Seizing money from suspected criminals is now as easy as swiping a card through a magnetic reader, and to the dismay of a civil liberties group Arizona is leading the way in using this new crime-fighting tool.
Known as Electronic Recovery and Access to Data, or ERAD, technology allows police officers to read the balance on prepaid cards and freeze the funds immediately until a court approves their forfeiture.
Criminals no longer deal in cash, preferring instead to use prepaid cards to move and launder money, police say.
The Institute for Justice, a conservative nonprofit that fights government control, says the device expands the scope of civil asset forfeiture, which they say is unfairly tilted in favor of the state and ensnares innocent people.
Civil asset forfeiture laws allow the government to take money and property it suspects is connected to crime.
Matt Miller, a senior attorney with the Institute for Justice, said the ability of police to seize prepaid card funds threatens the population that in effect uses the cards as a form of banking, and people whose employers pay them with prepaid cards.
“When the card functions as a de facto bank account I think you’ve got significant Fourth Amendment concerns,” Miller said. “You have a police officer on the side of the road put a card in one of these machines and essentially accessing someone’s bank account information.”
So far, a few federal circuit courts have ruled that the information contained on a magnetic strip of a payment card is not protected by the Fourth Amendment, which prohinits unreasonable searches and seizures.
The Maricopa County Attorney’s Office, which has put 105 of the devices into use with 15 police agencies, said in a fact sheet given to the Arizona Capitol Times that there have been no errors requiring the return of funds from 7,000 seized cards in the past six months nationwide, including Maricopa County.
Miller said he’s unimpressed with the zero error claim, saying most civil asset forfeiture cases go uncontested because people find it costs too much to hire a lawyer to seek the return of the relatively small sums the police take.
Police agencies in Maricopa County account for 17 percent of the departments nationwide using the devices, and are utilizing 26 percent of the devices in use. And 30 percent of all the officers nationwide trained to use them are in Maricopa County. The Navajo County Sheriff’s Office also has a device.
The Maricopa County Attorney’s Office, which owns 128 of the devices, has taken $28,193 in 100 seizures in six months.
The device is sold exclusively by a Texas company, ERAD Group, owned by the self-professed leading authority on the criminal use of prepaid cards in America, T. Jack Williams.
Williams said the device helps police to keep pace with criminals, who no longer count on couriers to move large bundles of cash.
“Prepaid cards is the currency of criminals,” Williams said. “Whether you’re a sex trafficker, a human trafficker, you’re a doper, you’re a terrorist, no matter what you do, prepaid cards have some major advantages over cash for you. A prepaid card is global cash.”
‘Like a compass’
The practice of civil asset forfeiture has come under attack in recent years and reforms have taken place in a few states because there is no requirement for the government to charge the person whose property is taken with a crime. The American Civil Liberties Union of Arizona is is suing Pinal County in an effort to have Arizona’s laws deemed unconstitutional.
Police say asset forfeitures strike at the finances of criminal organizations and cripple them, and the forfeited funds can be put toward fighting crime. Police lobbying groups also smothered an attempt in the Legislature this year to amend Arizona’s forfeiture laws, even killing a bill that would have created a study committee.
Williams said civil asset forfeiture is “a small, insignificant piece” of what police use ERAD for.
“It’s all about intel, it’s all about reports,” he said.
For example, one of the trends he is seeing is an inordinate amount of seized cards coming from just a few of the 15,000 banks in the United States, a fact that raises many questions for police, he said.
“I’m like a compass,” Williams said. “I can look at these thousands of cards that point to this same bank,” he said.
Williams’ patent describes the device and how it is used. A police officer swipes a card through a payment terminal just like a merchant would do to get an account balance. The inquiry would be cloaked as a typical merchant to prevent alerting the account holder the police are looking at it.
The officer would then be able to issue instructions to freeze or seize the funds.
The Maricopa County Attorney’s Office says it is similar to what happens when a person rents a car or hotel room. A hotel will take the card information and put a hold on a preset amount, and upon checkout release the hold and charge the transaction amount.
Funds associated with credit cards and debit cards can’t be frozen with ERAD, but a police officer using the device can tell if a card is a fraud when the information on the magnetic strip doesn’t match the information embossed on the front.
Identifying theft rings
James Molesa, chief deputy of the Navajo County Sheriff’s Office, said his agency has been successful in identifying large credit card theft rings and recovering stolen identifications using ERAD.
Navajo County has been designated as a High Intensity Drug Trafficking Area, meaning it qualifies for special federal funding to combat drug running.
He said criminals like to go to towns in Navajo County off the beaten path and use their stolen cards to buy merchandise and then return it for cash or gift cards.
Molesa said in recent years police began to notice fewer and fewer couriers carrying cash bulk and instead carrying several payment cards, even hotel room keys that were encrypted with stolen credit card information.
“Trafficking organizations have got to get their money from point A to point B, just like a bank does, and the most efficient way and the most secret way is what they’re looking for, so it’s always evolving,” Molesa said. “And because law enforcement is on this, there’s going to be another method they’ll morph to.”
Civil liberty groups fear police are going to begin using the device for roadside seizures.
Molesa said the Navajo County Sheriff’s Office isn’t using the device roadside, and the agency works with the Navajo County Attorney’s Office to obtain seizure warrants if the money is tied to crime.
The Maricopa County Attorney’s Office said only a police supervisor in agency using ERAD can order the seizure of funds, and then the county attorney must get a seizure warrant approved by the court.