Report - 2020 Financial Fraud And Identity Theft Report 5C928339 Fad7 4188 A35F Cb11
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- 2020 Financial Fraud And Identity Theft Report 5C928339 Fad7 4188 A35F Cb11
Summary
A December 2020 progress report of the Office of Crime Victims Advocacy to the Washington Legislature on the Financial Fraud and Identity Theft Investigation and Prosecution Program, submitted under RCW 43.330.300(1)(c). The report states that in state fiscal year 2020, between July 1, 2019 and June 30, 2020, the program's two task forces conducted 2,635 investigations, charged 305 cases involving 770 counts, and obtained 329 convictions. It describes funding from Uniform Commercial Code-1 filing surcharges, raised to $15 beginning July 1, 2020, and an allocation of 10% to administration, 67.5% to the Greater Puget Sound Task Force and 22.5% to the Spokane Regional Task Force. Its recommendations ask the Legislature to amend RCW 9.35.020 to elevate non-financially motivated identity theft to a first-degree charge and to make possession of a skimming device a felony.
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Financial Fraud and
Identity Theft Investigation
and Prosecution Program
PROGRESS REPORT ON TASK FORCE AND RECOMMENDATIONS PURSUANT TO RCW 43.330.300(1)(C)
December 2020
OFFICE OF CRIME VICTIM ADVOCACY
REPORT TO THE LEGISLATURE
Lisa Brown, Director
2.2
Acknowledgments
Washington State Department of Commerce
Diane Klontz, assistant director
Community Services and Housing Division
Richard Torrance, managing director
Office of Crime Victims Advocacy
Greater Puget Sound Financial Fraud and Identity
Theft Task Force
Melinda J. Young, task force chair
King County Prosecutor's Office
Spokane County Financial Fraud and Identity Theft
Task Force
Inspector John Nowels, task force chair
Spokane County Sheriff's Office
Washington State Department of Commerce
Richard Torrance, managing director
360-725-2059
richard.torrance@commerce.wa.gov
OFFICE OF CRIME VICTIMS ADVOCACY
1011 Plum St. SE
P.O. Box 42525
Olympia, WA 98504-2525
www.commerce.wa.gov
For people with disabilities, this report is available
on request in other formats. To submit a request,
please call 360.725.4000 (TTY 360.586.0772)
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND
PROSECUTION PROGRAM
Table of Contents
Executive Summary ..................................................................................................................................... 2
Program Revenue and Funding Allocation .................................................................................................... 4
Task Force Goals and Performance .............................................................................................................. 6
Recommendations ....................................................................................................................................... 9
Appendix A: Task Force Members .............................................................................................................. 10
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 1
PROGRAM
Executive Summary
Overview
The Legislature created the Financial Fraud and Identity Theft Crime Investigation and Prosecution Program
(FFIT) in 2008 at the Department of Commerce (Commerce). The program strengthens cooperation between
law enforcement and financial industry investigators to increase the capacity to respond to financial fraud and
identity theft crimes. This report meets the statutory requirements in RCW 43.330.300(1)(c):
"By December 31 of each year submit a report to the appropriate committees of the legislature and the governor
regarding the progress of the program and task forces. The report must include recommendations on changes to the
program, including expansion."
Financial Fraud and Identity Theft Crimes are defined in RCW 43.330.300(4) as check fraud, chronic unlawful
issuance of bank checks, embezzlement, credit and debit card fraud, identity theft, forgery, counterfeit
instruments (such as checks or documents), organized counterfeit check rings and organized identity theft
rings.
Identity theft and related fraud has decreased overall per 100,000 population since calendar year 2010. This
trend also applies to the state's national ranking in identity theft and related crime. Figure 1 below charts
Washington's ranking year over year among states by reported identity theft and fraud crimes, with a higher
ranking indicating lower rates of reported crimes. Both identity theft and fraud crime rankings were higher in
2019 than in 2010, indicating lower rates of reporting identity theft and fraud crimes.
Figure 1: Identity Theft Crime Trend in Washington - 2010 to 2019
50 48
39
40
35 36
33 34
32
30 27 27
25 31
29
25 25
20 23
16
10 14
12
7 8
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ID Theft Fraud Linear (ID Theft) Linear (Fraud)
Source: Federal Trade Commission, Consumer Sentinel Network Data Books, 2010-2019
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 2
PROGRAM
In 2008, Commerce established two regional FFIT task forces consisting of the state's three largest counties.
Those task forces are the Greater Puget Sound (GPS) Task Force, including King and Pierce counties, and the
Spokane County Task Force. At the end of the state fiscal year 2015, Snohomish County joined the Greater
Puget Sound Task Force and began working as part of that group in January 2016. Each task force includes
representatives from the following stakeholder groups:
Local law enforcement
County prosecutors
The state Office of the Attorney General
Financial institutions
Other state, local and federal law enforcement and investigative agencies
Both task forces direct grant funds to law enforcement investigations and forensic analysis and prosecutorial
staff dedicated to financial fraud and identity theft cases generated by the investigations.
Fees on Uniform Commercial Code (UCC) filing funds the FFIT program. The Department of Licensing collects
and deposits the UCC fees into a dedicated FFIT account. More details on program funding are in the Task
Funding section.
Key Findings
State Fiscal Year 2020
Between July 1, 2019, and June 30, 2020, there were 2,635 investigations conducted, 1,694 more than in
the previous state fiscal year period.
The task forces charged 305 cases involving 770 counts, 45% fewer counts than the previous year. This
reduction reflects an increase in the complexity of cases and the number of offenders per case (see the
Task Force Performance section).
There were 329 convictions, a 52% decrease, or 359 fewer convictions than achieved in the previous year.
Task forces are identifying and prosecuting significantly more sophisticated multi-person criminal
organizations spanning multiple jurisdictions.
Cumulative Findings Since Program Inception
The task forces report performance quarterly to Commerce. In the eight state fiscal years of active
investigatory work (2011 through 2020), the task forces have:
Conducted 9,575 investigations
Charged 5,346 cases
Charged 16,230 counts
Achieved 5,062 convictions
Summary of Recommendations
The task forces recommend the Legislature amend RCW 9.35.020 to:
Elevate non-financially motivated identity theft to a first-degree charge
Make possession of a skimming device a felony offense
Base the penalty on the Amount the Defendant Attempted to obtain, and
Enhance penalties for FFIT crimes where a victim is a vulnerable person.
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 3
PROGRAM
Program Revenue and Funding Allocation
Task Force Funding Program Surcharge Transfers
The Department of Licensing (DOL) collects program funding from surcharges on personal and corporate
Uniform Commercial Code-1 (UCC) filings. DOL transfers collected funds monthly to Commerce for the
exclusive support of the activities of the FFIT program.
Figure 2: Uniform Commercial Code-1 Collections, SFY 2008 - 2020
100,000 $1,200,000
90,000
$1,000,000
80,000
70,000
$800,000
60,000
50,000 $600,000
40,000
$400,000
30,000
20,000
$200,000
10,000
- $0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Number of Filings Surcharge Revenue
Source: Washington State Department of Licensing Monthly UCC-1 Surcharge Reports
Background on Program Revenue
UCC Surcharges at Program Inception
UCC-1 collections began in August 2008. The FFIT program originally had three UCC surcharges fees:
1. $8 for paper fillings
2. $3 for individual web-based filings
3. $3 for batch web-based filings
The program saved collected fees for a year to fund the task forces. During the next two years, the task forces
organized, hired and trained staff before becoming operational. The three-year ramp-up period explains why
investigation and prosecution data began in 2011, while revenue collection began in 2008.
Changes to UCC Surcharges
When the Legislature reauthorized the FFIT Program in the 2015 legislative session, the Legislature raised all
UCC fees to $10 beginning July 1, 2015. When the Legislature reauthorized the program again during the 2020
legislative session, the Legislature increased all UCC fees to $15 beginning July 1, 2020.
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 4
PROGRAM
Program Revenue Allocation
The Department of Commerce retains 10% of program revenue for administration. The remaining 90% of
funding is split evenly among the counties, as agreed upon by the program partners and Commerce. The
Greater Puget Sound Task Force includes three counties, and the Spokane Regional Task Force includes only
Spokane County, resulting in a 3-to-1 ratio between the two task forces. After the 10% for administration, 67.5%
of program funding goes to the Greater Puget Sound Task Force, and 22.5% goes to the Spokane Regional
Task Force. Figure 3 shows the allocation of the total funding.
Figure 3: Program Revenue Allocation
Department of Commerce
Administration, 10% Spokane Regional Task
Force, 22.50%
Greater Puget Sound Task
Force, 67.50%
Source: Department of Commerce
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 5
PROGRAM
Task Force Goals and Performance
Overview
The FFIT program is required to report on task force activity performance and new methods of cooperation.
The task forces submit quarterly performance reports to Commerce and then follow up with two semi-annual
narrative reports of ongoing operational successes and accomplishments. These reports describe the
planning and staffing of investigations, apprehension and prosecution of financial fraud and identity theft
crimes, and new and best practices.
In the criminal justice system, law enforcement investigations are half of the process of bringing criminal
enterprises to justice. Prosecution and sentencing are the culmination of that process and constitute a
measurable outcome for the program.
Statewide Performance Goals
Statewide, the performance goal of the task forces is 92 convictions per quarter. Since establishing this
performance measure in 2011, the task forces achieved an average of 131 convictions each quarter over 36
quarters for 4,733 individuals convicted.
The data shows the task forces are far exceeding their original goal. Commerce and the task forces will review
the performance measure goals to determine if increasing the performance goals for convictions per quarter
for state fiscal year 2020 is warranted.
Task Force Performance
The FFIT program continues to make improvements in identifying, arresting, and prosecuting individuals and
groups engaged in the criminal enterprise of financial fraud and identity theft. Each year, both task forces have
incrementally increased their investigations' scope, going after larger and more complex criminal enterprises.
In fiscal year 2020, the FFIT task forces produced a combined:
2,635 investigations
305 cases charged
770 criminal counts charged
329 convictions
Combined task force performance from state fiscal year 2011 through 2020 is presented in Figure 3.
Data for the two task forces are presented separately in Figure 4 and Figure 5.
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 6
PROGRAM
Statewide Task Force Performance
Figure 3: Statewide Task Force Performance
3,500
3,000
2,500
2,000
1,500
1,000
500
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
INVESTIGATIONS CASES CHARGED COUNTS CHARGED CONVICTIONS
Source: FFIT Task Force Quarterly Reports
Greater Puget Sound FFIT Task Force Performance
During state fiscal year 2020, the Greater Puget Sound Task Force conducted 219 investigations, prosecuted
116 cases involving 257 counts and received 239 convictions on cases prosecuted.
Figure 4: Greater Puget Sound Task Force Performance, SFY 2001 - 2020
2,500
2,000
1,500
1,000
500
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
INVESTIGATIONS CASES CHARGED COUNTS CHARGED CONVICTIONS
Source: Greater Puget Sound Task Force Quarterly Reports
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 7
PROGRAM
Spokane Regional FFIT Task Force Performance
During state fiscal year 2020, the Spokane County Task Force conducted 895 investigations, prosecuted 121
cases involving 344 counts and received 64 convictions.
Figure 5: Spokane Area FFIT Task Force Performance by SFY 2011 - 2020
2,500
2,000
1,500
1,000
500
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
INVESTIGATIONS CASES CHARGED COUNTS CHARGED CONVICTIONS
Source: Spokane Area FFIT Task Force Quarterly Reports
Note on Change in Data Collection for Courts Changed
Beginning in 2017, prosecutors began reporting all counts-charged data. Previously, law enforcement reported
some of the counts-charged data. Since prosecutors do not always prosecute every charge identified by law
enforcement, this change results in more accurate data for state fiscal year 2017. It also accounts for the
reduced number of counts charged for both task forces in 2017 (Figure 3 and Figure 4).
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 8
PROGRAM
Recommendations
Commerce worked with both task forces to develop the following recommendations to strengthen law
enforcement and criminal justice response to financial fraud and identity theft crimes.
Elevate Non-Financially Motivated Identity Theft to a First-Degree
Charge
The task forces recommend elevating identity theft that is motivated by the intent to avoid apprehension by
law enforcement to a first-degree charge. Currently, it is charged as Identity Theft in the Second Degree under
RCW 9.35.020. The increased penalty for this charge may deter individuals from using stolen identities to avoid
arrest for other, currently more serious crimes.
A suspect will sometimes give an identity theft victim's name to police in an attempt to avoid arrest. Unless
law enforcement books the defendant into jail where jail booking staff use fingerprints to identify them, the
victim – rather than the defendant – may receive a criminal citation. This deception could result in an arrest
warrant, which would create a criminal history for the victim of identity theft. However, because the "loss" is
under $1,500, only a charge of Identity Theft in the Second Degree under RCW 9.35.020 is currently allowable.
Create Penalty Enhancements when a Victim is a Vulnerable Person
The task forces recommend the Legislature create penalty enhancements that may be added for financial
fraud and identity theft crimes when a victim is a vulnerable person (including minors, elderly and dependents).
Base the Financial Threshold for First-Degree Identity Theft on the
Amount the Defendant Attempted to Obtain
The task forces recommend the Legislature change the financial threshold for Identity Theft in the First
Degree. The threshold is currently $1,500 obtained from identity theft. The task forces recommend basing the
first-degree charge on what the defendant attempted to obtain by misusing the victim's identity rather than
what they obtained. Currently, a defendant who uses a stolen identity to attempt a high-dollar value crime but
is unsuccessful may only be charged with Identity Theft in the Second Degree. Basing the level of identity theft
on the amount the defendant attempted to obtain, rather than on the amount the defendant obtained, avoids
rewarding suspects who use stolen identities to attempt to commit the most serious crimes and are
unsuccessful only because they are caught or because their plans otherwise fail.
Make Possession of a Skimming Device a Felony
The task forces recommend making possession of a skimming device with criminal intent to commit identity
theft a felony under RCW 9.35.020. This statutory change will strengthen prosecutorial tools in all jurisdictions
in Washington. Skimming has increasingly become a problem in identity theft cases. Skimming devices allow a
person to obtain financial and personal information directly from credit and debit card magnetic stripes. There
are legitimate reasons to use skimmers, such as when small businesses use such devices on mobile phones
to sell goods and services. However, identity thieves also use skimming devices in conjunction with card re-
encoders to retrieve an individual's financial information to make counterfeit credit cards. Currently, the only
charge available for possessing a skimmer with intent to commit a crime is Attempted Identity Theft in the
Second Degree, a gross misdemeanor. The task forces believe this is an inadequate charge for such a
sophisticated crime.
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 9
PROGRAM
Appendix A: Task Force Members
Table 1: Greater Puget Sound FFIT Task Force Members
Entity Representative
King County Prosecuting Attorney's Patrick Hinds, senior deputy prosecuting attorney
Office GPS-FFIT Executive Board Co-Chair, Grantee Representative
Mitch Mondala, BECU Security - Financial Crimes Unit GPS-FFIT Executive
Boeing Employees Credit Union
Board Co-Chair
Lieutenant Tim Gately
Redmond Police Department
GPS-FFIT Executive Board Secretary
Pierce County Sheriff's Office Teresa Burg, sergeant
Pierce County Prosecuting Attorney's
Brook Burbank, deputy prosecuting attorney/assistant chief criminal deputy
Office
Columbia Bank John Fick, vice president/fraud investigations unit manager
Snohomish County Prosecutor's Office Michael Held, deputy prosecuting attorney/chief of staff
SeaTac Police Department Jon Mattsen, chief of police
Sound Credit Union Angie May, senior fraud investigator
Washington State Attorney General's
Michael Stanley, assistant attorney general
Office
JP Morgan Chase Barbara Tainter, JPMC Security - National Vulnerable Adult Investigations
Bank of America Tim Whitesitt, vice president/senior investigator
United States Attorney's Office Vacant (TBD)
Local law enforcement Vacant (TBD)
Federal law enforcement Vacant (TBD)
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 10
PROGRAM
Table 2: Spokane Regional FFIT Task Force Members
Entity Representative
Spokane County Sheriff's Office Rob Sherar, inspector
Spokane County Prosecutor's Office Steve Garvin, senior prosecutor
Spokane Police Department Brad Arleth, captain
Spokane Teachers Credit Union Jim Fuher, fraud prevention manager
Washington State Attorney General's Office Mark Porter, investigator
Small Towns and Cities Representative Vacant (TBD)
FINANCIAL FRAUD AND IDENTITY THEFT INVESTIGATION AND PROSECUTION 11
PROGRAM
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