This is the first post in my new series about what private investigators can & cannot do legally when searching for hidden assets. Divorcing spouses, creditors bringing forced collection proceedings, etc., may search for assets by hiring private investigators and/or information brokers who try to detect secret bank accounts. The post asks: what standards should be followed when investigating bank accounts at U.S. financial institutions? At the conclusion it discusses some best practices. The post’s talking points are:
- Hiring A Private Investigator For A $249.00 Bank Account Search?
- The Security Of Your Information At Banks in the U.S.
- How Illegal Pretext Calls Work In An Investigation
- Federal Laws Related To Pretexting
- Best Practices For Collecting Bank Account Information
Virginia private investigator Arcanum Investigations, Inc. apparently offers bank account searches through the Docusearch.com, (“Docusearch”), website. For $249.00 plus $50 for each open bank account detected, Docusearch says it “[i]dentifies all bank accounts,” “[b]ank name and address,” “[a]ccount titles, where available“, “[a]ccount type” and “[a]pproximate account balance, where available.” The website states that Docusearch “will continue to search all major banks…”:
“We will not stop searching once an account is located. We will continue to search all major banks and credit unions nationwide and locality of the subject. No account numbers will be returned. Your attorney may subpoena all bank records (directly) from the bank once account(s) have been identified.”
The Docusearch “How To Find Hidden Bank Accounts” video asserts “our licensed private investigators specialize in finding hidden assets, secret bank accounts and other financial information that people work so hard to hide.” The video says “[o]ur licensed private investigators and asset search specialists have access to protected information that’s usually reserved just for law enforcement…plus you can rest easy knowing all of our work is done in compliance with all bank privacy laws.”
Besides bank account searches, Docusearch offers searches which can supply other personal information. In Remsburg v. Docusearch, Inc. et. al., Docusearch was sued because of alleged information from some of these searches. This 2002 lawsuit claimed Docusearch sold a victim’s social security number and employment address to the victim’s stalker. The stalker then reportedly used the address in a scheme to kill the victim. A February 18, 2003 court opinion about the lawsuit suggested that under certain circumstances, a private investigator can create and owe a duty of care to a person the private investigator investigates. According to a March 10, 2004 USA Today article, the 2002 lawsuit against Docusearch was settled for $85,000.
BANKS IN THE U.S.
Pursuant to the Gramm-Leach-Bliley Act (“the GLBA”) at 15 U.S.C. § 6801 et seq., U.S. financial institutions protect bank account information from public disclosure. The financial institutions do this through the “information security program[s]” they are required to have by U.S. Treasury’s Comptroller of the Currency, pursuant to 12 C.F.R. Part 30 Appendix B, (highlighting added).
Given these information security programs at U.S. financial institutions, private investigators would ordinarily not be able to search a U.S. financial institution. Documentary evidence like a bank customer’s financial account numbers; monthly account statements; account opening documents and bank signature cards can only be disclosed by a U.S. financial institution as mentioned by 15 U.S.C. § 6802 (e) (1)-(8): to effect a transaction requested by the consumer (i.e. bank customer); with the consent of the bank customer; for the protection or confidentiality of the financial institution’s records pertaining to the customer, etc.
The GLBA and other privacy laws also prohibit pretexting, (i.e. the use of false pretenses), when contacting a U.S. bank, phone company or government agency for confidential information. A webpage published by the Arizona Department of Public Safety describes how some private investigators make pretext phone calls to U.S. banks:
“Generally, it is illegal under federal law (the Gramm-Leach-Bliley Act) for a person (or PI) to obtain account information from financial institutions (such as banks) unless the account owner gives their consent. Oftentimes, the person (or PI) performs an illegal act called ‘pretexting’, by fraudulently obtaining personal information (or is provided such information) from (or on) the subject of the investigation and pretending to be the account holder. This tactic is also used for identity theft. From the FTC website: For example, a pretexter may call, claim he’s from a survey firm, and ask you a few questions. When the pretexter has the information he wants, he uses it to call your financial institution. He pretends to be you or someone with authorized access to your account. He might claim that he’s forgotten his checkbook and needs information about his account. In this way, the pretexter may be able to obtain personal information about you such as your SSN, bank and credit card account numbers, information in your credit report, and the existence and size of your savings and investment portfolios. Use of this tactic is common in divorce cases and law suits.”
If a private investigator or information broker pretexts during a private investigation, some of the following federal statutes might possibly apply:
- 15 U.S.C. § 45 (Unfair methods of competition unlawful; prevention by Commission): By relying on both 15 U.S.C. §45 and 15 U.SC. § 53 (False advertisements; injunctions and restraining orders), the Federal Trade Commission can sue pretexters for fraudulent, deceptive and unfair business practices.
- 15 U.S.C. § 6821(a) (Prohibition on obtaining customer information by false pretenses): This part of the GLBA makes it illegal to access bank account information by making pretext phone calls to a financial institution or its customers. 15 U.S.C. § 6821 also prohibits submitting false documents to a financial institution, to obtain nonpublic customer information.
- 18 U.S.C. § 1039 (Fraud and related activity in connection with obtaining confidential phone records information of a covered entity): This statute generally prohibits telephone record pretexting and the sale of illegally acquired telephone records.
- 18 U.S.C. § 1028 (Fraud and related activity in connection with identification documents, authentication features, and information): Both this statute & 18 U.S.C. §1028A (Aggravated identity theft), prohibit a broad range of frauds in connection with identification documents.
- 18 U.S.C. § 1341 (Frauds and swindles): Covers frauds which use U.S. mail. It and 18 U.S.C. § 1343 (Fraud by wire, radio, or television), are the ubiquitous federal fraud statutes.
- 26 U.S.C. § 7213 (Unauthorized disclosure of information): Prohibits the unauthorized inspection or disclosure of U.S. tax returns or return information. Subsection (a) (4), entitled “Solicitation”, expressly covers the illegal sale/illegal receipt of tax return information.
- 42 U.S.C. § 1307 (Penalty for fraud): Among other things, covers misconduct like eliciting social security numbers through pretext calls to the U.S. Social Security Administration.
- 47 U.S.C. § 222 (Privacy of customer information): Section (c) (2) of this Act generally prohibits telephone record disclosure absent “affirmative written request by the customer, to any person designated by the customer”.
A private investigator or information broker engaged in pretexting could face a Federal Trade Commission lawsuit or even criminal indictment. In Federal Trade Commission v. Victor L. Guzzeta d/b/a Smart Data Systems, an information broker stipulated to a final judgment which enjoined him from pretexting. The 2001 press release “As Part of ‘Operation Detect Pretext’ FTC Sues to Halt ‘Pretexting’” indicated this information broker was accused of pretexting for financial records.
Meanwhile, in the U.S. District Court, in Tacoma Mr. Emilio and Mrs. Brandy Torrella were criminally prosecuted for their pretext telephone calls to the I.R.S., Social Security Administration, pharmacies, medical offices and various state labor departments. Their indictment claimed the Torrellas made the pretext calls while performing asset searches and other services for the private investigators who were their co-defendants.
The Torrellas and /or their co-defendants were charged with conspiracy and violating many of the above-cited federal statutes: 18 U.S.C. § 1343 (Wire Fraud); 42 U.S.C. § 1307 (Penalty for Fraud); 26 U.S.C. § 7213 (Unauthorized Disclosure of Information); and 18 U.S.C. §1028A (Aggravated Identity Theft). After their May 20, 2008 plea agreements, both Mr. and Mrs. Torrella were sentenced on August 14, 2009 to serve six months of prison and two years of supervised release.
U.S. banks implement information security programs to protect a bank customer’s financial information from public disclosure. This means that evidence such as a bank customer’s bank account number, bank signature cards and monthly account statements maintained at a U.S. financial institution, are not commercially available to private investigators.
Some general best practices/legal methods investigators and other professionals can follow when collecting bank account information include:
- Seeking a court ordering directing a bank witness to disclose information;
- Serving subpoenas on a bank;
- Using a consent form signed by a bank signatory, authorizing the release of records; etc.
- Complying with the GLBA, anti-pretexting and other laws. Guidance on what could violate the GLBA is supplied by the PI Magazine interview with Joel Winston “The FTC On Pretexting”. This interview by Mr. Jimmie Mesis, Editor-in-Chief, PI Magazine was initially published at the Jan/Feb 2005 issue of PI Magazine:¹
(To Read The Article, Click On The Image Below)
¹“The FTC On Pretexting” from the Jan/Feb. 2005 issue of PI Magazine, Reprint Courtesy of PIMagazine.com.
Copyright 2014 Fred L. Abrams