fraud talll

February 2015

DMV investigators fight external and internal fraud

 

The state of New York recently conducted an investigation using fingerprint technology to root out taxi drivers who were using multiple IDs. They found 750 taxi drivers who had more than one license.

“We see people, whose livelihood depends on driving, committing fraud to get multiple licenses,” says Owen McShane, director of investigations for the New York Department of Motor Vehicles. The taxi drivers in question would have one pristine license for insurance purposes, and another for when they got tickets.

Fraud such as this occurs at all motor vehicle agencies across the country. From identity theft, to title fraud, to fraudulent documents, and even social security and odometer fraud, many states are actively preventing and combating these crimes by working with in-house investigations units. These units—which can include anywhere from two to over 200 investigators—work with local and federal government agencies to fight fraud that occurs at the DMV.

THE ROLE OF INVESTIGATORS

According to Frank Alvarez, chief of the Investigations Division at the California Department of Motor Vehicles, one type of fraud is more prevalent than others.

“What has always kind of been at the forefront is identity theft,” says Alvarez. In fact, around 16.6 million residents in the United States over the age of 16 were victims of identity theft in 2012, according to the Bureau of Justice Statistics.

DMV investigations units fight identity theft, identity fraud, title fraud, odometer fraud and other types of crime that touch the driver’s license or DMV on a daily basis. In addition to fighting these types of external fraud crimes, DMV investigators also fight internal fraud, which occurs when employees themselves are corrupt. This can mean employees are bribed or are connected with organized crime.

According to Betty Johnson, administrator for the Driver and Vehicle Records Division at the Nebraska Department of Motor Vehicles, nearly all types of fraud center around one document: the driver’s license. “We are finding all kinds of illegal activity that is wrapped around the issuance of that driver’s license,” she says. “Bankruptcy fraud, title fraud, sex offender registry fraud—all of this can be wrapped around a driver’s license that someone has obtained in a fictitious name or someone else’s name.”

“The driver’s license has become the de facto national ID card,” adds McShane. “People need it for every type of transaction imaginable, from boarding a plane [and] opening a bank account, to getting into public and government buildings. People go out of their way to get a clean record.”

McShane says New York kicked off an initiative in 2010 that uses facial recognition to make sure each driver has only one license. To date, the state has identified more than 14,500 people who had two or more licenses. They have arrested 3,500 individuals and have taken administrative action, which is used when the cases are too old to criminally prosecute, on an additional 9,000 people.

 

 

DIFFERENT SHAPES & SIZES

The size of investigations units varies greatly. The Nebraska DMV formed a fraud investigations unit in 2005 that was comprised of just one analyst and one non-sworn investigator. Since then, it has grown to a team of eight people that includes four analysts and four sworn investigators.

Nebraska’s unit is fairly small compared to other states. New York has roughly 100 investigators, while California has 223. The size of a state’s investigations unit typically correlates with its population. For example, California takes on somewhere between 18,000 and 22,000 cases a year, according to Alvarez, so a large team of investigators is necessary.

Investigations units are created within DMVs by hiring either sworn officers of civilian investigators. Sworn officers are law enforcement professionals and can make arrests and serve warrants, while civilian investigators, who typically have a background in law enforcement, would need to rely on law enforcement to do those things. States with fraud investigation units often have a mix of sworn officers and civilian investigators.

Many in the industry, such as Johnson, place a lot of value on hiring investigators who have previous law enforcement experience. She notes that most of the Nebraska DMV’s sworn officers were previously retired from other law enforcement agencies.

“I think it takes some very specialized training and specialized information to be able to work these types of investigations,” says Johnson. “Having that prior law enforcement experience is fundamental to what we’re trying to do.”

Brian Ursino, director of law enforcement at AAMVA, agrees. “If the DMVs hire investigators who are former police officers, they’re getting a product in the front door that’s trained and experienced,” he says. “These officers have a level of expertise that you won’t be able to get if you hire someone off the street.”

CROSS-AGENCY COLLABORATION

While DMV investigators work alone on certain cases, the majority of their work is done in conjunction with local, state or federal agencies. The partnership works both ways: DMV investigators need help on cases that go beyond just the scope of DMV fraud (most do), and federal agencies and law enforcement sometimes need guidance when investigating crimes that involve the driver’s license or other DMV-issued documents.

“Those partnerships are critical to us taking a systemwide approach to combating the problem,” says Ursino. “It should not fall strictly to the DMV, nor should it fall strictly to the state, local or federal officers. All of us working together have a better chance of preventing and detecting fraud if we work as a team.”

According to Johnson, the majority of Nebraska’s cases end up being prosecuted

on the federal level as well, so cross-agency collaboration is critical. McShane echoes this statement and says that in New York, the DMV investigators partner with federal and local agencies on nearly every case. “Most of the arrests we do are in conjunction with another agency,” he says.

Another benefit of having sworn officers that work with government agencies is that being involved in these cases can result in financial benefits for the DMV investigations division. “Having sworn officers and being active participants in the case results in a lot more revenue stream coming into the agency and the ability to share in some of the federal proceeds,” says McShane.

He points to an example in which the New York DMV was involved in a case that resulted in the federal forfeiture of $14 million. The New York DMV received $1 million from that, which was then used for equipment and vehicles for the investigations unit.

In addition, partnering with another arm of law enforcement or a government agency can help ensure safety for all parties involved. “If we’re going to arrest somebody who is a really violent criminal, we’re going to want to make sure we have a SWAT team or a service team on hand to deal with that,” says McShane.

LOOKING AHEAD

Right now, only about half of the jurisdictions in the U.S. have DMV investigations units. For agencies wishing to implement one, funding is sometimes available, as it was for the New York and Nebraska DMVs.

According to Johnson, the Nebraska DMV initially formed its investigations unit with a federal grant because it knew it had a core group of customers it couldn’t serve: those who were affected in some way by identity theft or fraud.

The New York DMV received funding for its unit from the U.S. Marshals, the Secret Service and the National Highway Traffic Safety Administration, according to McShane.

For those jurisdictions that cannot implement an investigations division immediately, Alvarez suggests that DMVs establish some type of investigative capacity as a starting point. Ultimately, however, he believes a dedicated investigations unit is key to fighting these types of crime.

“Regular streamlined law enforcement can do it as well, but it’s more of a specialty and expertise,” says Alvarez. “[There is] training that is needed to be more efficient in those types of investigations.”

Another step DMVs without an investigations unit can take is getting in touch with the state police, highway patrol and law enforcement, and partnering with them at some level to begin detecting when fraud occurs.

More states will jump on board as they learn about and see the value of having an investigations unit in place, Johnson believes. “I think the concept of having an investigations unit in the DMV will grow, and I think states will find it’s necessary in order to continue combatting motor vehicle related fraud,” she says.

Overall, McShane thinks DMV investigations units are incredibly valuable and that they will continue to grow. “It allows the agency to control and have input on the investigations relating to customers and employees committing fraud, and it allows the agency to learn from both types of crimes.”