Crime in the Suites An Analysis of Current Issues in White Collar Defense

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March 5, 2013

Was This Identity Theft? Sixth Circuit Should Limit Meaning of That Term

By: Nicole Kardell

What’s in a name?

When you think of identity theft, you typically think of someone taking a person’s name plus some other identifiers, like their address and Social Security number or credit card number, to go on a spending spree or drain the victim’s bank account. You may think of fraudulent impersonation. But what if someone falsely stated that another person gave him permission to use their joint property as collateral on a loan? That sounds like a false statement but not a case of stolen identity. Yet a federal district court in Tennessee found that just this scenario constituted identity theft in a current case against real estate broker David Miller.

Perhaps the court’s holding doesn’t sound too troubling. After all, identity theft is a crime and it’s clearly behavior that we want to deter. But expanding the reach of what may fall under the federal identity theft laws doesn’t really deter the behavior that Congress sought to address by statute. It just makes it harder to anticipate the bounds of the law, and that is troubling.

Congress passed the Identity Theft and Assumption Deterrence Act of 1998 in order to address the growing problem of fraudsters taking people’s personal information to either steal from their existing accounts or to run up debt in the victims’ names. The act criminalized fraud in connection with the theft and misuse of personal identifying information. (Before the law was passed, only fraud in connection with identification documents was a federal crime.) But there was some concern that prosecutors were not vigorously going after identity theft cases. So Congress passed the Identity Theft Penalty Enhancement Act of 2004. Again, this measure was aimed squarely at penalizing identity thieves who were attacking consumers’ financial accounts and credit. The bill’s sponsor, Rep. John Carter (R-Tex.), said identity theft is “a crime that we need to address and address seriously … for the protection of the credit of American citizens.”

Years later, the Department of Justice appears to have gotten the message and is actively prosecuting identity theft cases. All is well and good with the DOJ’s ordinary efforts in this area. On its website, the DOJ discusses identity theft issues in a familiar context, relating concerns over the misuse of “your Social Security number, your bank account or credit card number, your telephone calling card number, and other valuable identifying data.”

It also provides exemplary cases, which are again in keeping with the general understanding of what constitutes identity theft: (1) a woman pleaded guilty for using a stolen Social Security number to obtain thousands of dollars in credit and then filing for bankruptcy in the name of her victim; (2) a man pleaded guilty after obtaining private bank account information about an insurance company’s policyholders and using that information to deposit counterfeit checks; (3) a defendant was indicted on bank fraud charges for obtaining names, addresses, and Social Security numbers from a Web site and using those data to apply for a series of car loans over the Internet.

So with a pretty clear understanding of congressional intent and a fairly clear depiction of the scope of federal identity theft laws, it seems a bit like prosecutorial overreach for the DOJ to turn around and use these laws in a case like that against David Miller. Not in keeping with the sample cases above, Miller’s “theft” involved him “using the names of two individuals in a document that stated Miller had the authority to pledge real property as collateral for the loan when he had no such authority.” He was not trying to impersonate them to create new accounts or steal from their existing accounts. There are other laws to prosecute what Miller did – and he was found guilty of making false statements to a bank.

The concern here is that adding the identity theft count to Miller’s sentence is a misuse of the Identity Theft Penalty Enhancement Act and an overexpansion of what behavior falls under the rubric of identity theft. What is next? Will the department uses this law to prosecute those who lie about references on a job application?

The general rule is that criminal laws should be strictly construed in favor of the defendant. The ruling against Miller seems a case in point where the Rule of Lenity was not applied. Miller has appealed to the U.S. Court of Appeals for the Sixth Circuit, which will hopefully bring the law back within its intended scope.

Nicole Kardell

Nicole is a certified privacy professional with expertise in European privacy law (CIPP/E), in particular the GDPR. She helps companies to navigate the changing face of privacy regulations and to keep their business practices and partnerships in compliance with the law both domestically and abroad.