So far, a company, not state policy, prevents a trooper with Oklahoma’s Department of Public Safety from seizing money out of motorists’ bank accounts.
That’s the word from the founder of ERAD, the card reader recently deployed — then put on hold — with the state’s Highway Patrol Special Operations officers.
In use for little more than six weeks, the devices have not yet been implemented in pursuit of Oklahoma’s controversial civil forfeiture laws, which allow officers to seize cash, cars, homes, personal items or almost any other property from anyone they allege might be involved in drugs or other crimes.
However, stories about the ERAD — which stands for Electronic Recovery and Access to Data — in Oklahoma have erupted across the country, prompting businesses to cancel trips through the state and sparking outrage from civil activists on the left and right. Initially discovered in state agency financial disclosure documents, and reported by Oklahoma Watch, the story prompted lawmakers from both parties to call on Gov. Mary Fallin to halt their use, at least temporarily.
“Clearly they (DPS) were not aware that people are uncomfortable that they are using these things. That they are cognizant of people having issues with this is a good thing,” Sen. Kyle Loveless, R-Oklahoma City, told The Frontier in a recent story.
DPS’ documented contract negotiation with ERAD appears to show the agency specifically requested the ability to seize money from bank accounts.
To understand why the Highway Patrol apparently wanted to, but can’t, seize control of bank accounts from people on the side of the road, it helps to start at the beginning.
By his own estimation, T. Jack Williams, the founder and president of ERAD Group, Inc., which makes the card readers used by OHP — as well as 26 other law enforcement organizations around the country — is the world’s leading expert on prepaid cards. He invented them.
While working decades ago for Blockbuster Video, Williams came up with the idea for gift cards. Transfer money to one at a store, and it could be given as a gift and used like money … at Blockbuster. Soon, every major retailer in the country had versions of these, from Walmart to Starbucks. Then, stores began selling prepaid Visa and MasterCards, and everything changed, Williams said. Now they are accepted worldwide.
“Today, a criminal can be in Juarez, Mexico, can load a card up wherever he wants, and if they come across, there is no declaration that they have to make on the value on the card, even though it’s a cash card,” Williams said. “From a criminal’s point of view, a prepaid card is the perfect solution to money laundering.”
Any money on the card is carried by whoever has the card. No one has to prove identity to use it. It can be used, transferred to others, or stuck in an out-of-the-way place to be used later. It can buy guns, bomb making materials, transportation, lodging, fuel, anything.
“Prepaid cards are the currency of criminals,” he said. “It is the way that bad things happen to good people. They steal their identities. They’re selling girls. They’re selling dope. And the only way that law enforcement has a clue of what’s going on is if somebody has the platform and the ability to tell them.”
But there’s another side to the prepaid card market. They are used by grandmothers for gifts to their grandkids. Teachers use them to pay for ever-more-costly supplies for their classes, no longer supplied by schools. Oklahoma’s unemployment payments are put on these cards. Increasingly at many institutions, students have their loans or grants on prepaid cards, issued by the college. They are used by single moms on benefits.
“If I’m living here in Oklahoma, and I am a mom getting child support, I don’t get a choice. That’s the way I get those funds and the state doesn’t give me a choice,” said Brady Henderson, legal director for the American Civil Liberties Union in Oklahoma City.
“The state says, ‘This shall be how you transport this money. Then the DPS does something that makes that means of transporting that money vulnerable to seizure and privacy violations. I think there is an issue there.’ ”
Williams said anybody carrying prepaid cards gave up the right to keeping the money on them private. With Oklahoma’s forfeiture laws, law enforcement might seize them amid accusations they are being used for drug purchases, or alleging they bear drug profits, he said.
The Fourth Amendment to the U.S. Constitution states: “The right of the people to be secure in their persons, houses, papers, and effects,[a] against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
Are prepaid Visa and MasterCards “papers and effects?” Williams said recent court rulings in the Federal Eighth and Sixth Circuit courts support the right of law enforcement to read information from cards, and seize the money on them.
“The Eighth Circuit just announced its ruling last week that reading mag stripes on plastic cards is not a Fourth Amendment violation,” Williams said.
So, why can’t the Oklahoma Highway Patrol and any other law enforcement in Oklahoma seize money from a bank card? Williams explains that it’s technical.
“It’s a systemic limit. It’s an operational beast,” Williams said.
The manner in which troopers wanted to seize bank funds is described clearly in the contract they signed with Williams.
Section C of the contract signed by the Department of Public Safety with ERAD spells out specific requirements of the system they eventually purchased. Troopers need to, they said, be able to seize money from a motorist “at the point of stop.”
From the contract: “The solution shall have the ability to read cards at the point of stop and provide the trooper with information contained on magnetic stripe such as: name (if any recorded in stripe), cash balance, banking information (account number, routing number).”
Account numbers and routing numbers are those along the bottom of increasingly rare paper checks, and are essentially the fingerprint of a bank account. They identify the bank where the bearer’s account lies, as well as the account in which the cash is deposited.
In addition to identifying which Trooper is running the card, the requirements requested by the DPS include: “The solution shall have the ability to place identified funds on hold for further investigation. The solution shall have the ability to freeze or seize the funds at stop if sufficient evidence is available.”
DPS also requested that the bidder “describe the process for all scenarios: Balance Inquiry, Freeze, Seize, Return.”
The 199 page document includes a discussion between ERAD and DPS on this specific issue.
“The ERAD process is a fully functional system that provides the services requested in C.1 regarding cash balances on prepaid access devices (referred to as debit cards),” writes the company in response to the DPS mandatory requirement.
“The prepaid access device networks do not provide banking information such as bank account number or routing number. For example, many of the prepaid access devices law enforcement will find are gift cards, and purchased with cash. As such, we request that C.2.1 be omitted from the Solicitation.”
However, ERAD Group adds it will be happy to assist DPS with getting the bank information.
“Additional information regarding each prepaid access card is available via subpoena sent directly to the issuing financial institution, of which ERAD will assist whenever asked,” the company said.
They would help Troopers get the money anyway. Satisfied, the unnamed DPS negotiator accepted the condition.
“In retrospect the Vendor’s comments sound reasonable. Would assume all gift type cards composition is universal. The point is well taken and should have been considered some information requires a subpoena. Therefore DPS has no objection to removing C.2.1.1.c,” they wrote.
Williams said it really doesn’t matter that ERAD can’t read account and routing numbers.
“But they can do it anyway. That’s not a big deal,” Williams said. “If they (Troopers) want to seize a bank account, they can get a court order, send it to the bank and the bank shuts the account down. They don’t need me for that.”
That Troopers couldn’t seize bank accounts on the side of the road gave DPS something to shout about when the story broke.
“Swipe and seize”
The first article about the ERAD devices published June 7. The story prompted similar stories by media outlets throughout the country.
By June 10, Claremore Republican State Representative Mark Lepak called for an interim study on civil forfeiture reform and the use of the device. Chickasha Republican Scott Biggs filed for a similar study.
The following Monday, DPS Commissioner Michael Thompson called a press conference in which he criticized journalists covering the story. Training and implementation of the ERAD devices had only just finished, he said.
“From the time that we had initiated that training, we had not had one stop that resulted in us putting a hold or an attempt to hold or freeze anyone’s funds. So contrary to the propaganda that we’re just doin’ a swipe and seize and takin’ everyone’s money, it’s just simply not true,” Thompson said.
When contacted by The Frontier, Oklahoma Highway Patrol spokesman Lt. John Vincent said only 16 of the force’s 800 troopers had the devices. He said the devices were with the Special Operations group.
Is the Special Operations group used in drug interdiction? Yes, he said.
“If you have a legitimate reason to have these cards, and you can prove it, there is no problem,” Vincent assured.
If troopers have a suspicion that someone carrying the cards doesn’t have a legitimate reason or source of the funds, the burden of proof would be on the individual, not OHP, he said.
Vincent insisted the Special Operations troopers weren’t stopping people at random and going through their wallets. They had to have reasonable suspicion a search would be necessary. Then, no money would be seized unless the officer suspected it were being used in a crime.
For bank cards and/or credit cards, the readers could only verify the information already present on the front of the card. Could the readers go into bank accounts?
No way, Vincent said. “They just can’t do it.”
Did he know the original contract bid called for the devices to be able to do that?
“I don’t know anything about that,” Vincent said. “I’ve not looked at that or been made aware of what is in the contract. Obviously it’s not what we have now.”
He said the cards had not been used in civil forfeiture operations yet. Vincent said all questions were to be directed to the Oklahoma Office of Management and Enterprise Services, or OMES.
“That’s all OMES,” Vincent said.
John Estus, spokesman for OMES, reacted with surprise. “So, the Department of Public Safety said they didn’t have anything to do with the contract the Department of Public Safety holds?”
A check-back from Estus revealed the contract was, in fact, negotiated by the Department of Public safety, by members of the DPS information technology (IT) personnel, he said.
“Those specs were developed by DPS,” Estus said. “OMES did not develop the specifications you asked about.”
Eventually, DPS agreed to an interview involving the department’s legal division.
“No expectation of privacy”
Requests to interview Commissioner Thompson for this article were not granted.
Instead, DPS agreed to a meeting involving an assistant general counsel, Brooke Churchman, who handles court filings in many DPS forfeiture operations, and Highway Patrol spokesman Capt. Paul Timmons.
The relevant section in the contract was read to them. Timmons denied DPS wanted to use the ERAD to “freeze or seize the funds at stop,” despite being read the quote from the contract.
Timmons: “Let me correct something. First of all, we haven’t determined whether or not we clearly asked to seize bank account information. That’s something that we’re still trying to research.”
Frontier: “Well, it’s in this document.”
Timmons: “I know it’s in the document, but as I said earlier, we have people with our legal division that are going back and researching all the steps that took place until we got to this point. Until we can verify what was actually asked for with this contract process, I can’t say that that’s actually true or not.”
Churchman also denied the contract meant to seize money in bank accounts.
“Yes, we are looking at the contract…but…that type of wording…there was never a time we were actually looking to get into people’s bank accounts,” Churchman said.
Henderson said he has trouble believing that.
“That’s very strange,” Henderson said. “The plain language is what we’re going off of. It plainly says ‘This is what we want’ in the contract. It’s talking about a device that can see bank account numbers and bank routing numbers. It has parts that talk about seizure of the funds.”
Henderson said other explanations don’t make sense.
“If that were true, it wouldn’t make any sense to withdraw the requirement,” he said.
By Friday, Governor Mary Fallin announced a “delay” in the implementation of the ERADs.
“The Department of Public Safety needs to formulate a clear policy for using this new technology,” said Fallin. “It can be a viable tool for law enforcement only if authorities are able to ensure Oklahoma motorists and others driving through our state that it will be used appropriately.”
Loveless said Fallin’s request is just that–a request, not an executive order. Her statement was not law.
“I appreciate Governor Fallin’s leadership on this issue, but … law enforcement could be using them now and we not know. Governor Fallin could discuss it with DPS and they could resume today,” Loveless said.