Counterfeit Checks—Maryland

Four individuals have been indicted by a federal grand jury in Maryland on charges that they conspired to commit bank fraud, and that they committed bank fraud and mail fraud.^[1] According to the US Attorney in Maryland, the four individuals, Barry Elijah Davis, Benjamin Steven Davis, Binica Nicole Brooks, and Kendena Aisha Lee, engaged in a counterfeit check scheme that involved “over 500 drivers, recruiters, account holders, check cashers, and others.”^[2] More than $15 million of counterfeit checks were allegedly found on Ms. Lee’s laptop computer, and the use of counterfeit checks had allegedly resulted in the loss of more than $500,000.^[3]

According to the government, the scheme began in January 2004 when Barry Davis, Benjamin Davis, and Ms. Brooks “produced counterfeit business checks using templates with real business account numbers obtained by paying individuals for copies of their paychecks.”^[4] Some of those who were recruited were students from Morgan State University who allegedly “agreed to open new bank accounts to receive deposits of counterfeit checks in exchange of payment,” which “fraudulently inflat[ed] the bank account balances.”^[5] The checks were allegedly delivered by FedEx or UPS to bank branches out of state, and counterfeit checks were allegedly used to pay for those services.^[6]

Both bank fraud and mail fraud (when it affects a financial institution) carry maximum sentences of 30 years in prison and $1 million in fines.

Both bank fraud and mail fraud require the government to prove beyond a reasonable doubt that the defendants devised a scheme or artifice to defraud, and, based on the attention paid to Ms. Lee’s laptop, the counterfeit checks are a key component to the government’s case. Therefore the defense would likely want to have that evidence suppressed and not admitted at trial. One way to do that is to challenge the seizure of the laptop.

Under Rule 41 of the Federal Rules of Criminal Procedure, a magistrate judge issues a warrant at the request of a federal law enforcement officer or an attorney for the government.^[7] It can be issued for any of the following: evidence of a crime; contraband, “fruits of crime,” or other illegal items; property designed for use, intended for use, or used in committing a crime; or a person to be arrested.^[8] The warrant must provide probable cause, either through an affidavit or other information,^[9] and when it is issued, it must identify the person or property to be searched, identify any person or property to be seized, and designate the magistrate judge to whom it must be returned.^[10]

If the warrant did identify the laptop as property to be seized, it raises questions of how the government learned that the computer was being used to create the alleged counterfeit checks. There are commercial programs, such as VersaCheck, that allow the user to enter whatever account number he or she desires, and it will be printed on blank checks. One intriguing possibility is that VersaCheck software can print barcodes on its checks that contains unique identifiers that allow both the issuer and recipient to track the check. In a purely speculative way of thinking, it is possible that a barcode could lead back to the computer doing the printing, or even the printer itself. A couple of months ago, the Electronic Frontier Foundation [hereinafter EFF] announced that it had cracked a code printed by a number of color laser printers, such as the Xerox brand DocuColor line.^[11] The printers print microscopic dots that are almost impossible to see without a microscope, but when illuminated by a special light, the dots contain information on the printer’s serial number, model, and configuration, as well as the time the page was printed.^[12] Unfortunately, at this stage in the case, there’s simply not enough information to do more than speculate how the government may have named the computer to be searched and seized.

If the warrant did not state that the laptop was to be searched or seized, a question arises about whether a warrantless search or seizure of the laptop is permissible. Suffice to say the question is without a clear answer because different circuits are split on whether a computer can be searched or seized without a warrant.^[13] While most courts liken computers to closed containers, which means that an individual maintains a reasonable expectation of privacy for his computer, the circuits are split on how to treat individual files and the disks in which they are stored.^[14] The Fifth Circuit, for example views a disk as one container and has held that when a warrantless search of a portion of a computer had been justified, there was no longer any expectation of privacy in the rest of the computer.^[15] The Tenth Circuit, by contrast, “has refused to allow … exhaustive searches of a computer’s hard [drive] in the absence of a warrant or some exception to the warrant requirement.”^[16]

As more details about the case emerge, it will be easier to determine the likelihood of success if a motion to suppress the computer is filed.

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[1] US Attorney’s Office, Four Defendants Indicted in Scheme Involving More than $15 Million in Counterfeit Business Checks, Jan. 10, 2005.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Fed. R. Crim. P. 41(b).
[8] Id. R. 41(c).
[9] Id. R. 41(d)(1).
[10] Id. R. 41(e)(2).
[11] See, EFF, Is Your Printer Spying on You?, last updated Dec. 5, 2005.
[12] See Jeremy Reimer, EFF Decodes Secret Color Laser Printer Spy Markings, Ars Technica, Oct. 18, 2005.
[13] See, e.g., US DOJ, Searching and Seizing Computers and Obtaining Electronic Evidence in Criminal Investigations, Cybercrime Division, Jul. 2002.
[14] Id. I.B.2.
[15] Id.
[16] Id.