Report - 2024 Commercereports Ofsvp 2023 Financial Fraud And Identity Theft Report F

Summary

A report under RCW 43.330.300(1)(c) to the Washington State Legislature from the Department of Commerce on the Financial Fraud and Identity Theft Crimes Investigation and Prosecution Program, dated April 2024. It describes the program, created in 2008 and scheduled to sunset on July 1, 2030, which supports the Greater Puget Sound and Spokane County task forces and is funded by a surcharge on UCC-1 filings, raised to $15 from July 1, 2021. For state fiscal year 2023 it reports 1,879 investigations, 198 cases charged, 593 counts charged and 183 convictions, and cumulative totals of 15,078 investigations and 6,049 convictions. It states that Commerce retains 10% of revenue for administration, with 67.5% to the Greater Puget Sound task force and 22.5% to Spokane County. The report makes four recommendations to the Legislature.

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 Financial Fraud and
 Identity Theft Crimes
 Investigation and
 Prosecution Program



Performance and recommendations pursuant to RCW
43.330.300(1)(c)




                                         April 2024
       OFFICE OF FIREARM SAFETY
       AND VIOLENCE PREVENTION /
       COMMUNITY SAFETY UNIT             Report to the Legislature

                                         Director Mike Fong
v3.4
Acknowledgments
Washington State Department of Commerce
Cindy Guertin-Anderson, Assistant Director of
Community Services Division

Dave Pringle, Legislative and Policy Director

Greater Puget Sound Financial Fraud and Identity
Theft Task Force
Mitch Mondala, Task Force Co-Chair, Boeing
Employees Credit Union

Patrick Hinds, Task Force Co-Chair, Senior Deputy
Prosecuting Attorney, King County Prosecuting
Attorney's Office

Spokane County Financial Fraud and Identity Theft
Task Force
Khris Thompson, Task Force Chair, Undersheriff,
Spokane County Sheriff's Office

Washington State Department of Commerce
Kate Kelly, Executive Director
Kate.kelly@commerce.wa.gov
Phone: 360-628-6846

Office of Firearm Safety and Violence
Prevention/Community Safety Unit

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)




  2023 FINANCIAL FRAUD AND IDENTITY THEFT CRIMES INVESTIGATION AND PROSECUTION PROGRAM   2
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Table of Contents
Executive summary .........................................................................................................................................4

Recommendations ..........................................................................................................................................5

Statewide trends .............................................................................................................................................6

Program revenue and funding allocation .........................................................................................................7

Task force goals and performance ..................................................................................................................9

Recommendations ........................................................................................................................................11

Appendix A: Task force members .................................................................................................................13




  2023 FINANCIAL FRAUD AND IDENTITY THEFT CRIMES INVESTIGATION AND PROSECUTION                                                                             3
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Executive summary
Overview
The Legislature created the Financial Fraud and Identity Theft (FFIT) Crimes Investigation and Prosecution
Program in the Department of Commerce (Commerce) in 2008. The program strengthens cooperation
between law enforcement and financial industry investigators. It increases 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 31st 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 information regarding the use of
    funds and funding needs to facilitate a biennial review of the program's funding. The report must also include
    recommendations on changes to the program, including expansion.

The FFIT program is funded through the financial fraud and identity theft crimes investigation and prosecution
account created in RCW 43.330.300(3). Revenue to the account may include appropriations, revenues
generated by the surcharge imposed in RCW 62A.9A-525, federal funds, and any other gifts or grants.
Expenditures from the account may be used only to support the activities of the financial fraud and identity
theft crime investigation and prosecution task forces and the program administrative expenses of the
department, which may not exceed 10% of the amount appropriated. The program is currently scheduled to
sunset on July 1, 2030.

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/debit card fraud, identity theft, forgery, counterfeit instruments
such as checks or documents, organized counterfeit check rings, and organized identification theft rings."

As directed in the statute, Commerce supports two regional FFIT task forces comprising the state's four
largest counties: the Greater Puget Sound Task Force, including King, Snohomish and Pierce counties, and the
Spokane County Task Force. These task forces consist of representatives from the Attorney General's office,
county prosecutors' offices, law enforcement agencies and financial institutions.


Key findings
State fiscal year 2023 (July 1, 2022 - June 30, 2023)
   1,879 investigations conducted (737 more than the previous fiscal year)
   198 cases charged (83 fewer than the previous fiscal year)
   593 counts charged (72 fewer than the previous fiscal year)
   183 convictions (192 fewer than the previous fiscal year)
   Task forces are identifying and prosecuting significantly more sophisticated multi-person criminal
   organizations spanning multiple jurisdictions

Cumulative findings in fiscal years 2011-2023
The FFIT task forces report performance quarterly to Commerce. In the years of active investigatory work
(2011 through 2022), the task forces have:

   Conducted 15,078 investigations
   Charged 6,410 cases
   Charged 19,255 counts
   Obtained 6,049 convictions

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Recommendations
The task forces provided the following recommendations to the Legislature.

   Elevate non-financially motivated identity theft to a first-degree charge
   Create penalty enhancements when a victim is a vulnerable individual
   Base the financial threshold for first-degree identity theft on the amount the suspect attempted to obtain
   Make possession of a skimming device a felony




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Statewide trends
State-level data on identity theft and fraud
The Washington Association of Sheriffs and Police Chiefs (WASPC) 2022 Crime in Washington Report
indicated that in 2022, 22,994 fraud offenses were reported throughout the state.1 Identity Theft and
Swindle/Con Games totaled 13,410 offenses or 58.3% of all financial crimes in Washington. According to the
report, in 2022 Credit Card/ATM fraud, impersonation, wire fraud, hacking/computer/invasion and welfare
fraud comprised 10,584 or 41.6% of financial crimes in Washington. Juveniles were responsible for 2.1% of
fraud cases.


Where Washington fit among national trends
According to the Federal Trade Commission's (FTC) Consumer Sentinel Network Data Book 2022,2 5.2 million
cases of reported financial fraud were reported in 2022. The top three categories of financial fraud include
identity theft (21.52%), imposter scams and credit bureaus (14.10%), and information furnishers and report
users (13.42%), resulting in 2.4 million reports of fraud reports with $8.38 billion in losses.

In 2022, nationally, identity theft cases totaled 1.1 million. Imposter scams accounted for more than 725,989
cases, costing $2.33 million. Based on the Federal Trade Commission's Consumer Sentinel Network 2023
annual report, the 2022 data indicated this is how Washington ranked compared to other states:

    Washington ranks 31st with 158 identity theft reports per 100,000 people, totaling 11,877 reports.
    Washington ranks 20th with 936 fraud and other reports per 100,000 people, totaling 70,297 reports.
    Total fraud losses are $215.5 million or $750 median loss per person.

Other national data points include:
    Younger people reported losing money to fraud more often than older people. Those aged 20-29 reported
    losing money in 43% of reports to the FTC. When people aged 70+ had a loss, the median loss was much
    higher, from $548 to $1,674.
    One in five people lost money in imposter scams, with a median loss of $1,000 per person, totaling $2.667
    billion in losses. Credit card account fraud increased 13% from 2021 to 2022. Government benefit fraud
    has decreased by 88% during the same time period.
    Military personnel reported more than 93,000 fraud complaints, including 39,000 imposter scams that cost
    them more than $165.5 million in losses.




1 Crime in Washington 2022-compressed.pdf 07-2023.pdf (waspc.org)
2 Consumer Sentinel Network Data Book 2022 (ftc.gov)



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Program revenue and funding allocation
The state's FFIT task forces use these funds to support law enforcement investigations, forensic analysis and
prosecutorial staff dedicated to financial fraud and identity theft cases.

Currently, all funds for the FFIT program are drawn from fees on Uniform Commercial Code Financing
Statement filings, also known as UCC-1 filings. The Department of Licensing collects the fees as surcharges
on personal and corporate UCC-1 filings. Collected funds are transferred to Commerce monthly for the
exclusive support of the activities of the FFIT program.

History of UCC-1 fee collection
Fees collection began when the FFIT program was created in 2008. After accumulating fees for a year, the task
forces spent two years organizing, hiring and training staff before becoming operational. The three-year ramp-
up period explains why revenue collection began in 2008, and investigation and prosecution data began in
2011.

When the Legislature reauthorized the FFIT Program in 2015, UCC-1 fees were raised to $10. When the
program was reauthorized again in 2020, UCC-1 fees were increased to $15, beginning July 1, 2021. Collecting
the new $15 surcharge began in November 2021. The chart below explains the fillings and UCC revenue
collected from 2008-2022. For SFY 22, the state reported 111,968 filings and collected $1.5 million in UCC fees
to support the FFIT Program.

Figure 2: Uniform Commercial Code-1 filings and revenue, SFY 2008 - 2023

                                                        REVENUE FY 23
                                                   Number of Filings          Surcharge Revenue

  1,800,000
  1,600,000
  1,400,000
  1,200,000
  1,000,000
    800,000
    600,000
    400,000
    200,000
          -
               2009     2010    2011    2012     2013    2014    2015     2016     2017   2018    2019   2020   2021   2022   2023


Source: Washington State Department of Licensing Monthly UCC-1 Surcharge Reports


Program revenue allocation
Commerce retains 10% of FFIT program revenue for administration. The remaining funds are divided between
the task forces in a manner agreed upon by the program partners and Commerce. The Greater Puget Sound
Task Force includes three counties (King, Pierce and Snohomish). The Spokane County 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 is allocated to the Greater Puget Sound Task Force, and 22.5% is allocated to the
Spokane County Task Force. Figure 3 shows the allocation of the total funding.

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Figure 3: Program revenue allocation


                                                                        10%

                                                      22.5%




                                                                          67.5%




              Department of Commerce Administration           Greater Puget Sound Task Force   Spokane Regional Task Force


Source: Department of Commerce




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Task force goals and performance
The FFIT task forces submit quarterly performance reports to Commerce and follow up with two semi-annual
narrative reports of ongoing operational successes and accomplishments. These reports describe the
planning and staffing of investigations, apprehension of suspects, prosecution of financial fraud and identity
theft crimes, and new and best practices.


Statewide performance goals
Statewide, the performance goal of the task forces is to achieve 92 convictions per quarter. Since establishing
this performance measure in 2011, the task forces have achieved an average of 116 convictions each quarter
over 52 quarters, with 6,049 individuals convicted.

This data shows the task forces significantly exceed the original performance goal.


Task force performance
The FFIT task forces continue to improve at 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 the scope of their investigations, pursuing larger and more complex criminal
enterprises.

In fiscal year 2023, the FFIT task forces produced a combined:

    1,879 investigations
    281 cases charged

Combined task force performance from state fiscal years 2011 through 2023 is presented in Figure 4.

Figure 4: Statewide FFIT Task Force performance, SFY 2011-2023
  3,500

  3,000

  2,500

  2,000

  1,500

  1,000

    500

      -
              2013        2014        2015   2016    2017       2018    2019     2020   2021    2022     2023

                          INVESTIGATIONS        CASES CHARGED          COUNTS CHARGED      CONVICTIONS


Source: FFIT Task Force Quarterly Reports

During state fiscal year 2023, the Greater Puget Sound Task Force conducted 61 investigations, prosecuted 98
cases involving 349 counts, and obtained 99 convictions. Pierce and Snohomish County do not report


  2023 FINANCIAL FRAUD AND IDENTITY THEFT CRIMES INVESTIGATION AND PROSECUTION                                  9
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investigation numbers as they do not have dedicated investigators assigned to the task force. Pierce and
Snohomish County only report when the prosecutor's office charges cases in those counties.

Figure 5: Greater Puget Sound FFIT Task Force performance, SFY 2011 – 2023
 2,500


 2,000


 1,500


 1,000


   500


      0
             2013        2014        2015        2016        2017       2018    2019     2020   2021    2022     2023

                         INVESTIGATIONS                 CASES CHARGED          COUNTS CHARGED      CONVICTIONS


Source: Greater Puget Sound Task Force Quarterly Reports

During state fiscal year 2023, the Spokane County Task Force conducted 844 investigations, prosecuted 100
cases involving 244 counts, and obtained 84 convictions.

Figure 6: Spokane County FFIT Task Force performance, SFY 2011-2023
 4,000
 3,500
 3,000
 2,500
 2,000
 1,500
 1,000
   500
      0
             2013        2014        2015        2016        2017       2018    2019     2020   2021    2022     2023

                         INVESTIGATIONS                 CASES CHARGED          COUNTS CHARGED      CONVICTIONS


Source: Spokane County FFIT Task Force Quarterly Reports


Note on change in data collection for counts charged
In 2017, prosecutors began reporting all counts-charged data. Previously, law enforcement reported some of
the counts-charged data. Because prosecutors do not always prosecute every offense identified by law
enforcement, this change resulted in more accurate data beginning in state fiscal year 2017. It also accounts
for the reduced number of counts charged for both task forces in 2017 (Figures 5 and 6).


 2023 FINANCIAL FRAUD AND IDENTITY THEFT CRIMES INVESTIGATION AND PROSECUTION                                           10
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Recommendations
FFIT task forces developed 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 FFIT task forces recommend establishing a first-degree offense for identity theft motivated by the intent to
avoid apprehension by law enforcement. This new definition for Identity Theft in the First Degree would be a
Class B felony. Currently, this crime is charged as Identity Theft in the Second Degree, which is a Class C
felony, under RCW 9.35.020. An increased penalty for this charge should deter individuals from using stolen
identities to avoid arrest for other, more serious crimes.

A suspect will sometimes give an identity theft victim's name to police to avoid arrest. Unless law enforcement
books the suspect into jail where fingerprints can confirm identity, the victim – rather than the suspect – may
receive a criminal citation. This deception could result in an arrest warrant, creating a criminal history for the
victim of identity theft. However, so long as the "loss" is less than $1,500, only a charge of Identity Theft in the
Second Degree under RCW 9.35.020 is currently allowable for suspects charged with this type of crime.


Create penalty enhancements when a victim is a vulnerable
individual
The task forces recommend the Legislature create penalty enhancements that may be added for financial
fraud and identity theft crimes when the victim is a senior or vulnerable individual.

For a number of reasons—including aging brains, declines in cognitive functioning, and other physiological and
societal factors—older adults are often highly susceptible to scams and frauds. In addition, research has
consistently shown that seniors are both more likely to be targets of financial fraud and identity theft, and that
the consequences of victimization are more severe for them than for younger adults.

The Legislature has taken some steps to address these issues. For example, the victim’s advanced age or
vulnerability is taken into account in the seriousness level of certain crimes (e.g., Theft from a Vulnerable Adult
in the First Degree in violation of RCW 9A.56.400 has a higher seriousness level than Theft in the First Degree
in violation of RCW 9A.56.030). In addition, under RCW 9.94A.535(3)(b), a court has the discretion to impose
an exceptional sentence above the standard range for a felony if it is proven that the accused knew or should
have known that the victim was particularly vulnerable. However, gaps in the statutory framework still result in
situations where defendants who knowingly target seniors or vulnerable individuals are not appropriately
sanctioned for their actions. For example, under RCW 9.35.020(2), an act of identity theft is elevated to Identity
Theft in the First Degree when the accused either knowingly targets a senior or vulnerable adult or obtains
something of more than $1,500 in value. However, a defendant who does both—steals more than $1,500 from
a person who is a senior or vulnerable individual through identity theft—faces no higher sanction than a
defendant who only does one or the other. Further, with the exception of the crime of Identity Theft in the First
Degree, the current statutory framework gives prosecutors little ability to bring more serious charges or seek
higher sanctions against offenders who knowingly target seniors who are not necessarily “vulnerable” as
defined by statute.




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With these concerns in mind, the task forces recommend that the Legislature create additional penalty
enhancements that may be added to financial fraud and identity theft crimes when the victim is a senior or
vulnerable adult. Such enhancements would give prosecutors and courts greater flexibility to appropriately
charge and sentence those who target and prey on senior or vulnerable individuals.


Base the financial threshold for first-degree identity theft on the
amount the suspect attempted to obtain
The task forces recommend the Legislature change the financial threshold for Identity Theft in the First
Degree. The current threshold is "credit, money, goods, services, or anything else of value in excess of $1,500
obtained from identity theft." The task forces recommend changing the first-degree charge to be based on
what the defendant attempted to obtain by misusing the victim's identity rather than what they obtained.

A defendant who uses a stolen identity to attempt an unsuccessful high-dollar value crime can 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. Increasingly, skimming is a problem in identity theft cases. Skimming devices allow people 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 use skimming devices and card re-encoders to retrieve an
individual's financial information to make counterfeit credit cards. 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.




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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, GPS-FFIT executive board co-chair,
Office                                 grantee representative

King County Prosecuting Attorney's
                                       Margo Marin, deputy prosecuting attorney
Office

Boeing Employees Credit Union          Mitch Mondala, BECU Security - Financial Crimes Unit, GPS-FFIT executive board co-chair

Redmond Police Department              Martin Fuller, lieutenant

Redmond Police Department              Nicole Perry, analyst

Pierce County Sheriff's Office         Doug Shook, sergeant

Pierce County Sheriff's Office         Bill Foster, detective

Pierce County Prosecuting Attorney's
                                       Brook Burbank, deputy prosecuting attorney/assistant chief criminal deputy
Office

Pierce County Prosecuting Attorney's
                                       Matt Thomas, deputy prosecuting attorney
Office

Columbia Bank                          John Fick, vice president/fraud investigations unit manager

Snohomish County Prosecuting
                                       Michael Held, deputy prosecuting attorney/chief of staff
Attorney's Office

Snohomish County Prosecuting
                                       Hall Hupp, deputy prosecuting attorney
Attorney's Office

Sound Credit Union                     Angie May, senior fraud investigator, GPS-FFIT executive board secretary

Washington State Attorney General's
                                       Marko Hananel assistant attorney general
Office

JP Morgan Chase                        Barbara VanArshall, JPMC Security - National Vulnerable Adult Investigations

Bank of America                        Tim Whitesitt, vice president/senior investigator

King County Sheriff’s Office           Jon Mattsen, major

King County Sheriff’s Office           Robin Fry, detective

United States Attorney's Office        Vacant (TBD)

Federal law enforcement                Vacant (TBD)

Salal Credit Union                     John Fick, fraud manager




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Table 2: Spokane County FFIT Task Force members
Entity                                           Representative

Spokane County Sheriff's Office                  Khris Thompson, underssheriff

Spokane Police Department                        Tracie Meidl, captain

Spokane County Prosecuting Attorney's Office     Katie McNulty, deputy prosecuting attorney

Numerica Credit Union                            Roger Fitzpatrick, legal/compliance manager

Cheney Police Department                         Rick Beghtol, chief

Washington State Attorney General's Office       Lisa Jangaard, investigator/analyst

Small towns and cities Representative            Vacant (TBD)




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