INVESTIGATIONS
Financial Crimes Division

Mission Statement

• Financial Institution Fraud & Related Criminal Investigations
• Access Device Fraud
• Counterfeit and Fraudulent Identification
• Money Laundering
• Computer Fraud
• Telecommunications Fraud
• Program Fraud Investigations
• Forgery
• Operation TRIP
• Food Stamp Violation
• Electronic Benefits Transfer (EBT) Card
• Nigerian Advance Fee Fraud - Operation 4-1-9
• Task Forces
• Asset Seizures and Forfeitures
• Electronic Crime Branch
• Training

Financial Institution Fraud (FIF) and Related Criminal Investigations

• The Secret Service has concurrent jurisdiction with the Department of Justice to investigate fraud, both civil and criminal, against federally insured financial(FIF) institutions. The Crime Bill of 1994 extended our FIF investigative authority to the year 2004.
  
  
• Our FIF program distinguishes itself from other such programs by recognizing the need to balance traditional law enforcement operations with a program management approach designed to prevent recurring criminal activity.
  
  
• We are encountering new criminal schemes which attack financial institutions, particularly those crimes being committed by organized ethnic criminal groups, such as the West Africans, Asians, and East Europeans.
  
  
• A recent American Banking Association (ABA) survey concluded that the two major problems in the area of bank fraud today are: (1) the fraudulent production of negotiable instruments through the use of what has become known as "desktop publishing," and (2) access device fraud.
  
  
• Recent Secret Service investigations indicate that there has been an increase in credit card fraud, fictitious document fraud, and fraud involving the counterfeiting of corporate checks and other negotiable instruments,as well as false identification documents created with the use of computer technology.
  
  
• Title 18 United States Code, Section 514 was enacted into law in 1996 to prevent the increasing amount of fraud through the use of fictitious instruments. Congress passed this law through the joint efforts of the Department of Justice and the Department of Treasury. FCD is responsible for the investigations of Title 18, United States Code Section 514 (Fictitious Instruments).

Access Device Fraud

1. If your complaint is essentially a non-criminal dispute with a retailer or other business, you must immediately dispute the charge(s) in writing with the customer relations office of your credit card company.
   
   
2. If you have been the victim of credit card fraud or identity theft, the following tips will assist you:
   
   
   • Report the crime to the police immediately. Get a copy of your police report or case number. Credit card companies, your bank, and the insurance company may ask you to reference the report to verify the crime.
     
     
   • Immediately contact your credit card issuers. Get replacement cards with new account numbers and ask that the old account be processed as "account closed at consumer’s request" for credit record purposes. You should also follow up this telephone conversation with a letter to the credit card company that summarizes your request in writing.
     
     
   • Call the fraud units of the three credit reporting bureaus. Report the theft of your credit cards and/or numbers. Ask that your accounts be flagged. Also, add a victim’s statement to your report that requests that they contact you to verify future credit applications. The following is a list of addresses and numbers to the three credit bureaus:
   
   

   Equifax Credit Information Services - Consumer Fraud Div. P.O. Box 105496 Atlanta, Georgia 30348-5496 Tel: (800) 997-2493 www.equifax.com	Experian P.O. Box 2104 Allen, Texas 75013-2104 Tel: (888) EXPERIAN (397-3742) www.experian.com
   Trans Union Fraud Victim Assistance Dept. P.O. Box 390 Springfield, PA 19064-0390 Tel: (800) 680-7289 www.transunion.com

   
   
   • Keep a log of all conversations with authorities and financial entities.
     
     
   • As with any personal information, only provide your credit card number to merchants you know. Also, remember to protect your social security number. You have to give your social security number for employment and tax purposes, but it is not necessary for many businesses. Notify the Social Security Administration’s Office of Inspector General if your social security number has been used fraudulently.
     
     
   • The Federal Trade Commission (FTC) is the federal clearinghouse for complaints by victims of identity theft. Although the FTC does not have the authority to bring criminal cases, the Commission assists victims of identity theft by providing them with information to help them resolve the financial and other problems that can result from identity theft. The FTC also may refer victim complaints to other appropriate government agencies and private organizations for further action. If you have been a victim of identity theft, you can file a complaint with the FTC by contacting the FTC's Consumer Response Center.

Counterfeit and Fraudulent Identification

Since 1982, the Secret Service has enforced laws involving counterfeit and fraudulent identification. Title 18, United States Code, Section 1028, defines this criminal act as someone who knowingly and without lawful authority produces, transfers, or possesses a false identification document to defraud the U.S. Government. The use of desktop publishing software/hardware to counterfeit and produce different forms of identification used to obtain funds illegally remains one of the Secret Service's strongest core violations.

Money Laundering

The Money Laundering Control Act makes it a crime to launder proceeds of certain criminal offenses called "specified unlawful activities" (SUA), which are defined in Title 18, United States Code,1956, 1957 and Title 18,United States Code, 1961, the Racketeer Influenced and Corrupt Organizations Act (RICO).

The Secret Service has observed an increase in money laundering activities as they relate to these specified unlawful activities. This is especially true in the area of financial institution fraud, access device fraud (credit card, telecommunications and computer investigations), food stamp fraud, and counterfeiting of U.S. currency.

Computer Fraud

In 1986, Congress revised Title 18 of the United States Code to include the investigation of fraud and related activities concerning computers that were described as "federal interest computers," as defined in Title 18, United States Code, Section 1030. The Secret Service has also investigated cases where computer technology has been used in traditional Secret Service violations, such as counterfeiting and the creation of false identification documents.

Computers are being used extensively in financial crimes, not only as an instrument of the crime, but to "hack" into data bases to retrieve account information; store account information; clone microchips for cellular telephones; and scan corporate checks, bonds and negotiable instruments, that are later counterfeited using desktop publishing methods.

Because computers are a tremendous source of both investigative leads and evidentiary material, the Secret Service has established the Electronic Crimes Special Agent Program (ECSAP), that trains agents to conduct forensic examinations of computers that were used in criminal endeavors. So trained, these agents can preserve any investigative leads within the computer, as well as any evidence needed for subsequent prosecutions.

Telecommunications Fraud

Telecommunication fraud losses are estimated at more than a billion dollars yearly. One of the largest "markets" for this type of fraud is the cloning of cellular telephones, a relatively simple procedure that can be done with the purchase of over-the-counter electronic equipment. When an individual transmits with a cellular telephone, the telephone emits a burst of electronic information. Within this burst of information is the electronic serial number (ESN), the mobile identification number (MIN) and other electronic identification signals, all of which can be illegally captured through the use of an ESN reader. Once captured, this information is transported through a computer onto microchips in the cellular telephones. These new telephones can be used for up to 30 days before the fraudulent charges are discovered. Cell telephones are being used extensively by organized criminal groups and drug cartels, as well as several Middle Eastern groups. Using acquired investigative expertise and state-of-the-art electronic equipment, the Secret Service now has the ability to effectively investigate the use of such telephones. This is another example of law enforcement using technology to target criminal enterprise.

The Secret Service has become the recognized law enforcement expert in the field of telecommunications fraud. It works closely with other law enforcement agencies, as well as representatives of the telecommunications industry in conducting telecommunications fraud investigations. These types of investigations, in many instances, act as a nexus to other criminal enterprises, such as access device fraud, counterfeiting, money laundering, and the trafficking of narcotics. During fiscal year 1996, the Secret Service opened 555 cases and arrested 556 individuals for telecommunications fraud.

Program Fraud Investigations

The Program Fraud Investigations Branch was created to coordinate investigations related to fraud committed against government programs that are within the investigative jurisdiction of the Secret Service. This Branch is responsible for identifying systemic weaknesses in government programs that permit recurring criminal activity, and recommend corrective measures to strengthen these systems, (e.g., EBT, food stamps), During fiscal year 1996, the Secret Service arrested 1,102 individuals in all areas of program fraud.

Forgery

Hundreds of millions of government checks and bonds are issued by the United States each year. This large number attracts criminals who specialize in stealing and forging checks/bonds from mail boxes in apartment houses and private homes. During a fraudulent transaction, a check/bond thief usually forges the payee's signature and presents false identification.

Operation TRIP (Treasury Recipient Integrity Program)

In March 1994, the Secret Service established "Operation TRIP," which was created to identify systemic weaknesses in the Treasury Department's disbursement systems and to subsequently suppress the associated fraudulent activities involving these systems worldwide.

In a cooperative effort with other government agencies, the Financial Crimes Division has assisted in establishing uniform standards of benefit recipient verification, developed anti-fraud disbursement procedures, and identified weaknesses in current verification systems and proposed acceptable alternatives to eliminate program fraud in this country and abroad.

To date, the Financial Crimes Division has assisted Operation TRIP, in the Philippines, Canada, Guam, Puerto Rico, Spain, Italy, Germany, Japan, Korea, and the United Kingdom.

Food Stamp Violation

Congress enacted the Food Stamp Act of 1977 to provide nutritional food to low-income families. It further directed the Secret Service to aggressively pursue fraud in the food stamp program. The possession or use of Food Stamp Coupons, Authorization to Participate cards, or Electronic Benefit Transfer cards by unauthorized persons compromises the integrity of the Food Stamp Program and is a criminal violation of the Food Stamp Act.

Electronic Benefits Transfer (EBT) Card

The Vice President's National Performance Review has designated the Electronic Benefits Transfer (EBT) card as the method of payment for the delivery of recurring government cash benefit payments to individuals without a bank account and for the delivery of non­cash benefits such as Food Stamps. For individuals with bank accounts, Electronic Funds Transfer will continue as the preferred method of making federal benefit payments. The National Performance Review has created the Federal EBT Task Force to design and implement the new nationwide program which will annually deliver over $111 billion in benefits from government agencies, such as the US Department of Agriculture, Health and Human Services, Veterans Administration, Office of Personnel Management, and the Railroad Retirement Board.

The Federal EBT Task Force is attempting to design a system that will piggyback on the existing commercial credit/debit card infrastructure. The task force has proposed EBT payment services be provided by financial institutions designated as financial agents of the government. The new EBT card will be an on­line debit system with benefits periodically placed in a customer's account. Customers will use their cards to retrieve the cash benefits from Automated Teller Machines and food benefits from point-of-sale terminals at participating retail stores.

As with any recurring payment system, EBT is open to a wide variety of fraud, including multiple false applications for benefits, counterfeiting of the EBT card and trafficking of non­cash benefits for cash or contraband. The Financial Crimes Division is taking a proactive approach by recommending fraud deterrent features to this new system as it is designed.

In an attempt to combat potential attacks, Financial Crimes Division has suggested the use of: biometric identifiers to verify applicants' identities and prevent application fraud; counterfeit deterrents such as four-color graphics and fine-line printing, and the use of holograms and embossing in the design of the card; and features that allow investigators to monitor transactions and use the audit trail to identify criminals who illegally traffic food benefit payments.

Although the new EBT system design is still evolving, one can be assured that criminals with expertise in credit/debit card fraud will attack a program of this magnitude. Fraud associated with EBT programs is a violation of two of the Secret Service's primary jurisdictions: Title 18, United States Code, Section 1029, Access Device Fraud and United States Code, Section 1030, Computer Fraud.

Nigerian Advance Fee Fraud
"OPERATION 4-1-9"

The perpetrators of Advance Fee Fraud are often very creative and innovative. This fraud is called "4-1-9" fraud after the section of the Nigerian penal code that addresses fraud schemes. Nigerian nationals, purporting to be officials of their government or banking institutions, will fax or mail letters to individuals and businesses in the United States and other countries. The correspondence will inform the recipient that a reputable foreign company or individual is needed for the deposit of an overpayment on a procurement contract. The letter will claim that the Nigerian government overpaid anywhere from $10 to $60 million on these contracts. There is the perception that no one would enter such an obviously suspicious relationship; however, many victims have been enticed into believing they can share in such windfall profits.

Individuals are asked to provide funds to cover various fees and for personal identifiers such as Social Security numbers, bank account numbers, and other similar data. Once this information is received, the victims find that they have lost large sums of money. It is hard to pinpoint how much has been lost in these scams since many victims do not report their losses to authorities due to fear or embarrassment.

In response to this growing epidemic, the Secret Service established "Operation 4-1-9" to target Nigerian Advance Fee Fraud on an international basis. Indications are that losses attributed to Advance Fee Fraud are in the hundreds of millions of dollars annually.

Agents on temporary assignment to the American Embassy in Lagos, Nigeria, in conjunction with the Regional Security Office, supplied information in the form of investigative leads to the Federal Investigation and Intelligence Bureau (FIIB) of the Nigerian National Police. This project was designed to provide Nigerian law enforcement officials with investigative leads to enable them to enforce their own jurisdictional violations.

On July 2, 1996, officials of the FIIB, accompanied by Secret Service agents in an observer/advisor role, executed search warrants on 16 location in Lagos that resulted in the arrests of 43 Nigerian nationals. Evidence seized included telephones and facsimile machines, government and Central Bank of Nigeria letterhead, international business directories, scam letters, and addressed envelopes, and files containing correspondence from victims throughout the world.

Task Forces

The Secret Service is involved in numerous task forces with federal, state, county, city, and local law enforcement agencies nationwide. Several of these task forces specifically target international organized crime groups and the proceeds of their criminal enterprises. All assets forfeited are shared with agencies represented on the task force.

These groups are not only involved in financial crimes, but investigations indicate that the proceeds obtained from financial fraud are being diverted toward other criminal enterprise.

Examples of Secret Service involvment in a variety of task forces:

• West African Task Force
• Metro Alien Task Force
• Financial Crimes Task Force
• Asian Organized Crime Task Force
• Violent Crimes Task Force
• HIDTA (High Intensity Drug Trafficking Area)
• INTERPOL(International Criminal Police Organization)
• IBFWG (Interagency Bank Fraud Working Group)
• CABINET (Combined Agency Interdiction Network)

Asset Seizures and Forfeitures

Provides assistance to investigative offices by supplying counsel, direction, expertise and temporary support personnel as needed in terms of criminal investigations and the seizure and forfeiture of assets.

Major Initiatives:

• Continued emphasis on forfeiture actions involving program fraud (e.g. food stamp fraud and Medicare fraud). This emphasis is underscored by specialized training of Secret Service personnel and proactive involvement in these investigations from onset to criminal prosecution.
• Continued funding of task forces that have prioritized the use of asset forfeiture as a significant criminal deterrent. Funding is provided for the purchase of investigative equipment and state/local law enforcement overtime costs.
• Continuation of an aggressive training program to enhance the quality and quantity of Secret Service seizures involving fraud and money laundering. Continued training of field investigators and support components, emphasizing basic asset forfeiture skills, and providing skill enhancement to those already possessing a basic knowledge of the program.
• As a funding source for the Service, allocates monies for the purchase of items having intrinsic law enforcement benefit and which perpetuate forfeiture investigations. Such items include vehicles, communications systems, law enforcement/forensic technologies, the purchase of evidence/information and other special initiative considerations.
• Coordination of the distribution of forfeited property requested for official use by Secret Service field offices, as well as other federal,state,and local law enforcement agencies participating in joint investigations resulting in the seizure and forfeiture of assets.

Electronic Crimes Branch

The passage of the Omnibus Crime Control Act of 1984 brought to the Secret Service investigative jurisdiction for violations of Title 18 United States Code 1029 (credit card and access devices) and in 1986 Title 18,United States Code 1030 (computer fraud). The Financial Crimes Division's Electronic Crimes Branch houses the equipment and personnel devoted to these jurisdictions.

Between 1985 and the present, we have seen rapid growth of the number and type of criminal misuses of electronic technology investigated by the Service. The degree of sophistication of today's criminal has advanced at an accelerated rate over the past few years.

Our electronic investigations have involved credit card fraud, unauthorized computer access, cellular and land line telephone service tampering, the production of false identification, counterfeit currency, threats made against the President, narcotics, illegal firearms trafficking, and even homicides. Computers are now used extensively in facilitating many crimes investgated by the Secret Service.

The Electronic Crimes Branch provides service to our special agents, who are located in more than 125 domestic and foreign offices.

What does the ECB do?

• We provide administrative control of all computer-related and telecommunications investigations.
• We provide technical assistance to our special agents in the development of their cases, including the preparation and service of search warrants on electronic storage devices.
• We provide laboratory analysis and courtroom testimony concerning the evidentiary contents of electronic storage devices seized during criminal investigations.
• We provide educational presentations to classes and seminars for law enforcement officers, other government agencies, and private industry.
• We meet regularly with other government agencies, hardware manufacturers, and software publishers to stay at the leading edge of this quickly changing technology.
• We conduct research and development projects in order to address new problem areas, linked to new technology.

Electronic Evidence Seizure

As computers and related storage and communication devices proliferate in our society, so does the use of those devices in conducting criminal activities. Technology is employed by criminals as a means of communication, a tool for theft and extortion, and a repository to hide incriminating evidence or contraband materials. Law enforcement officers must possess up-to-date knowledge and equipment to effectively investigate today's criminal activity. The law enforcement community is challenged by the task of identifying, investigating and prosecuting individuals and organizations that use these and other emerging technologies to support their illicit operations.

Please see our Best Practices for Seizing Electronic Evidence reference guide for more information.

Contact the Electronic Crimes Branch.

Training

The Financial Crimes Division has become involved in the training of foreign law enforcement officials in the areas of investigative techniques, types of international fraud schemes, and identification of systemic weaknesses in their financial systems that lead to fraudulent activity. Financial Crimes Division has provided training for more than 2,000 foreign law enforcement and banking officials from the following countries: Latvia, Russia, Japan, Slovenia, Cyprus, Ukraine, Pakistan, Australia, China, Peru, Korea, France, Aruba, South Africa, Mexico and Spain.

Investigations
Counterfeit | Financial Crimes | Forensic Services