IAPE Evidence Blog

Star­Tri­bune, startribune.com
BYLINE: JIM SPENCER, Star Tri­bune
Link to Article

Min­neapo­lis, MN

Fake jer­seys, pirated movies and coun­ter­feit per­fume, drugs and brand-name goods filled the evi­dence vault at the Immi­gra­tion and Cus­toms Enforce­ment office in Min­nesota after sev­eral busts in 2009.

An indus­trial spy tries to steal $20 mil­lion in trade secrets from Minnesota-based Valspar paints. A crew of coun­ter­feit­ers wants to move a mil­lion bucks worth of knock­off cell­phone equip­ment through St. Paul. In a five-day Twin Cities sweep, fed­eral agents seize 17,000 coun­ter­feit items, every­thing from faux foot­ball jer­seys to cha­rade Chanel perfume.

The theft of intel­lec­tual prop­erty has grown into an orga­nized crime wave that is cost­ing busi­nesses in Min­nesota and across the coun­try bil­lions of dol­lars in lost rev­enue and pil­fered ideas. The prob­lem extends from fake Min­nesota Twins gear to fake can­cer drugs to fake Cisco com­puter soft­ware sold to the U.S. military.

Nation­ally, up to $250 bil­lion is stolen from U.S. com­pa­nies through such chi­canery. Jobs are lost, inno­va­tion is under­mined and con­sumers are left with a line of fraud­u­lent prod­ucts that range in qual­ity “from incon­ve­nient to deadly,” said Steve Tepp, direc­tor of intel­lec­tual prop­erty enforce­ment at the U.S. Cham­ber of Commerce.

The phe­nom­e­non has reached such lev­els of sophis­ti­ca­tion and vol­ume that Pres­i­dent Obama recently called for a crack­down on intel­lec­tual prop­erty theft as one of the pil­lars of a new national effort to thwart “transna­tional orga­nized crime.”

“You have very high [profit] mar­gin activ­ity accom­pa­nied by penal­ties that are rel­a­tively low if you’re caught,” said Vic­to­ria Espinel, the White House’s intel­lec­tual prop­erty enforce­ment coor­di­na­tor. “That’s a very attrac­tive com­bi­na­tion for any crim­i­nal enterprise.”

Trade secret theft in Min­nesota may run in the “hun­dreds of mil­lions of dol­lars,” Min­neapo­lis FBI agent Chris Golomb said. He noted “a lot of activ­ity” in areas such as med­ical devices, indus­trial coat­ings and films, elec­tronic cir­cuits and advanced microprocessors.

Still, com­pa­nies are reluc­tant to dis­cuss how intel­lec­tual prop­erty crime has affected them for fear of affect­ing their stock prices, law enforce­ment offi­cials said. Indeed, half a dozen of Minnesota’s lead­ing elec­tron­ics, med­ical tech­nol­ogy and retail busi­nesses declined or didn’t respond to requests for comment.

“If the com­pany has any worry of pub­lic con­cerns [or] that their share­hold­ers might sus­pect something’s wrong with the com­pany, they are not going to par­tic­i­pate [in a pros­e­cu­tion],” said FBI agent Tamara White, who super­vises the eco­nomic espi­onage unit in the bureau’s Min­neapo­lis office.

White and Golomb, whose job is to explain eco­nomic espi­onage to pri­vate com­pa­nies, say they are mak­ing progress in their efforts to get exec­u­tives to help put away the crooks.

“If we get the com­pa­nies on board to pros­e­cute, I think we have a pretty high suc­cess rate,” Golomb said. “The big­ger hur­dle has always been and will con­tinue to be to get the com­pany to feel com­fort­able enough to come to us to pur­sue prosecution.”

Piracy and the Internet

Tech­nol­ogy adds to the crim­i­nal appeal.

The brand pro­tec­tion com­pany Mark­Mon­i­tor tracked 100 web­sites pro­vid­ing coun­ter­feit or pirated items for a year. The study revealed 53 bil­lion vis­its. Most went to ille­gal file– shar­ing web­sites that let vis­i­tors down­load music or movies for free but left con­sumers vul­ner­a­ble to com­puter viruses and iden­tity theft. Sites sell­ing poten­tially dan­ger­ous fake pre­scrip­tion drugs got 51 mil­lion vis­its a year, Mark­Mon­i­tor found. And other coun­ter­feit prod­ucts sites attracted 87 mil­lion visits.

“These find­ings are just the tip of the ice­berg,” a Mark­Mon­i­tor report con­cluded. “The true scope of the prob­lem is expo­nen­tially higher in terms of user traf­fic, lost rev­enue and risks to pub­lic health and safety.”

While the FBI works on trade secret theft, the U.S. Immi­gra­tion and Cus­toms Enforce­ment (ICE) enforces trade­mark and copy­right laws. It was ICE that in July seized $1 mil­lion worth of coun­ter­feit cell­phones, cell­phone bat­ter­ies and acces­sories in St. Paul.

China was the source of roughly 66 per­cent of coun­ter­feit goods seized by ICE in 2010. But the mer­chan­dise can — and often is — sold via web­sites and pow­ered by Inter­net providers any­where in the world, said Bill Ross, an ICE unit chief at the multi-agency National Intel­lec­tual Prop­erty Rights Coor­di­na­tion Cen­ter. Unlike on-the-ground oper­a­tions of a decade ago, Internet-driven intel­lec­tual prop­erty crime becomes an inter­na­tional maze fraught with arrest problems.

“Ten or 15 years ago when we were work­ing with these eco­nomic espi­onage cases, they were remov­ing reams of paper,” Golomb said. “Today, with the click of a but­ton, you can trans­fer data to a thumb drive [or] to an out­side Gmail or Yahoo account. It’s very fast, and it’s large amounts of data.”

Big money, lit­tle risk

The rewards for intel­lec­tual prop­erty crime far out­weigh the consequences.

David Yen Lee, a tech­ni­cal direc­tor at Valspar, got caught try­ing to steal $20 mil­lion worth of chem­i­cal for­mu­las to give to a Chi­nese com­pany in exchange for a high-ranking job. Lee got 15 months in jail.

The bust of a group led by a Min­nesotan named Charles Thomp­son led to the arrests of eight peo­ple accused of sell­ing $500,000 worth of coun­ter­feit items, said Mike Fein­berg, a Minnesota-based agent with ICE. The sus­pects pleaded guilty and got probation.

“The profit mar­gin is almost as good as sell­ing drugs,” Fein­berg said.

The penal­ties for get­ting caught don’t come close to those for deal­ing dope.

At the White House, Espinel said the Obama admin­is­tra­tion has asked Con­gress to pass laws that increase penal­ties for orga­nized intel­lec­tual prop­erty crime in hopes of keep­ing more orga­nized crim­i­nals and ter­ror­ists from get­ting involved. The gov­ern­ment is try­ing to tweak its pur­chas­ing rules to keep coun­ter­feit items out of its sup­ply chain.

Fed­eral author­i­ties also have started tak­ing over web­sites that mar­ket coun­ter­feit items, par­tic­u­larly fake pre­scrip­tion drugs. Author­i­ties say they have seized 141 sites since June 2010. The sites now carry fed­eral warn­ings about intel­lec­tual prop­erty crime. Mean­while, author­i­ties are work­ing with major credit card com­pa­nies to stop pro­cess­ing pay­ments for all sorts of coun­ter­feit prod­ucts and phar­ma­ceu­ti­cals, Espinel said.

What no one can con­trol is the public’s search for a deal, which dri­ves the demand for such piracy.

“Ten years ago, if you bought a knock­off, you knew it,” Ross said. “What we see now is high-enough qual­ity that the buyer doesn’t know.”

Jim Spencer • 202 – 408-2752

“Most peo­ple are not in the U.S., or they are hid­ing behind screen names,” Ross said.

Trade-secret theft is even more confounding.

“The major­ity of com­pa­nies are pretty savvy when it comes to coun­ter­feit­ing,” Golomb said. Still, com­pa­nies often don’t under­stand what their trade secrets are or how to pro­tect them. Golomb coun­sels com­pa­nies to limit com­puter gear employ­ees carry when trav­el­ing and to be aware of solic­i­ta­tions for information.

In the end, the biggest obsta­cle may be the ease with which sci­en­tific and engi­neer­ing details can now be trans­ferred out of a company.

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Inter­na­tional Asso­ci­a­tion for Prop­erty and Evi­dence
“Law Enforce­ment Serv­ing the Needs of Law Enforce­ment”
www.IAPE.org

www.sctimes.com
BYLINE: Dave Aeikens

Stearns County, MN

Deposit unused, expired med­ica­tions safely

A month into its pre­scrip­tion drug drop-off pro­gram, Stearns County is hop­ing to attract more business.

The county sheriff’s office has four bar­rels in a back room of the law enforce­ment cen­ter that will store the drugs peo­ple drop off until they are taken to be incin­er­ated. So far, about one-fourth of one bar­rel is full of old pill bottles.

“I don’t know what to expect. With the pop­u­la­tion here, there has to be unused med­ica­tion get­ting flushed,” said Bruce Bech­told, chief deputy of the Stearns County Sheriff’s Office.

The county started the pro­gram May 1 with the envi­ron­men­tal ser­vices depart­ment pro­vid­ing the finan­cial back­ing and the sheriff’s depart­ment han­dling the pre­scrip­tion drugs col­lec­tion and its disposal.

The idea is to get unused pre­scrip­tion drugs that might be mis­used or abused out of med­i­cine cab­i­nets. The county also has an envi­ron­men­tal goal to keep the drugs out of land­fills, waste treat­ment sys­tems and ground water.

The fed­eral Drug Enforce­ment Agency had a national drug return pro­gram in April. On that day, 323 pounds of pre­scrip­tion drugs came into Stearns County in drop boxes in St. Cloud, Mel­rose and Paynesville.

Dis­cus­sions are expected to take place with city offi­cials in Mel­rose and Pay­nesville about hav­ing a per­ma­nent drop box placed in those cities.

Cards are being printed that can be placed on phar­macy coun­ters alert­ing peo­ple that they can dis­pose their unused pre­scrip­tions at the Stearns County Sheriff’s Office.

The drop box in the main lobby is a black metal safe that pulls open and allows some­one to drop off their used drugs between 8 a.m. and 4:30 p.m. Mon­day through Fri­day. Peo­ple can remain anony­mous and even peel the label off if they want, Bech­told said.

“We are not inter­ested in who is tak­ing what med­ica­tions,” Bech­told said.

The drugs are dropped into a com­mon office trash can and then emp­tied into the bar­rels that are behind locked doors in back.

Once the county gets four bar­rels, deputies will drive them to Fos­ston in north­ern Min­nesota where they will be incin­er­ated. It’s the only place licensed to burn pre­scrip­tion drugs in Minnesota.

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Inter­na­tional Asso­ci­a­tion for Prop­erty and Evi­dence
“Law Enforce­ment Serv­ing the Needs of Law Enforce­ment”
www.IAPE.org

South­side Pride ‚southsidepride.com
BYLINE: Ed Felien
Link to Article

Hen­nepin County, MN

The con­tro­versy sur­round­ing the Metro Gang Strike Force (MGSF) will not go away.

Hen­nepin County Attor­ney Mike Free­man decided there was not enough evi­dence to bring crim­i­nal charges against mem­bers of the Strike Force. There were three areas where there could have been crim­i­nal mis­con­duct: theft and other related offenses; mis­con­duct by a pub­lic offi­cer; and fail­ure to pro­tect prop­erty and data.

Per­haps the most con­tro­ver­sial aspect of the charge of theft against the MGSF is the claim that they seized prop­erty with­out a valid law enforce­ment purpose.

Accord­ing to Freeman’s report: “Inves­ti­ga­tors also found a num­ber of cases where some doc­u­men­ta­tion was miss­ing con­cern­ing for­fei­ture of seized cash. This is con­sis­tent with the Leg­isla­tive Auditor’s Report which says: ‘The strike force did not have doc­u­men­ta­tion to show that it served seizure notices for 202 of 545 cash seizures we tested, total­ing about $165,650. By not serv­ing the required notice of seizure, the strike force vio­lated the statu­tory admin­is­tra­tive for­fei­ture process and may not have a legal right to retain the seized cash.’”

It is impor­tant to note that the above cash was deposited in the MGSF evi­dence room and even­tu­ally in an MGSF bank account. There is no evi­dence that MGSF offi­cers took cash from sus­pects for their per­sonal use.

The Amer­i­can Civil Lib­er­ties Union is very crit­i­cal of Freeman’s deci­sion not to pros­e­cute mem­bers of the MGSF. In their state­ment they say they oppose “the power of law enforce­ment to seize and for­feit prop­erty with­out crim­i­nal charges. This power, known as admin­is­tra­tive for­fei­ture, gives police the power to decide guilt and pun­ish­ment. Under admin­is­tra­tive for­fei­ture, the prop­erty owner must pay to sue to have their prop­erty returned, and the police do not need to charge or even arrest some­one to pun­ish them with forfeiture.”

Freeman’s crim­i­nal inves­ti­ga­tion looked into claims that MGSF employ­ees took and used prop­erty from the evi­dence room, but these reports could not be sub­stan­ti­ated. Some prop­erty that was taken by employ­ees was alleged to have been marked for destruc­tion and was per­mit­ted by the com­man­der to be con­verted to the per­sonal use of employ­ees, but the com­man­der refused to speak with inves­ti­ga­tors regard­ing these claims. As a result there was insuf­fi­cient evi­dence to sup­port crim­i­nal charges.

The Spe­cial Review Panel begun by Min­nesota Commiss-ioner of Pub­lic Safety Michael Cam­pion found that “offi­cers stated that they used lap­tops removed from the evi­dence room for offi­cial pur­poses.” But Free­man con­cludes “absent proof that spe­cific com­put­ers were con­verted to per­sonal use, there is insuf­fi­cient evi­dence that any of the employ­ees ‘took’ the prop­erty as required by the inter­fer­ence with prop­erty in offi­cial cus­tody statute 609.47.”

An ice auger was seized as part of a nar­cotics case. It went miss­ing from the evi­dence room. The case offi­cer let it be known he was look­ing for the auger, and then the auger mys­te­ri­ously reap­peared. Twenty watches dis­ap­peared and never reappeared.

Many seized items were sold to MGSF mem­bers or their fam­i­lies. A pair of trail­ers were sold to the commander’s son. They were located on the commander’s vaca­tion prop­erty in north­ern Min­nesota. One was a 7-foot by 9-foot flatbed trailer that cost $1,300 in 2005 when it was bought from Gan­der Moun­tain. The son paid $500 for it. Free­man con­cludes: “There is insuf­fi­cient evi­dence that the prices paid were so far below the mar­ket value for these used trail­ers that the trans­ac­tion could be deemed a swin­dle of the MGSF.”

There was cer­tainly sloppy book­keep­ing. Free­man and the leg­isla­tive audi­tor agree “that the state of the records and the lack of inter­nal con­trols made it impos­si­ble for us to con­clude that all seized cash was either held in the prop­erty room or deposited with the fis­cal agent.” The com­man­der said he recalled pay­ing a MGSF worker $5,000 as an advance until they could be put on the Ram­sey County pay­roll, and he used money to pay con­fi­den­tial informants.

Some money was also used for travel. Free­man con­cludes, once again, there are insuf­fi­cient grounds for pros­e­cu­tion of crim­i­nal wrong­do­ing. How­ever, on Wednes­day, Aug. 25, 2010, a fed­eral court awarded $3 mil­lion in a class action law­suit to vic­tims of abuse by offi­cers of the MGSF. Accord­ing to Mara Got­tfried in her piece in the Pio­neer Press, Thurs­day, Aug. 26, the Fed­eral Dis­trict Court ruled that some MGSF offi­cers would stop peo­ple not sus­pected of gang activ­ity and seize their money. A Strike Force Review panel found “These encoun­ters almost always involved a per­son of color.”

The law­suit also claimed that strike force mem­bers “engaged in a pat­tern and prac­tice of using their appar­ent author­ity as police offi­cers to extort cash and prop­erty … par­tic­u­larly from those con­cerned about their immi­gra­tion sta­tus who would nat­u­rally per­ceive that they had no abil­ity to assert legal rights.” One of the attor­neys for the vic­tims said, “Every­body was failed here in the Twin Cities, every­body had a loss here. The Con­sti­tu­tion didn’t work for all of us when this rogue task force was run amok out there, vio­lat­ing people’s rights. … This is an ugly chap­ter, I’m sorry to say, in the life of the Twin Cities. But it ends pos­i­tively, it ends on a good note.”

Once again, the crim­i­nal jus­tice sys­tem can­not act because dis­trict attor­neys believe they can­not prove guilt beyond a rea­son­able doubt, and civil courts have issued a $3 mil­lion set­tle­ment based on a pre­pon­der­ance of evi­dence. And the offi­cers respon­si­ble for this bleed­ing of the pub­lic trea­sury con­tinue to be paid by the City of Min­neapo­lis and other juris­dic­tions that were part of the now defunct MGSF.

Freeman’s report con­tin­ues: “On May 20, 2009, the day MGSF oper­a­tions were sus­pended; sev­eral MGSF offi­cers were seen shred­ding doc­u­ments.” “The Offi­cial Records Act requires pub­lic offi­cers to ‘make and pre­serve all records nec­es­sary to a full and accu­rate knowl­edge of their offi­cial activ­i­ties.’ ” But, once again, with­out direct evi­dence that the offi­cers were delib­er­ately try­ing to destroy evi­dence that would impli­cate them in a crime, there is not suf­fi­cient evi­dence to bring crim­i­nal charges. The offi­cers claimed they were told by their home depart­ments to “clean out their files,” and they needed to destroy files to pro­tect under­cover offi­cers and informants.

The MGSF has dis­banded. The com­man­der has retired after 40 years as a St. Paul police officer.

Charles Samuel­son, the direc­tor of the ACLU-MN, wants Free­man to con­vene a Grand Jury to hear evi­dence and deter­mine if crimes have been com­mit­ted and whether offi­cers should be indicted: “The County Attor­ney has shown there is no pun­ish­ment for abuse of for­fei­ture power. We are shocked that he would make this deci­sion with­out input from the pub­lic. Again, we urge him to call for a grand jury inves­ti­ga­tion, and let the com­mu­nity decide whether any crimes were com­mit­ted.” Randy Hop­per, the attor­ney who won the $3 mil­lion set­tle­ment in Fed­eral Dis­trict Court against the MGSF, wants the Min­nesota Attor­ney Gen­eral to inves­ti­gate, because he believes the Hen­nepin County Attor­ney works too closely with the offi­cers and has a con­flict of interest.

In all prob­a­bil­ity, the mat­ter will sim­ply rest, and the events will fade into mem­ory.
One of the last actions of the MGSF was to clean out the Rolling 30’s gang from South Min­neapo­lis. They got con­vic­tions for more than a dozen gang mem­bers and made a major con­tri­bu­tion to peace and quiet in the Pow­der­horn and Cen­tral neigh­bor­hoods of South Minneapolis.

When Offi­cer Jerry Haaf was mur­dered by the Vice Lords almost 20 years ago, the police put tremen­dous pres­sure on the African-American com­mu­nity in South Min­neapo­lis to the point that Mayor Sharon Bel­ton pub­licly called for restraint. But they got one of the shoot­ers to con­fess and tes­tify against the oth­ers, and, even­tu­ally, they elim­i­nated the Vice Lords as a scourge to South Min­neapo­lis.
It must be that every cop wants to be Clint East­wood as Dirty Harry or Charles Bron­son in Death Wish. The abuses of power by the MGSF were an exam­ple of that kind of Hol­ly­wood vig­i­lante jus­tice. If we believe in the rule of law, if we believe in equal rights for all our cit­i­zens, then we have to move beyond this kind of thuggery.

Clearly, we need a bet­ter way to deal with the social prob­lems in our com­mu­nity, but until we find a way that we can all agree on, we’ll still need some­one to take out the garbage, and when they do, they’ll get their hands dirty.

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Inter­na­tional Asso­ci­a­tion for Prop­erty and Evi­dence
“Law Enforce­ment Serv­ing the Needs of Law Enforce­ment”
www.IAPE.org