A bank’s report could put the FBI on your trail

By Kathleen Johnston Jarboe

The high-priced hooker didn’t turn in former New York governor Eliot Spitzer. Neither did his wife nor the state employees who worked under him. Instead, an obscure banking report filed in a Detroit database connected him with the prostitution ring that led to his resignation in March.

Spitzer’s story might seem distant to you. But you might have more in common with him than you think, because you, too, could be the subject of an electronic file tucked away in that database.

Under a federal law called the Bank Secrecy Act, banks must report on their customers for certain types of payments, purchases, money transfers or cash withdrawals.

For example, if you ever took out or deposited $10,000 or more in cash, your bank should have filed a report. If bank employees suspected a financial transaction was linked with criminal activities, they should have flagged it. Or if your payments, transfers or withdrawals ever totaled $5,000 or more and no apparent reason for the movement of money existed, there might be a file on you.

More and more of these reports, called Currency Transaction Reports and Suspicious Activity Reports (SARs), have been filed since the Sept. 11 terrorist attacks. Part of the reason for the increase is that more financial institutions have been required to file the reports. Now money service businesses, securities and futures firms, dealers in precious metals and gems, casinos and some insurance businesses must file the reports, too.

But since some amounts of money moved by terrorists have been so much smaller than the amounts tracked in the past, banks have increasingly reported unusual financial activities, erring on the side of caution. In Maryland, 18,424 suspicious activity reports were filed in 2006— nine times more than were filed in 2000.

“The purpose is to provide an anonymous tip,” said Steve Hudak, a spokesman for the Financial Crimes Enforcement Network. FinCEN is the federal agency that oversees the database containing the financial reports. Law enforcement agencies use this information to support criminal investigations or to find tips.
Of course, if you sent $20,000 to Harvard for tuition, that doesn’t mean there’s a file on you at FinCEN. Banks are supposed to track what activities are normal for their customers and investigate unusual financial transactions before filing reports.

“There is judgment involved in whether or not [an action] is unusual or not,” Hudak said.
Look no further than Bowie resident Jayrece E. Turnbull if you want an example of really suspicious behavior. Last year the 34-year-old woman with no wage or employment history deposited a property tax refund check for $410,000, according to court documents. Less than a week later she tried to transfer half of that money to another account.

But there was a problem. Her name wasn’t on the original check. When a bank employee asked her for proof of her connection to the business listed on the check, she became defensive. Two days later, she sent the bank a copy of a trade name application for the business. The document listed her as the business owner.

But there was a second problem. The bank employee noticed she had applied for the trade name the day after the bank asked her for proof of her connection to the business. An investigation resulted, according to a news report. In the investigation, authorities uncovered a scam in which employees of the D.C. Office of Tax and Revenue had bilked taxpayers of more than $16 million.
Turnbull is in jail, awaiting trial.

Still, even when banks track an activity, only a small percentage of the reports result in investigations.
According to news reports, a bank report on Spitzer’s payments to a shell corporation, which served as a front for the prostitution ring, collected dust until another suspicious activity report called attention to the shell organization.

“There are millions of suspicious activity reports that get filed,” said Jonathan Turner, a managing director of the Memphis-based fraud investigation firm Wilson & Turner Inc. “Most of those SARs are never looked at again.”

Federal officials in Maryland want to ensure that reports of truly suspicious activities don’t slip through the cracks. Last spring, they set up teams in Baltimore and Greenbelt to comb through those reports.

“It is a disciplined approach to reviewing the SARs,” said Rod J. Rosenstein, Maryland’s top federal prosecutor.

The review teams have generated new leads and some cases are being investigated. Rosenstein said he expects more cases but declined to be more specific.

To protect financial institutions and to encourage them to track unusual activities more fully, law enforcement agencies are prohibited from divulging the reports. Instead, officers use the tips to subpoena financial records that can be introduced in court.

FinCEN offers examples on its Web site of when a SAR report led to an investigation or helped prove a crime. But the organization withholds identifying details.

Still, some cases slip out to the public, like a story in The New York Times linking the start of the Spitzer investigation with a SAR report. Or a Washington Post story last year that said the D.C. scam investigation began after Turnbull’s bank filed a report on her.

Do you have a file? And if so, what does it say about you? Most likely, you’ll never know.

Kathleen Johnston Jarboe is a freelance writer based in Howard County.