Secret Social Security Trust Account

I’m back in South Carolina for the Financial Investigations Seminar. After attending, and being favorably impressed by, last month’s Grand Jury Seminar, I have high hopes. The format this time is different: we are seated at tables, rather than stadium seating. We have been assigned to tables to ensure diversity. At my table, we have two Assistant United States Attorneys, someone from the FBI, and someone from the Bureau of Alcohol, Tobacco, and Firearms (ATF). In the room there is even more diversity, including police officers from various states, a few Drug Enforcement Agency (DEA) agents, someone the Department of Energy and someone else from the ultra-secret National Security Agency (NSA).

In addition to students, each table has a facilitator. We have Matt from the Office of the Comptroller of Currency (OCC), the governmental agency in charge of regulating banks. During one of the breaks, Matt mentioned that he spends a significant amount of time testifying in court against people trying to pass off fraudulent financial instruments. One popular “theory” is that the government has a trust account for every individual which corresponds to their social security number. Most people wait until they retire to start drawing money from the account, but by filling out certain paperwork, you can access those funds at any time to pay debts (such as taxes) that you owe the government. This is utter BS and trying to pass off such fraudulent financial instruments is a felony.

We start off with the regular introduction to the area and to the instructors as well as an overview of the course: analyzing financial information is a good way to understand criminal activity and find assets to seize.

Then something amazing happened: we took a break.

I have been to lots of training classes, both in private industry and in government. Typically they take the approach that training is expensive, so to justify the expense they try to maximize the amount of information they provide. This more-is-always-better approach makes as much sense as drinking from a fire hose if you are really thirsty. The brain, like the stomach, can only take in so much and then it needs time to digest. If you don’t take breaks to digest, the body takes one of two approaches: stop taking in new material, or expel some of the old material to make space for new material. Both are bad. This class avoided the mistake by getting to the point and then taking a break so that we could digest the material.

Throughout the day we never went much more than an hour without taking a break and as a result, I felt focused and attentive throughout the day (even with the 3 hour time difference). Another thing they did was vary the presentation from straight lecture, to video clips, to breakout sessions. The breakout sessions were particularly helpful because each table had the facilitator to keep them on track.

The presenter started with a discussion about different types of financial information: public records (real estate transactions, court records, and Internet searches) which are available to anyone, restricted records (DMV records, utility bills, trash collection, and various law enforcement databases) which can be accessed by law enforcement agencies upon request, and restricted records (telephone records, credit card receipts, bank records, or company files) which require a subpoena or a search warrant. Then we watched a short video of government agents going through the suspect’s trash for clues (the stinkiness of the garbage becomes a running joke in the videos). Then we break into groups to brainstorm about (a) specific examples of assets, liabilities, income, and expenses, and (b) the documents used to track/support each of those things. For example, a house is an asset, and ownership is recorded on a deed which can be found at the county recorder’s office.

We also discussed that it is important to conduct the investigation covertly, especially in the early stages when you don’t know how the parties are related and who is involved with the criminal activity. In one example, a bank loan on a car, for more than the car is worth, may indicate that both the buyer and the seller are engaging in suspicious activity.

After lunch, we discussed techniques for organizing the case information. Graphical presentation is helpful, but it need to be clear and organized. When it is done well, it is amazingly powerful. There was also a discussion of several products on the market to generate such presentations, which I found amusing since (a) the government is not going to buy me new software and (b) even if I bought it, I am prohibited from installing it on the computer.

We also discussed how to prove income. This is a straightforward process if you have bank statements (deposits = income). It is also possible to prove income indirectly by assuming that income is either used to accumulate assets or pay expenses. Thus, income is essentially the increase in assets from the prior year plus the expenses for the current year. They gave us a practice problem, and instead of using round numbers that we could add and subtract in our heads, they gave us more realistic numbers and gave everyone a calculator. After running the numbers it turns out, that at least hypnotically, crime does pay.

We closed with a discussion that if you have a transaction over $10,000 with a bank, broker, or casino, they have to report the transaction on a Currency Transaction Report (CTR). If you pay cash for something over $10,000, the business has to report the payment on Form 8300. If you move over $10,000 in cash in or out of the country, you have to complete a Report of International Transportation of Currency or Monetary Instruments (CMIR). Finally, if you do something suspicious at a bank (such as a series of deposits just under $10,000) the bank submits a Suspicious Activity Report (SAR). Former New York Governor Elliott Spitzer was caught paying for prostitution because of an SAR.

I believe in training, and I believe that it should be done well. Before my training with the Department of Justice (DOJ), I would always leave thinking that someday I would be in a position to become a trainer and improve the system. Now I think that I would like to be in a position to become a trainer to participate in a system that works so well. I am pleased to attend and look forward to more in the future, even if it means that I have to wait until I retire to access my secret social security trust account.