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Monday, June 13, 2016

Oklahoma Forfeiture Furor

A furor has erupted in the last two days over the use of open loop debit card readers by the Oklahoma Highway Patrol.
Oklahoma has a sordid history of using civil forfeiture laws to steal from citizens in order to enrich police departments and individuals connected to the law enforcement industry. In 2013, an anonymous district attorney in the state used $5,000 from a forfeiture fund to pay off his student loans. Another unnamed, Oklahoma prosecutor lived rent free in a seized house for five years and paid his utility bills with forfeited money. Two months ago, Wagoner County Sheriff Bob Colbert and Deputy Jeffrey Gragg were indicted for illegally seizing $10,000 in cash from a driver after a “routine traffic stop.” On February 27, greedy and crooked Oklahoma cops seized $53,000 from the manager of  Christian rock band. The manager planned to donate the money to an orphanage in Myanmar. Cops accused him of being a drug dealer. The case became a national scandal.
Asset forfeiture is the euphemism that describes the seizure of private property and money from people accused of drug crimes. The key word is “accused.” In order to get their money or property back victims of asset forfeiture must hire a lawyer and sue. It has become a major source of funding for police departments all over the country. The cops get to keep what they steal. Seventy percent of forfeiture expenditures in Oklahoma are used to pay cops.

The Good News

The Oklahoma card readers will be used by traffic cops who patrol Interstate Highway 40. Numerous commentators have expressed outrage that police in Oklahoma could simply contrive a traffic stops, accuse their victim of drug trafficking, pull the debit cards from their victim’s wallet and use the new card readers to steal all the money in a victim’s bank account. Wednesday in the Washington Post, Radley Balko reported “the Oklahoma Highway Patrol has a device that also allows them to seize money in your bank account or on prepaid cards.”
“Here’s how it works. If a trooper suspects you may have money tied to some type of crime, the highway patrol can scan any cards you have and seize the money.”
Then Balko quoted a cretinous Oklahoma Highway Patrol spokesman who explained, “We’re gonna look for different factors in the way that you’re acting. We’re gonna look for if there’s a difference in your story. If there’s someway that we can prove that you’re falsifying information to us about your business.”
The good news is that things aren’t quite that bad yet. Balko got it wrong.

Some Details

First, police cannot touch your cards until after they arrest you. Then, as part of what is often called a post-arrest “inventory search,” while they make a list of the belongings on your person, they can scan your debit card.
Secondly, the card readers do not allow police to steal your bank accounts. The seizures can only be made on prepaid debit cards – cards that are “loaded” in advance with some amount of money at an outlet like Green Dot or Walmart. Those are an alternative to carrying cash. The readers cannot interact with cards connected to a legitimate bank account.
Prepaid debit cards come in two flavors – called open loop and closed loop. Closed loop cards are your prepaid Starbucks or Target card. They can only be used instead of cash for purchases at one business. Open loop prepaid cards can be used anywhere, wherever – for example – Visa or MasterCard are accepted. For the last four years, the Department of Homeland Security has been encouraged to think of open loop cards as a tool of criminals and terrorists. For example, one common argument goes, buying an airplane ticket with cash raises immediate alarms but buying an airplane ticket with an open loop card does not.

T. Jack Williams

And, the principal alarmist behind this fear that open loop debit cards are a national threat is a man named T. Jack Williams. Williams is currently the president of a company called Paymentcard Services, Inc. According to his resume, Williams clients “include multiple federal and state law enforcement agencies including DHS, ICE, and USSS, all of which utilize Mr. Williams as a payment card subject matter expert. His expertise ranges from global infrastructure to forensics, targeting the criminal use of prepaid cards to launder money or finance terrorists.” At a hearing in Carson City, Nevada in March 2015 Williams described himself as “the inventor of the prepaid card.”
In 2012, Williams started another company called ERAD Group, Inc., which is named after the Department of Homeland Security Science and Technology Directorate’s Electronic Recovery and Access to Data (ERAD) initiative. The readers have been around since 2012. Williams landed a contract with Homeland Security that year. According to Homeland Security, the card readers are supposed to be used to detect “fraudulent cards.”
“The ERAD Prepaid Card Reader is a small, handheld device that uses wireless connectivity to allow law enforcement officers in the field to check the balance of cards,” the Department states. “This allows for identification of suspicious prepaid cards and the ability to put a temporary hold on the linked funds until a full investigation can be completed.”
Oklahoma is buying its card readers from ERAD Group, Inc., and according to the contract the state signed with ERAD, Williams will get 7.7 percent of the money seized using the card readers. And it is all perfectly legal.

The Law

Earlier this year, in a “proprietary and confidential” brochure aimed at law enforcement agencies:
Williams argued that according to US v. Alabi and US v. Bah “interrogating the magnetic stripe of a confiscated credit, debit or prepaid card does not violate an individual’s Fourth Amendment rights.” He reads Riley v. California to mean “individuals do not have privacy rights with magnetic stripe cards.” And he tells his potential police customers that the cases Oklahoma v. Eighty Three (83) Walmart Gift Cards and various MasterCards and Visa Cards and US v. Ross William Ulbricht, ak/a “Dread Pirate Roberts,” a/k/a “DPR,” a/k/a “Silk Road” instruct that “prepaid cash cards are…currency.”
The bad news is that this is just the beginning.