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CONDUCTING COVERT INVESTIGATIONS, INTEGRITY TESTS AND FINANCIAL INVESTIGATIONS ON LAW ENFORCEMENT EMPLOYEES (Part I)

May 2014

by Steve Rothlein and Lou Reiter



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©2014 Steve Rothlein and Lou Reiter, PATC Legal & Liability Risk Management Institute (www.llrmi.com)

 

Traditional Internal Affairs Investigations

Traditionally, most law enforcement agencies dedicate the majority of their internal affairs resources to investigating citizen complaints.  A complaint registered against an officer may be a significant indicator of police misconduct and should always be thoroughly investigated.  Every complaint, including those that are anonymous, should be documented and evaluated by the internal affairs unit to determine the appropriate course of action.  A strong process for investigating citizen complaints will help to establish the essential bond of trust a police agency requires to provide effective law enforcement within the community.

The majority of these reactive complaint investigations become swearing contests between the complainants and the accused officers, including the witnesses for each side.  Rarely can investigators locate physical evidence or objective, disinterested witnesses to prove or disprove the allegations.  Generally, less than 20% of citizen complaints are sustained, despite comprehensive investigations that are sometimes comparable to homicide cases, exhausting every lead and documenting every aspect of the case.  The vast majority of these investigations result in a finding of not-sustained, meaning failure to prove or disprove the allegation.

Pro-active Enforcement Operations

A Police Foundation study in 1994 reported that 11 percent of the police agencies surveyed indicated that they conducted some form of pro-active enforcement involving police misconduct.  Some agencies refer to these forms of pro-active enforcement as integrity checks and sting operations.  Some of the areas of misconduct which might be conducive to this type of administrative policing are:

  • Involvement with narcotics

  • Theft

  • Misappropriation of official funds

  • Salary theft by unearned/manipulated overtime, phantom working employees, and double-dipping on paid details

  • Unauthorized information release

  • Perjury or false affidavits

  • Sexual misconduct

  • Traffic stops of females

  • Voyeuristic activities

  • Repeated contacts with vulnerable persons (prostitutes, addicts and runaways)

  • Citizen initiated contacts for sex

  • Excessive, unnecessary use of force

Agencies which are engaging in these forms of pro-active enforcement may also refer to them as “integrity checks.”  Some are staged calls designed to observe officers’ actions where found properties, burglaries or vehicle impounds are left with some form of valuable property.  The officer’s conduct is checked to determine whether the property was properly inventoried and booked into evidence.  Some agencies have used decoys when specific misconduct is being suspected of an employee.

Many agencies are already taking some type of proactive approach. Staff inspections/audits and supervisory checks may properly be determined to be a form of pro-active enforcement.  Service call-backs would be another.  Property room audits, confidential fund accounting and equipment inventories are others.  A supervisor who randomly views in-car videotapes, booking room videos or belt tape recordings are other good examples of this form of proactive enforcement. A supervisor’s analysis of an officer’s traffic citations for its ratio of female/male contact is a very valuable enforcement check.  Regular and random audits of computer/criminal records is very warranted to offset allegations that this valuable information source is being misused or abused.  It’s very important to document these practices.  This documentation may shield an agency from liability should one of the employees engage in these forms of misconduct. It is recommended that a police agency designate these staff inspections/audits and supervisory checks on a scheduled maintenance format for the high liability/critical task performance areas.

Some of the important considerations which should be evaluated before deciding to engage in any pro-active administrative enforcement are:

  • Resources and equipment

  • Mutual aid provisions

  • Ethical issues

  • Agency environment

Most police agencies, except very large ones, are not equipped nor staffed for such intense, critical operations.  Frequently, operative personnel are recruited from adjacent agencies, state and federal units, and community outreach sources. It is essential when engaging an undercover operative to utilize someone unknown to an agency and who can’t be compromised during or after the conclusion of the operation. 

The last thing that should happen during one of these operations is to have the equipment fail. Police surveillance and undercover equipment often fails at the most critical moment.  When the target of an enforcement operation is another police employee, one must strive for perfection. The investigator must identify and seek out the best source for this sophisticated level of equipment.

On top of all these potential areas for failure, the agency CEO must consider the effect that a pro-active administrative enforcement operation may have on the agency.  He/she has to validate the ethical considerations and weigh the potential negative impact on morale these type of investigations can have on the overall agency personnel.

Criminal Allegations

It’s essential to remember that the administrative case will still need to be addressed regardless of the ultimate outcome of the criminal case.  In very few instances will there be a criminal filing or finding.  In those cases where probable cause is established, the employee may still be a member of the department and may continue to be one even after the conclusion of the criminal proceeding.  More frequently the United States Department of Justice (USDOJ) and some prosecutors are taking more intense looks at actions of police employees.  Their investigations may take some time to conclude.  In the case of the F.B.I., the involved police agency most likely will never see anything on paper regarding their investigation other than it is concluded and is now closed.

It’s important for your agency to conduct whatever it can in regards to the administrative investigation before it gets cold.  This would include just about everything other than interviews with the accused employees.  This would be true even in those few states which now offer transactional immunity if the accused officer is compelled to answer questions.  It is very important to protect all possible evidence and witness statements during this early period.  Waiting months, or in some cases years, for the final decision on criminal prosecution could leave an agency without recourse and necessitate taking back an employee who the agency might otherwise have terminated.

The investigator, in concert with their supervisor, must consider all aspects of a pending criminal case and weigh the need to wait before the administrative case is initiated.  The threshold question to consider is, will the criminal case have any significant bearing on what the agency might do administratively?  What difference will the outcome of the criminal case have on the ultimate decision?  Can the agency come back after the final outcome of the criminal case when a conviction is held and charge the employee now with another allegation? The question that needs to be answered is what impact will an acquittal or conviction have on the administrative case?  Remember, the burden of proof is entirely different and the use of evidence is more restricted in the criminal case.

In some jurisdictions the criminal case will be taken over by the local prosecutor or state attorney general.  This can be helpful in bifurcating the process and eliminating any accusations of bias or conflict.  One potential problem is the emerging trend when such a case is taken over by one of these outside prosecutorial entities.  Many are now mandating that the police agency cease any investigative efforts, even administrative, until the criminal investigation is completed.  This is really a political issue; not a procedural matter.

There is no reasonable excuse to not bifurcate any incident which has a criminal element to it.  In most police agencies, this aspect of the employee misconduct should be farmed out to another agency to ensure that the criminal and personnel aspects are not compromised.  The employee’s constitutional rights must be protected at this juncture.  This is best preserved by bifurcating the investigation and allowing an outside agency conduct the criminal aspect.

Investigations by Another Agency

Simply because an agency relies on an outside entity to conduct the investigation does not relieve the concerned agency of the responsibility for ultimate accountability.  Some look at the task as narrowly framed only for the possible criminal implications or the four corners of the mission given to them or what they determine that mission to be.  This can seriously reduce the ability of an agency to use the investigation for the more intensive administrative analysis and subsequent determination whether discipline may be warranted.  Outside agencies are often reluctant to do these forms of administrative investigations.

There are two methods for an agency to use to ensure that the final product adequately addresses all relevant issues.  The first would be to monitor the criminal investigation very closely and request issues to be addressed if they are not being pursued adequately and voluntarily.  There is the possible problem that some might consider this as interference and an attempt to direct, influence or bias the outcome.  The second method is to accept the final investigation by the outside entity and then add to that investigation with any necessary follow-up issues done by your own IAU.

Remember, the investigation by the outside entity does not bring the administrative aspect to final closure.  They are investigating it primarily from the criminal aspect and their investigation normally will not make a satisfactory administrative finding.  At best, the investigative unit, prosecuting attorney, or grand jury will simply find no basis for criminal charges. This is just one conclusion. It is not the one reasonable for administrative, personnel and civil liability purposes.

Drug Related Corruption

This type of corruption differs in a variety of ways from other types of criminal misconduct.  In addition to protecting criminals, or ignoring their illegal activities for money, these officers often engage in stealing drugs and/or money from drug dealers and conducting illegal searches and seizures. Studies have revealed that drug related corruption is often characterized by a code of silence, unquestioned loyalty to other officers, and cynicism about the agency they work for as well as the criminal justice system itself.

Drug enforcement, especially in certain regions of the country known for drug importation including South Florida, New York, California, and the Southwest Texas Border, expose narcotics officers to extremely large sums of cash. When officers succumb to temptation and steal some of the cash, they often will attempt to launder the money or hide the proceeds.

Two other common issues may encourage or facilitate drug corruption.  First, many agencies pressure drug units for asset seizures.  When this is done without the agency showing that it will monitor the actual way the assets are seized may signal the wrong message to the officers that the ends justify the means.  Secondly, these special drug units frequently are housed at a remote and sometimes secret location.  Seldom does any command personnel venture to this remote location to determine how well the unit is being run.

Investigating Hidden Assets

The challenge for law enforcement authorities investigating this type of crime is to be able to prove the corrupt law enforcement employee has a net worth that exceeds their legitimate explainable income.  This can often be accomplished by a forensic audit of the target’s assets, liabilities, income, and expenses. Like any other investigation, surveillance of the target, interviews of their associates, and examination of their economic standard of living may possibly lead investigators to the conclusion that the spending habits and assets of the target far exceeds his/her legitimate income.

Suspicious indicators of illegitimate income could include the following:

  • Accelerated loan /credit card payments

  • Use of cashier checks and money orders

  • Use of multiple banks with deposits of just under $10,000

  • Extravagant home improvements and landscaping

  • Life style changes which include expensive vacations and the purchase of cars, boats, planes, etc.

The target of these investigations will often attempt to hide their illegitimate income from authorities; however, locating the banking records of the target will usually provide a wealth of incriminating information, which can link the illegitimate income to the target.

The following sources of information often reveal hidden assets or leads, which can directly link unexplainable income and assets to the target:

  • Employer Payroll Records: Government employee banking data will almost always be on file in the personnel department. Direct deposit records will identify the employee’s bank and, if the employee is paid by check, the bank that was utilized will be listed on the back of the paycheck after it is negotiated. Once the bank is identified, subpoenas can be issued to examine the account of the target.

  • Automated Data Bases: These provide information concerning tangible assets such as real estate, vehicles, boats, planes, and corporations. Examples of automated data bases include NCIC, FinCEN, Experian, Auto Trak, Google, and PACER. A key benefit in locating these tangible assets is that they often involve loan applications. A loan application will reveal bank account information, income tax information, and other assets and liabilities.

  • U.S. Postal Inspection Service Mail Center: The U.S. Postal Service will provide law enforcement officials a 30 or 60 day mail cover for a criminal investigation upon request of the unit commander. The mail cover will list any correspondence received at the address of the target. This information will reveal banks and other financial institutions corresponding with the target.  Once identified, separate subpoenas may be issued to examine those records.

  • Financial Crimes Enforcement Network (FinCEN): The mission of FinCEN is to collect, analyze and disseminate information to law enforcement officials investigating criminal misconduct. FinCEN is the repository for Suspicious Activity Reports from banks, which are required to file reports of any deposits which exceed $10,000. 

  • Credit Bureau Reports:  Lending institutions maintain original credit applications. These applications list the bank names and account numbers of the applicant.  Once the target’s account information is identified by the inquiries listed on the reports, a subpoena can be issued directed at the inquiring institution. The goal is to identify the target’s banks so those records may be examined.

  • Utility Companies: Local utility companies maintain the payment records and cancelled checks of their customers. The cancelled check or electronic payment of the utility bill will identify the bank of the customer allowing for a subpoena of the banking records.

  • Physical Surveillance:  Physical surveillance of the target of the investigation can by very time-consuming and manpower intensive.  The payoff, however, can be beneficial in discovering the different financial institutions the target is visiting. Other co-conspirators may be identified, which can reveal a wealth of information.

  • Electronic Surveillance: The utilization of a telephone pen register/trap and trace on a target under investigation will reveal incoming and outgoing calls on the phone subscriber. This information can lead to the source of hidden assets as well as help to develop the required probable cause for the application of a Title III wiretap. 

  • Legal Proceedings: Divorce, bankruptcy, and other types of litigation may reveal the identity of the target’s accountant, business partners, and other individuals that might be involved in laundering illicit income.  This information is often available via public records law; however, this varies from state to state. An estranged spouse may have a great deal of information concerning the target’s illegal activities, and can be an excellent witness in exposing a criminal enterprise.

  • Search Warrant: A search warrant on a target’s residence or office may reveal a great deal of information in locating illicit income.  When applying for a warrant, it is essential to include hard drive files and to include financial evidence in the search warrant affidavit.

Subpoenas

It may be necessary to apply for a subpoena from the prosecuting authority to gain access to some of the described sources of information described in this chapter. When making application for a subpoena, it is essential to request any and all account data even if it is not needed at the time. A limiting clause in the subpoena may direct the bank to omit certain items; however, the investigator can request the omitted items at a later date.  This is both a convenience to the bank and the investigator.

When applying for a subpoena, the investigators must always identify the period of time they are interested in reviewing. The ending date can be in the future which enables the investigator to obtain future records by simply placing a phone call. While all subpoenas should have a non-disclosure clause, the investigator must do a risk assessment when conducting covert investigations. A clerk or bank teller might accidentally or intentionally advise the target of the inquiry into their activities, which could substantially jeopardize the investigation. If the risk is unacceptable, consider using alternative sources. Banking institutions are regulated by strict federal privacy laws, which must be considered when issuing subpoenas.

The success of an investigation of a corrupt police officer or government official who is illegally obtaining cash or other assets often depends on the tenacity of the investigator and the skill of a forensic auditor.  The key to a successful financial investigation is to determine what information is available and how to discover it.  Insignificant details have resulted in resolving major investigations. The movement of money and assets is more than a paper trail, but can be a road map of criminal activity. The following are potentially valuable sources of information which should be considered when obtaining a Bank Record Subpoena:

  • All open or closed accounts                                                        

  • Signature cards

  • Cancelled checks

  • Deposit and withdrawal slips

  • ATM cash withdrawals

  • Wire transfer records

  • Loan applications

  • 1099 forms

  • Certificate of Deposit records

  • Bank statements

  • Open or closed IRA / Keogh account records

  • Credit card applications

  • Safe deposit box information

  • Currency Transaction Reports

 

Read Part II of This Article Here

 

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Note:  Court holdings can vary significantly between jurisdictions.  As such, it is advisable to seek the advice of a local prosecutor or legal adviser regarding questions on specific cases.  This article is not intended to constitute legal advice on a specific case.

 

 
       
 


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