In Oakland, the IRS Criminal Investigation division solves crimes by following the money
on March 22, 2013
When dealing with criminal street gangs like East Oakland’s Case Gang, law enforcement agencies may want to know where the money to fund illegal activities is coming from and how it’s being used.
Enter the Internal Revenue Service, Criminal Investigation division.
It’s not a typical operation for the federal agency, but 14 agents from its Criminal Investigation arm played a role in serving warrants to 17 members of the Case Gang last Friday in a large, multi-agency operation that was part of Oakland’s Operation Ceasefire. The nationally-known violence reduction program gives offenders with histories of gun violence a chance to change their behavior and receive community support and social services, or else face increased attention from law enforcement.
The March 8 law enforcement operation was the “follow through of that promise” for the Case Gang, said Oakland Police Department Deputy Chief Eric Breshears at a press conference last week. The Case Gang is an offshoot of the Nut Case Gang, an Oakland gang most famous for the random acts of violence members committed during a 10-week crime spree in the early 2000s that left five dead and many wounded.
Best known for its role in tax collection and audits, the IRS’s Criminal Investigation division is the police and law enforcement arm of the federal agency. Criminal Investigation agents go after financial crimes like Ponzi schemes, identify theft and money laundering. The most common financial crimes in the Bay Area are frauds regarding mortgages, taxes and investments, although identity theft is also prevalent and an area of focus for the department, said Arlette Lee, the special agent for the IRS Criminal Investigation division in charge of public information. The IRS has a high conviction rate for white collar crime—over 90 percent is the national average—because their cases are so clearly based on documented paper evidence like bank or property records, Lee said.
These white-collar crimes are the agency’s focus, and the Case Gang operation is the only case in recent history in which the agency’s Bay Area office went after a criminal street gang, Lee said.
But the agency’s financial expertise means it can play an important role in investigating complex crimes. “The IRS plays an integral part in law enforcement when it comes to crimes such as embezzlement, fraud, narcotics dealing, and other crimes with a financial component,” wrote Oakland Police Department spokeswoman Johnna Watson in an emailed statement. “The IRS has codes to charge offenders criminally when they are found to not have reported income.” She added that the federal agency also has the authority to freeze financial accounts and seize assets, which is an important part of law enforcement.
In the event of a large-scale, multi-agency operation like the Case Gang arrest sweep in Oakland, other law enforcement organizations work with IRS Criminal Investigation to see how they can together obtain evidence needed to make arrests. As a hypothetical example, Lee said that when investigating an arms trafficking operation within a street gang, the IRS would work with the Bureau of Alcohol, Tobacco, Firearms and Explosives, a federal law enforcement agency that regulates laws relating to these topics. The ATF would investigate the illegal weapons; the IRS would follow the money. Financial charges related to this crime could include money laundering or wire fraud.
Financial crimes can carry stiff penalties. Money laundering carries a sentence of 10 to 20 years in prison, while wire fraud is 20 years, Lee said. And in situations where witnesses may be reluctant to come forward, or testimonies differ, bank statements and other paper financial documents are hard to dispute. (One of the best-known cases of the IRS bringing down a gangster was Al Capone’s arrest and conviction for tax evasion; he was eventually sent to Alcatraz, where he served a seven-year sentence.)
To determine what charges to file in court, in the case of a multi-agency operation, Lee said the organizations will discuss the best options to get “the most bang for the buck.”
So far in the Case Gang investigation, only criminal charges have been released for the 17 people, who range in age from 18 to 32. These charges include prostitution, possession of a firearm by a felon, conspiracy to commit a crime and robbery, according to affidavits from the Alameda County District Attorney’s office. But an OPD statement released Wednesday said law enforcement partners also gathered evidence related to fraud.
The IRS has not yet pressed charges for financial crimes against any Case Gang members, Lee said. She added that the agency would continue to work with all of the agencies involved to see if any financial charges will be brought against the individuals.
Conversely, the IRS relies on the help of the local police when investigating financial crimes. For example, Lee said, if the federal agency needs to serve search warrants in the Oakland area, the OPD will often assist them with making safe entry to a person’s property, Lee said.
Oakland is home to an IRS field office that covers all of Northern California, though there are smaller offices located in San Francisco, San Jose, Walnut Creek, Sacramento and Fresno. Agents are trained at the Federal Law Enforcement Training Center in Glynco, Georgia, which provides training for 91 other federal agencies and is part of the Department of Homeland Security. Agents also attend a nine-week Criminal Investigation Training program alongside new trainees from the Department of Homeland Security and the Secret Service to learn basic federal criminal investigation techniques like firearms training and courtroom procedures, according to the IRS Criminal Investigation application website.
Once they have completed their training, IRS Criminal Investigation agents use badges and guns, bulletproof vests and cars with police lights like any other law enforcement agency, Lee said. “We always get these comments that we’re accountants with guns,” Lee said. “We have the same training as everyone else, but we’re looking for paper.”
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