Card-reading device offers officers tool in ever-evolving 'slaphouse' investigations
An electronic tool allows investigators to check balances and freeze prepaid debit cards of potential criminal funds while still out in the field
Reprinted with permission from Behind the Badge
By Jessica Peralta
Westminster Police Department’s financial crimes/fraud detectives have a new device to add to their crime-fighting toolbox in their work against the ever-changing illegal gambling rings known as slaphouses.
It’s called the ERAD, which stands for Electronic Recovery and Access to Data. And what it can do is determine funds balances in any prepaid card with a magnetic stripe – gift cards, for example.
“This is very new for law enforcement overall,” said Westminster Det. Henry Tran.
The mechanism is simple: Detectives sign in to ERAD’s app and plug in the device that looks like a small card reader. But its potential use is powerful – especially considering that slaphouses have been switching over to gift cards to conduct business.
“That’s typically where we find most of it,” Tran said. “They used to use a lot of cash with those slaphouses.”
But cash, he said, was easier to confiscate. Also, if someone was stopped by a law enforcement officer while carrying large amounts of cash, it could raise suspicion. Those suspected of illegal activities could have the cash confiscated and then they would have to explain how they obtained the cash in a courtroom. But by using gift cards, illegal gamblers could wipe the gift cards of funds before law enforcement could access them.
ERAD is changing that, according to Tran.
“When I first heard about this, I was like ‘Oh this is really going to be helpful,’” Tran said.
The device essentially allows detectives to see how much money is on the prepaid card, and if fraud is suspected, they can freeze the account. The suspect then has to prove they obtained the funds legally.
Then there is a potential further step of a seizure warrant that must be issued by a judge. At this point, the funds may be transferred out of the gift card account and placed in a law enforcement account. Eventually the money can go into asset forfeiture if it is found to be illegally obtained. The money could then go to the agency. The Westminster Police Department hasn’t gone through the whole process yet.
But other agencies have, according to ERAD.
“ERAD is used by federal agencies, state police, county prosecutors, drug task forces, sheriff’s offices and police departments to identify two crimes at the point of interdiction – stolen credit and debit cards and prepaid cards suspected to be tied to money laundering operations,” said Steve Beckerman, chief operating officer at ERAD Group, Inc. in Texas. “Every day consumers’ credit and debit cards are stolen from skimming devices attached to gas pumps and ATMs, point-of-sale devices and unscrupulous retailers or hacked from databases around the world. That information is encoded onto magnetic stripe cards and fraudulently used by criminals until the bank or credit union identifies the fraud. With ERAD, law enforcement can remove the cards from circulation and notify unsuspecting financial institutions who can proactively take steps to disable the cards before the fraud occurs.”
“Illicit proceeds from narcotics, sex trafficking, human smuggling, unemployment fraud, identity theft and terrorist funding are loaded on prepaid cards in an effort to conceal and launder money. When law enforcement has established the legal right to read prepaid cards, they use ERAD to determine the value of the card and, law permitting, place a temporary hold or liquidate the funds, which are then deposited in a law enforcement bank account until the case is settled or adjudicated,” Beckerman said.
Tran said this is a very helpful tool given the constant adaptation by slaphouse criminals.
“Now [suspects]are in the possession of multiple gift cards, debit cards, and you just don’t know how much they have in it,” he said. “They’re evolving every day. We just have to somehow keep up with them.”