The following statement was presented by Commander Michael Anzallo to the District of Columbia Council Committee on the Public Services and Consumer Affairs, Honorable Mary M. Cheh, Chair, on November 14, 2007, at the John A. Wilson Building, 1350 Pennsylvania Avenue, NW, Washington, DC.
Good afternoon Chairman Cheh, members of the Committee on Public Service and Consumer Affairs, and guests. My name is Michael Anzallo, and I am the Superintendent of the Detectives Division of the Metropolitan Police Department. Thank you for allowing me to testify today about Consumer Protection in the District of Columbia.
On behalf of Chief Lanier, I appreciate the opportunity to update the Committee on the Police Department’s performance in meeting our goals with respect to protecting consumers in the District of Columbia. The Financial Crimes and Fraud Unit of the Metropolitan Police Department investigates a broad range of Financial Crimes. These Crimes include:
- Consumer fraud schemes
- Identity Theft
- Theft by trick type crimes
- Credit Card Fraud
- Bad Check Law
- Embezzlement type cases, and
- Traditional confidence schemes
I want to begin my testimony by highlighting some of MPD’s collaborative efforts with other District agencies. We work closely with the Department of Consumer and Regulatory Affairs (DCRA) as it relates to several specific categories of Financial Crimes. One such area is on Contractor Fraud. This includes participation in investigations that relate to unlicensed contractors, inappropriate or misleading contracts, and in several instances outright home improvement fraud where the contractor takes monies but does not complete any work.
The Financial Crimes and Fraud Unit worked directly in several sting operations where DCRA targeted unlicensed construction/remodeling contractors. One of the several sting operations we have worked is “Operation Nail Gun.” In this operation several unlicensed contractors were identified and two others were issued Notices of Infractions by DCRA which included a fine. Another significant relationship that has been established with the DCRA is our membership in the DC Triad. The DC Triad pertains to developing strategies to curtail senior fraud and abuse within our community.
The Unit also works with Department of Insurance, Securities and Banking Enforcement on mortgage fraud schemes and has referred a number of investment fraud cases to them. This year alone we have worked with the Office of the Inspector General (OIG) in several “D.C. Government Employee” theft cases. Although the OIG has the sole investigative authority in these matters we are often asked to assist their investigators with these investigations. Our contacts, sources and expertise in the financial and banking industry help significantly in facilitating investigations of this nature. The Department also works with a number of Federal government agencies as well.
The Financial Crimes and Fraud Unit does not limit our efforts to reactive strategies. The unit has also participated several seminars and symposiums held by the Department of the Aging and other community groups throughout the city this year. In many of these functions we have set up and manned a booth to bring information to our senior citizens. In all of these instances the interest in our outreach effort was well received and very positive.
The aggregate of Financial Crime losses investigated by this unit reach upward to approximately ten million dollars annually. Due to the fact many crimes have an initially unknown or un-reported value or the losses continue after the initial report is filed, it is impossible to put an exact figure on the amount of losses. As of October 31, 2007, the known and documented losses are over $5,300,000.
Identity Theft has been recognized as one of the fastest growing crimes in the United States (Source: U.S. Postal Service). This year the incidence of Identity Theft significantly outnumbers all other categories of financial crime in Washington D.C. There are three main factors that have had an affect on the increasing number of identity theft statistics in the District of Columbia.
The District’s Identity Theft law was adopted in December of 2003. Prior to this law victims merely reported the theft to their banking, financial institutions, and or the three credit bureaus. In these instances the institution would usually reimburse the victim for the amounts in question. The financial institutions would refer the matter to their internal fraud departments and rarely would contact the police unless the figure was significant or a known suspect was identified. After adoption of the law, when initially reporting the thefts to the financial institution or the credit bureaus, they would demand that the police file a report before reimbursing the customers account. This has led to a significant increase in the number of reports filed with the police.
The second cause of the increases involves technology. Specifically, the increased availability of online merchants, online bill paying or instant online credit applications. Current technology allows one to purchase virtually any product, apply for credit or pay bills through the internet. Unfortunately these trends often can’t ensure that the person purchasing a product or applying for credit is who they claim to be. The use of a computer also helps the suspect to disguise their true identity or remain completely anonymous. The lack of proper security or verification processes found with many online merchants provide a ripe environment for Identity Thieves to flourish.
The Third facet of this large increase of Identity Theft reporting concerns the specifics contained in D.C.’s law. As written, D.C.’s Identity Theft law makes it a crime and requires a police report if:
- The victim lives in DC (it matters not where the actual crime took place). For instance the victim’s credit card could have been actually used fraudulently in California but because they are a D.C. resident, the law requires a report here.
- The victim lives in another jurisdiction but the use of their information or any portion of the crime occurs here. In this instance the victim who is living in California, but experiences unauthorized credit card purchases that are shipped to a DC address by the suspect also qualifies for a report in this jurisdiction.
In most instances it would not be cost effective, practical or an appropriate use of available manpower to investigate a crime that occurred in a distant jurisdiction from Washington, D.C., however by code we are required to do so. Nearly half of the I.D. Theft cases received by this office involve values of $500.00 dollars or less. In virtually all instances of I.D. Theft the bank reimburses the loss to the victim once they have evidence of a police report.
In most cases once the victim files a “Fraud Alert” or “Credit Freeze” with the three credit bureaus, future instances of “Identity Theft” are curtailed or eliminated entirely. Once made whole by the financial institution many victims of Identity Theft are no longer interested in pursuing the case from a criminal perspective.
Finally I would like to talk about a new initiative the Department is working on, “Training the Trainer.” A recent undertaking launched where PSA officers from the Fifth District were present during a community presentation on Identity Theft. They were subsequently given our power point presentations on this topic and briefed by detectives on the nuances of presenting this material to the community that they serve. Though certain financial crimes may be an intricate subject matter, it is believed that the basics of Identity Theft and the associated prevention strategies can reach a wider audience if more street level officers and officials can become part of our public outreach effort. The members of the Financial Crimes and Fraud Unit also provide presentations for the PSA’s citywide on request.
In closing, I want to repeat the Metropolitan Police Department’s commitment to Consumer Protection. I also want to assure the Committee that we will continue to back up that commitment with action and continued vigilance in fighting Fraud and Identity Theft. I am happy to answer any questions you may have at this time.