Criminal Records Archives

“Ban the box” legislation gains momentum

Across the country, municipalities and states are enacting legislation called “ban the box” which generally prohibits employers from asking job candidates about their criminal histories on applications. The legislation also makes it unlawful for a covered employer to take any adverse action against an individual on the basis of an arrest or criminal accusation that did not result in a conviction. The states of California, Connecticut, Hawaii, Massachusetts, Minnesota, and New Mexico have enacted some form of the legislation along with more than 26 cities and counties in Illinois, Maryland, Michigan, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Wisconsin and Washington. (A complete list of municipalities that have “banned the box” is posted at
http://www.nelp.org/page/-/SCLP/2010/BantheBoxcurrent.pdf?nocdn=1).

However, except for Hawaii and Massachusetts, the legislation has been limited to public employers, or public employers and vendors and contractors serving public entities. The city of Philadelphia, which is the most recent addition to this growing list, is the first municipality to pass a law that covers private employers with 10 or more employees. Below are some jurisdictional highlights of the enacted legislation:

Hawaii and Massachusetts private and public employers cannot consider felony convictions that are more than 10 years old. And in Massachusetts, employers are not permitted to consider misdemeanor convictions that are more than five years old.
Hawaii and the cities of Chicago, Hartford, and Cincinnati allow an employer to ask about an applicant’s criminal record only after a conditional offer of employment has been extended.
Chicago, San Francisco, and Boston require a public employer denying employment on the basis of a conviction to justify its decision based on EEOC’s guidelines which include the nature and gravity of the crime, the time that has passed since the conviction, and the relativity of the crime to the position.

Proponents of “ban the box” are confident that the legislation will be a significant factor in lowering recidivism rates, as it will allow applicants to demonstrate their skills and qualifications prior to disclosing criminal histories. And many experts say that such laws will expand beyond the borders of the United States in the very near future.

October 17th, 2011|Categories: Employment Decisions, Legislation|Tags: Criminal Records, Employment Decisions, National Criminal Database|

Massachusetts employers cannot ask about criminal history on initial job applications

As of November 4, 2010, Massachusetts employers are prohibited from asking about criminal records on the initial job application, except for positions for which a federal or state law, regulation or accreditation disqualifies an applicant based on a conviction, or if the employer is mandated by a federal or state law or regulation not to employ
individuals who have been convicted of a crime.

The new law also has two provisions that will become effective February 6, 2012. Under the first provision, an employer in possession of criminal record information must disclose that information to the applicant, prior to asking about it. And similar to the requirements of the Fair Credit Reporting Act, if an employer decides not to hire an
applicant in whole or in part because of the criminal record, the employer must provide the applicant with a copy of the record.

The second provision requires employers who conduct five or more criminal background investigations annually to implement and maintain a written criminal record information policy. The policy, at minimum, must specify procedures for (1) notifying applicants of the potential for an adverse decision based on the criminal record, (2) providing
a copy of the criminal record and the written policy to applicants, and (3) dispensing information to applicants about the process for correcting errors on their criminal record.

The law imposes penalties (including imprisonment for up to one year or a fine of up to $5,000 for an individual and $50,000 for a company) for those who request or require an applicant to provide a copy of his/her criminal record except under conditions authorized by law, and prohibits harassment of the subject of the criminal record (punishable by imprisonment of up to one year, or a fine of not more than $5,000.)

November 16th, 2010|Categories: Criminal Activity, Employment Decisions, Legislation|Tags: Criminal Records, Employment Decisions, Employment Law, Legislation, Massachusetts|

A look into money laundering

In U.S. law, money laundering is the process of engaging in financial transactions to conceal the identity, source, and/or destination of illegally gained money. It is believed that the term “money laundering” originated from the Mafia’s ownership of Laundromats whereby large sums of money were made through illegitimate activities that showed origination from a legitimate-appearing business.

The U.S. Criminal Code contains more than 100 predicate offenses to the crime of money laundering, which include drug trafficking, smuggling, prostitution rings, illegal arms sales, embezzlement, insider trading, bribery, and computer fraud. The Internal Revenue Service (IRS) considers money laundering a “tax evasion in progress.” And when no other crimes could be pinned to Al Capone, the IRS obtained a conviction for tax evasion. Leaving the courthouse, Capone said, “This is preposterous. You can’t tax illegal income!” Had the money laundering statutes been in effect in the 1930s, Capone also would have been charged with this crime. However, since October 1986, with the passage of the Money Laundering Control Act, organized crime members and many others have been convicted of both tax evasion and money laundering.

One of the most notable money laundering cases was settled in March of this year. Wachovia Bank, which is owned by Wells Fargo & Co., reached a $160 million settlement with the Justice Department over allegations that a failure in bank controls enabled drug traffickers to launder drug money by transferring $420 billion from Mexican currency-exchange houses to the bank. Under a deferred-prosecution agreement, Wachovia “admitted failure to identify, detect, and report suspicious transactions in third-party payment processor accounts.”

And money laundering has even reached the Vatican. Media reports from the past week say that the Vatican Bank, along with its chairman Ettore Gotti Tedeschi and director general, Paolo Cipriani, have been targeted for alleged violations of money laundering laws. Italian authorities temporarily froze 23 million euros ($30 million) from an account registered to the Institute for Works of Religion (IOR) a.k.a. the Vatican Bank. The investigation was opened after the Bank of Italy, adhering to anti-money-laundering directives issued by the European Union, alerted officials to two suspicious transfers on September 6, 2010. The Holy See expressed surprise at the allegations.

September 28th, 2010|Categories: Commercial Transactions Due Diligence|Tags: Criminal Records, IRS, Vatican Bank, Wachovia, Wells Fargo & Co.|

Why is it important to search criminal records under the company’s name along with its principals?

Under the doctrine of respondeat superior, a corporation may be held criminally liable for the illegal acts of its directors, officers, employees, and agents. The most common criminal cases are filed for regulatory causes, but other charges also may be brought depending on the severity of the crime and the adequacy of the civil and administrative enforcement actions, among many considerations.

On a related note, several months ago, we posted a case study from our files about one of the biggest payroll-tax frauds in U.S. history. The $200 million fraud led to the subject company’s Chapter 11 bankruptcy filing and its subsequent federal indictment. The company’s former CEO, who was considered the mastermind of the fraud, was sentenced to 22 years in prison in 2008. Prosecutors in the case argued that a guilty plea from the company itself also was needed to deter similar crimes by other companies. However, the court ruled that, among other regards, this would lead to unnecessary costs of a trial and damage the legal claims contained in the bankruptcy.

July 2nd, 2010|Categories: Commercial Transactions Due Diligence|Tags: Bankruptcy, Criminal Records|

A career in fraud

A prospective client investigation was ordered on a company and its president, but the preliminary information on the president was enough to reject the subject or any company under his direction from the possible business engagement. Initial court searches uncovered a 2001 criminal misdemeanor conviction for possession of a false identification to be used to defraud. The index did not provide much information and the file was destroyed by the court, so SI’s analyst turned to media sources to dig deeper. Sure enough, one article referenced guilty pleas entered in 2002 by the subject and his business partner for hiring imposters to take the Series 7 securities brokers’ examination for them. Each was sentenced to a year of probation and fined $5,000. Other articles from 2002 reported three civil cases for fraud in locations where the subject appeared to have no residential history, and further disclosed that the subject and his partner had been statutorily disqualified from working for a broker licensed by the National Association of Securities Dealers, ordered to disgorge profits and interest totaling $4,649,125 and each were fined $15,000 in civil penalties in 2006. Articles also linked the subject to a con artist who had admitted to defrauding Jewish organizations and individuals of $80 million during the 1990s. Most recently, the FDIC had executed a written agreement with the subject and (the same) business partner after they allegedly failed to seek FDIC approval before making an investment in an unregistered bank holding company. On the whole, this company president had been engaged in fraudulent behavior for nearly a decade and no amount of legal or regulatory action appeared to change his mode of operation.

March 26th, 2010|Categories: Commercial Transactions Due Diligence|Tags: Criminal Records, FDIC, Fraud, Investigation, Misrepresentation, prospective client|

One of the largest employment tax-fraud cases in IRS history

Our investigation, which included manual civil and criminal record searches and searches of media sources, revealed that the subject company and four of its subsidiaries are under federal indictment for conspiracy and wire fraud as part of a multimillion dollar tax fraud scheme orchestrated by the companies’ founder. This individual recently was sentenced to over 20 years in prison and ordered to pay restitution of $180 million to the Internal Revenue Service after pleading guilty to five felonies including failure to collect and pay payroll taxes and obstructing a federal investigation. It is reportedly one of the largest employment tax-fraud cases in IRS history. Before the sentencing, the individual attempted to justify his actions by claiming insanity.

The subject company and its subsidiaries also were defendants in dozens of lawsuits for fraud and breach of contract with damage claims totaling over $220 million, in addition to filing for Chapter 11 bankruptcy. Several motions had been filed to dismiss the bankruptcy proceedings, one of which was made by the company’s former accountants who were sued for professional negligence. In court papers, the accountants asked that the case be dismissed or converted to a Chapter 7 because “the only reason the debtor filed the petition was in an effort to help (the founder’s) criminal case.” The motion to dismiss also argued that the company has no chance to successfully reorganize because it is a “sham company used only for illegal activities,” has no remaining employees and no income.

July 14th, 2009|Categories: Employment Decisions|Tags: Bankruptcy, Criminal Records, Fraud, IRS|

Previous 12