or other publications to advertise themselves, in this way banking on the potential victim’s perception that the publication “vouches” for the advertisement’s reputability. Dishonest franchise peddlers may hold conferences in the best hotels in an attempt to create similar impressions. The rental of office space replete with all the “right” furniture, for example, implies a legitimacy to a business that may not in fact exist. The selection of an office suite itself may create an unassailable image of the operation located there. Having a prestigious or well-known business address can evoke an impression of reputability; as can location adjacent to a well-respected law firm, at such an address.

It should be noted that none of the above acts, for example, the rental of office space, the leasing of a hotel for a conference, or advertising in a publication, is itself unlawful. And yet each may be a preparatory step in a white collar thief’s scheme, much like the casing of a premises (which can be a crime) is for the burglar. Many of these acts, however, signal the initiation of a scheme by the white collar thief, reflecting a reapplication of his personal style of criminal behavior. And, because his style is well-studied and developed, such acts are likely to be characteristic indicators that he is on the move again.

Illegitimate Tools

Not all white collar offenders confine their activities to the use of legitimate tools. Often the white collar thief will employ tactics that are themselves unlawful but may not be understood as such by the victim. For example, in a consumer fraud, customers seeking advertised bargains are conned into accepting a more costly substitute or the explanation that they were “too late” for the bargain, although this device is now actionable as a fraudulent and deceitful sales tactic. Many con games rely on a naiveté of the victim or a specific lack of such information on his or her part to successfully execute an illegal scheme.

Other white collar offenders may illegally use the mails or offer investment opportunities in direct violation of state and federal law. In such cases, they may rely on the already-secured investment (for example, monetary commitment) of the victim to avoid detection for the use of such tactics. Some victims may continue to hope against hope that their “investment” will eventually payoff and assist the offender in concealing his illegal acts. A style characteristic of many white collar thieves is to draft victims into becoming their tools. Similar to this situation is the one in which the original victim becomes a co-conspirator with the offender, as in many public corruption cases.

Itemizing the many tools, both lawful and unlawful, employed by the white collar offender is essential to building a complete picture of the offender’s operating style. It can also help in anticipating how he will proceed in the perpetration of future schemes. Similarly, where an offender’s characteristic preparatory step is observed and recognized as such, his or her next move(s) can often be predicted. Knowing that the offender’s unmistakable style is often merely a patterned invocation of a finite set of legal and illegal tools robs from the white collar thief some of the “mystery” in which he likes to shroud his activities. It also tells the investigator that tedious and time-consuming though it may be, a careful cataloguing of the thief’s tools and tactics will stand him in good stead vis-a-vis the white collar offender.

The victim profile

The white collar thief is a predator and as such, an important component of his style of operating is the nature of the victim on which he preys. Building a profile of the characteristic victim of an offender becomes, then, an important element in any intelligence system seeking to control him. Often the white collar thief’s victims consist of a definable class based upon their business or occupation rather than their personal attributes. For example, many investment frauds are aimed at physicians and other professional men seeking income tax shelters. Other white-collar crime schemes may aim their activities at groups of victims who share a common attribute or station in life. Retirees or those near retirement age may be prime targets for fraudulent land investment operators. The examples are numerous. The point is, however, that choosing certain particular kinds of victims is a part of the white collar thief’s style, and essential to development of an intelligence profile which will be of practical use to the investigator.

Approach to the victim

Closely related to the choice of victim in determining the white collar offender’s operating style is the offender’s manner of making an approach to the victim. Often the initial overture is impersonally made by employing some of the legal or illegal tools noted above. Such an overture may generate victim self-selection by requiring the victim to perform an act that insures further contact by sending back a request for information, for example, or resulting in a direct seeking of the offender by the victim. In other instances, the offender may make a direct, personal overture to the victim utilizing various tools in a sales pitch-type of technique. He may show the victim impressive looking brochures and phony endorsements by prominent individuals. He may show copies of trade journal ads and construe his visit as a follow-up contact that he believes the victim to have requested. Often, then, the style of the offender is a combination not only of the tools he uses but also of the order in which he invokes their use in his approach to the victim.

In some cases a victim’s anonymous participation in a public event can be the basis for future contact. Nominal admission fees to a large gathering, for example, can provide the offender with names of individuals who can be “followed-up” in some manner. They may be told that they were “specially selected” to participate in a rare opportunity. The opportunity presented to them may be distant in time and nature from the substance of the gathering in which their names were acquired, making the approach to the victim a tortuous route to probe. The more complex the route, however, the more distinctive it will be as a stylistic trademark of the offender’s mode of operating.

The Master DATA File, A Summary

Intelligence master data entries containing summary information relating to an offender’s dominant scheme (and variations), personal characteristics, and operating style should be attached as cover sheets to intelligence files and arranged alphabetically according to subject name. Where the subject of intelligence is a group rather than an individual, the common group name should be used as the master card heading. Prominent individuals in the group can also be listed separately but should be cross-indexed with the group’s master data file.

Although the subject’s name represents the file heading, information concerning dominant scheme or activity should appear on master data entries before personal information. This will allow arrangement of files by types of fraud if that is preferred, with alphabetical filing within each type. For example, a file might contain a section labeled “Advance Fee Operators” followed by an alpha file of appropriate subjects. A later section of the file might be labeled “Land Fraud” and be followed by a similar alpha listing. Some units prefer to handle types of frauds or crimes by a supplementary file and leave the master data file intact with one alpha arrangement of all subjects.

A master data file can include cross-reference reports noting all aliases or business names used by white collar subjects. Alternatively, a unit can limit such additional references by using supplemental alias and business name files to deal with the issue separately. In the first instance, the master file might contain an entry for the subject under his true name followed by AKA indicating all known aliases. Separate entries would cross reference each alias followed by: TRUE NAME and refer the reader to that entry. In the second situation, the master entry would be filed under the true name and refer to the alias file in which all other known or suspected aliases would be listed. Business names should be treated in a manner consistent with that used for aliases.

As discussed above, the sources of information on the subject’s scheme or variations should be noted. This is particularly true where such sources are previous investigations. Where the subject has been a suspect because of prior activities but an investigation was not initiated, it will be helpful to include such information. Often this can be done by referring to a complaint file in which the suspect is noted.

Personal data provide rather straightforward items for the master data file. In addition to those noted earlier, units might want to include summary arrest history information although that is usually more appropriately included in the file.

Style characteristics related to legal and illegal tools used by the offender can be handled several ways. Pre-designed forms might list examples of tools to be checked off appropriately, with an open ended “other” listing. What is likely to be more useful, however, is to allow ample space in which tools and tactics can be listed. This will allow for additions to be made and supplemental notes to be included when appropriate. Victim profiles and approaches should be similarly handled.

Below are reproduced sample master data file entries. All names and information are fictitious as this is merely an illustration. The entries shown reflect the most complex entry situation for such a file, one in which a group and individuals with aliases associated with that group are noted.

MASTER DATA FOR OFFENDER GROUP

MASTER ENTRY #001

SUBJECT: Anderson Enterprises AKA “Enterprise Associates.” etc.

OR (See Bus. name File #316)

SEE ALSO: Anderson. Edward (MC #004), Martinson. Andrew (MC #142)

DOMINANT SCHEME: Advance Fee

KNOWN VARIATIONS INFO

SOURCE ADDITIONAL INFO

SUSPECT VIA COMPLAINTS:

# COMPLAINTS TYPE OF COMPLAINT DISPOSITION

BACKGROUND &CHARACTERISTICS:

MUG SHOT: Include mugshots or reference to mugshot file #s for group members

BUSINESS ADDRESS: List all business names and addresses or reference to business name file.

STYLE:

LEGAL TOOLS: Read local business directories; Ads placed in business publications looking for financing.

ILLEGAL TOOLS: False references. Brochures misrepresenting accomplishments in securing financing. Sequences of form letters to lull victims or delay complaints.

VICTIM PROFILE: Businessmen seeking financing for expansion of inventory or facilities; or to tide over business crisis period,

VICTIM APPROACH: Representation that fee is contingent on achievement of desired financing; demand for partial advance on ultimate fee (with or without guaranty of advance in event of non-performance).

***

ENTRY FOR OFFENDER

SUBJECT: Anderson, Edward

AKA: ”Kansas City Ted” “or alias file #2075** (MC#OO5)

SOURCES OF INTELLIGENCE INFORMATION

Victims of white collar offenders are, as in most crimes, a major source of information both for intelligence and investigative purposes. Most personal and style characteristics for a master card, for example, can be determined by careful victim interviewing. Other typical sources of information such as records checks in local and state systems are also helpful. Similarly, once a sound intelligence system has been established, methods for obtaining inputs from other parts the agency or other law enforcement agencies can be facilitated. Thus, a white collar crime unit in a police agency may decide to develop special forms on which patrol officers can report field information. This will assure the flow of information and that officers are given due credit for their contributions.

Depending upon the nature of the white collar subject in question, inter-agency communication may be of great assistance. Traveling cons, for example, are likely to have records in many jurisdictions. If specific information on the travels of such groups are not known, a knowledge of scheme perpetrated and/or the victims selected by the group may help investigators to narrow down those agencies likely to have relevant information. For example, if the dominant scheme involves use of the mails, inquiry placed with the Postal Inspection Service is likely to payoff. Similarly, if victims are selected on the basis of attendance at a public event, materials distributed at the event may indicate the location of prior events or individuals at the site of the event may have information about the groups’ travels. Agencies in these former locales can then be contacted. Regular intelligence meetings are extremely valuable mechanisms for insuring the value and utility of a unit’s intelligence system.

The white collar offender with roots in the community is likely to be easier to track. If the individual is a member of a professional occupational group or some particular business such as direct mail advertising, surprising amounts of information are available in national directories (the AMA directory of physicians, for example, provides age, medical school, specialty, address, etc.). Employers, employees, and business. associates are also good sources of general information on subjects. The offender may volunteer information about himself that has no apparent culpability dimensions, but which will provide clues as to his modus operandi and style.

Once an offender has been the subject of an investigation, much of the information required by the master card is likely to be available. Initial contacts made in the course of an investigation can remain valuable information sources for on-going intelligence. The major value of the master card is that it isolates specific information considered to be important. This provides a focus to inquiries made not only to the victim but also to other agencies. In this sense, the master card can serve as something of a checklist of basic information needed, helping to structure both initial and on-going intelligence efforts.

INITIATION, MAINTENANCE, AND UPKEEP OF THE INTELLIGENCE SYSTEM

It should be clear that even a simple intelligence system like the one described here, using a master card file can be a significant and time consuming task. While much actual file production, including cross-indexing and referencing, is a clerical function, basic master card file information requires experienced investigative decisions and input. Getting such input can represent an important management undertaking. In new units, master card file development can be used as an organizational and orientation project in which relevant information within the agency can be tracked down, reviewed and digested into proper format. Units that have some prior history of fraud investigation but are newly constituted, might use the master card file development process as a general updating and housecleaning task, getting old files in some order for the new effort. Often information known to the unit, but not appropriate for investigative files can find a “home” in the master card index. This gives the intelligence process an opportunity to provide some information benefit from the very beginning, setting a tone that can affect the level of use and upkeep to which the intelligence system will be subjected. Finally, working on master card development can also help to orient new unit investigators.

Despite the frequently tedious tasks associated with the initial file development, the process is an extremely important one. Effective and appropriate managerial stress on its importance, combined with the marshaling of adequate clerical resources, can remove the more arduous elements and insure that the process is well-initiated and completed. While the unit supervisor should have overall responsibility for management of the staff, the intelligence process is important enough that day-to-day responsibility for maintenance and upkeep should be specifically delegated. The ideal situation (if the unit has sufficient resources) would be one in which the staff of the unit includes an intelligence analyst, expert in the design and upkeep of files and in the assessment of information provided for file inclusion. Under such an arrangement, data provided by patrol officers (if it is a police unit), investigators, outside agencies, etc., would be routed to the analyst who would maintain records of such communications and make decisions on how and to what extent new information would modify existing files.

Keeping records of communications is important even if information from a source is not used, for two reasons. First, it can permit the analyst to assess the reliability of various sources; and second, if information is redundant, the source can and should be encouraged to continue to provide input. Thus, contributions to the intelligence system of the unit by a particular investigator not in the unit can be provided to those making personnel decisions about that individual. Members of the unit, of course, should be expected to actively engage in seeking intelligence information and should be frequently utilizing the files.

Major decisions concerning such an intelligence system should remain a unit-wide responsibility and not be left in the province of the analyst. The decision to initiate a file, for example, should begin with an investigator’s request to the unit supervisor. The supervisor should review the investigator’s rationale and consult with others in the unit knowledgeable about the subject(s). If a positive decision is made, the analyst should then be directed to gather the relevant materials from the investigator, briefly review the subject’s significance and determine the best formatting of the file, in consultation with the lead investigator. It is then the analyst who prepares the master card and organizes the file. In a particular case, of course, an analyst might identify a crime and trigger the opening of a file in consultation with the unit supervisor or an investigator.

The decision to purge a file, on the other hand, may be initiated in the opposite manner. It is the intelligence analyst who is in the best position to identify the files which go virtually unused. Periodic assessments by the analyst may result in the pulling of unattended files for unit review. A staff meeting to review the continued necessity of maintaining the file(s) would then be in order. While the final decision will rest with the unit supervisor, the entire staff should be involved. Where uncertainty about the value of a particular file exists, the decision may be deferred until specific sources can be checked. Thus, for example, the subjects of some files may be discussed at multi-agency intelligence meetings and information derived from that contact may determine whether continued maintenance is required.

If a unit cannot afford to have an intelligence analyst attached to it, it would be wise to consider designating one investigator to take major responsibility for the intelligence system. While an intelligence officer cannot be expected to be as expert in the design of files as would be an analyst, there may be some advantages to this model. First, an investigator/intelligence officer may be more credible to outside contacts than would be an analyst and so could serve as the focal point for inter-agency communication with the unit. Such an individual could represent the unit at intelligence meetings and take responsibility for handling much of the unit’s correspondence. Similarly, an intelligence officer, while less expert in the techniques of file maintenance, would be more likely to be attuned to the needs of investigators and therefore may be better able to make decisions relating to organization of files to best suit the investigative efforts being undertaken.

It makes no sense to establish an intelligence system without delegating specific responsibility for its upkeep. The usefulness of a white collar intelligence system is inextricably tied to the quality of maintenance it receives. Initial development and on-going maintenance cannot be divorced. If no commitment is made to maintenance, there is little reason to initiate the system in the first place. A similar error, and one often as fatal, made with regard to intelligence systems, is the failure to provide adequate clerical assistance for-the maintenance function. Even the best analyst or intelligence officer can quickly get bogged down without sufficient clerical assistance. This situation will detract significantly from the quality of the system and the use made of it.

Earlier it was noted that the system suggested here is one of simple design. Agencies having access to a commercial intelligence software can obviously handle much more information in more complex ways than others. It should be remembered, however, that added complexity requires adequate staffing for optimum benefit. Computers do not confer automatic benefits; you can be overwhelmed with useless data if the system is not set up and overseen correctly. In addition, some basic points remain whether in paper or digital format. A software program is just the faster digital version of an analog system, so a simple database may provide what the unit needs in a small department, or a department that doesn’t have a dedicated full time white collar crime investigator.

First, the simpler the overall design of such a system, the easier upkeep becomes and the more useful the system will be. Because of this the ultimate system users must be intimately involved in initial design and policy decisions.

Second, no matter how carefully designed and how ideal the staffing for an intelligence effort is, it should be subjected to a semi-annual review. At this time, a thorough housecleaning can occur and the overall policies concerning the system can be re-evaluated. Shortcomings of the system should be addressed and decisions for future improvement made at this time. While such decisions do not have to wait for a 6-month review time, scheduling such a review will insure that needed system assessment occurs.

Summary

Resources in any white collar enforcement effort must be judiciously expended. Therefore, it is necessary to most carefully weigh the justifications for such expenditures. Constraints on the use of resources for specific cases must also be considered. Intelligence efforts undertaken in the white collar crime area hold great potential for providing useful information obtained and organized in an optimal fashion. Legal restraints bearing on the permissibility of the form of intelligence activity adopted, however, may severely dilute its potential. Half-hearted attempts at an intelligence system will produce the same result.

A unit facing either of these situations, then, might better place its resources elsewhere in the fight against white collar crime. For, like so many other things, what one gets out of an intelligence system is directly related to the investment and continued commitment put into it.

Student Case Study Three – Mass Marketing Fraud

Assignment

Research and identify a mass marketing fraud that was reported in your state. Summarize the case and explain the sub-type of mass market fraud that occurred.

What special skills would an investigator need to investigate this type of crime?

Overview

Mass marketing fraud is a general term for frauds which exploit mass communication media, such as telemarketing, mass mailings, and the Internet. Since the 1930s, mass marketing has been a widely accepted and exercised practice. Advances in telecommunications and financial services technologies have further served to spur growth in mass marketing, both for legitimate business purposes as well as for the perpetration of consumer frauds.

Mass marketing frauds share a common theme: the use of false and/or deceptive representations to induce potential victims to make advance fee-type payments to fraud perpetrators. It is estimated mass marketing frauds victimize millions of Americans each year and generate losses in the hundreds of millions of dollars.

Mass marketing fraud schemes are predominantly transnational in nature.

Perpetrators operate from multiple foreign countries and utilize the financial infrastructure of one or more countries to transfer and launder funds.

International mass marketing fraud, in all of its constantly evolving forms, poses a serious threat to individuals, businesses, and financial institutions around the world. Fraud perpetrators exploit global financial systems, communications networks, and markets to defraud victims, launder illicit proceeds, conceal the locations from which they operate, and engage legitimate businesses as unwitting participant in their criminal activities. Organized crime groups increasingly initiate, facilitate, and profit from mass-marketing fraud, using persuasion and manipulation to steal substantial amounts of money, estimated in the tens of billions of dollars worldwide, from vulnerable consumers. Mass marketing fraud groups are highly adaptive, altering schemes and techniques to evade law enforcement scrutiny and respond to consumer awareness of fraud schemes.

The FBI, however, is uniquely positioned to assist in these investigations due to its network of legal attaché offices located all over the world. By leveraging its global presence and network of liaison contacts, the FBI has successfully cooperated with other domestic and foreign law enforcement agencies to combat, disrupt, and dismantle international mass marketing fraud groups.

The enduring remedy for this crime problem lies in consumer awareness, education and fraud prevention programs-in other words, preventing people from becoming victims in the first place. Toward this end, the FBI participates in the International Mass Marketing Fraud Working Group (IMMFWG), a multi-agency working group established to facilitate the multi-national exchange of information and intelligence, the coordination of cross-border operational matters, and the enhancement of public awareness of international mass marketing fraud schemes. The current membership of the IMMFWG consists of an international association of law enforcement, regulatory, and consumer protection agencies.

Advance fee fraud

This category of fraud encompasses a broad variety of mass marketing schemes, the objective of which is to induce victims into remitting upfront payments in exchange for the promise of goods, services, and/or prizes. For example:

In Nigerian letter schemes (also known as “419 scams” because that’s the number of the article in the Nigerian criminal code that deals with these types of frauds), victims are contacted by letter or by email with a variety of scenarios that purport to involve the movement of substantial sums of money held in foreign bank accounts. The victims are requested to pay fees to secure the transfer of funds to the US and in return are promised a large percentage of the transferred funds. Of course, there are no funds and the victims will even be asked to pay additional funds to cover “unanticipated” costs.

In foreign lottery/sweepstakes fraud, victims receive letters or emails informing them they have won a substantial prize in a foreign drawing, but must remit payment for various taxes/fees to receive their winnings. Alternatively, victims are provided with a counterfeit instrument (such as a cashier’s check) that purports to represent a portion of the winnings. Similar to an overpayment fraud (see below), the victim is told to deposit the check, forward the required payments for taxes/fees, and the victim can keep the balance. The check is ultimately returned as a counterfeit item and the victim is indebted to their financial institution for the withdrawn funds.

Overpayment fraud

Victims who have advertised some item for sale, usually via the Internet, are contacted by “buyers” who remit counterfeit instruments in excess of the purchase price as payment. The victims are told to cash the instruments, deduct any expenses, and return or forward the excess funds to the “buyer,” but later discover the check was counterfeit. Victims in this fraud not only lose the value of the property sold, but they are also indebted to their financial institutions for the funds withdrawn on the counterfeit check.

Recovery/impersonation schemes

Victims are contacted, usually by telephone, by perpetrators posing as law enforcement officers, government employees, or lawyers who reference the victim’s losses in a prior fraud scheme. They are led to believe that the perpetrators had been arrested and funds have been seized to pay back their losses, but of course they must first pay fees for processing and administrative services before the seized funds can be released.

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This work (Investigating White Collar Crime by Channel Custom) is free of known copyright restrictions.