HomeMy WebLinkAboutItem 2a: Authorization to Assign Police Officer to Internal Revenue Service Los Angeles SAR & MSB Task Force of A N
- 7 0,01'0 Riv
• G 114
1:=1“
`4 t
STAFF REPORT
Police Department
DATE: July 5, 2011
TO: Mayor and Members of the City Council
FROM: Robert Guthrie, Interim Chief of Police
By: Nancy Chik, Senior Management Anal s
SUBJECT: Participation in an Internal Revenue Service Task Force
Recommendation: Authorize the Police Department to assign a police
officer to the Internal Revenue Service Los Angeles SAR & MSB Task Force
and the utilization of Asset Forfeiture funds to lease office space for two
years for the task force in the City of Arcadia, in an amount not to exceed
$350,000.
SUMMARY
The Police Department recommends assigning a full -time police officer to the Department
of the Treasury Internal Revenue Service (IRS) Los Angeles Suspicious Activity Reports
(SAR) & Money Services Businesses (MSB) Task Force (also known as LA- SMTF), and
the utilization of Asset Forfeiture funds, in an amount not to exceed $350,000, to pay for a
two -year lease of office space for the task force in the City.
BACKGROUND
Suspicious Activity Reports (SARs) are one of the government's main weapons in the
battle against money laundering and other financial crimes since these reports generate
leads that law enforcement agencies use to initiate money laundering investigations.
Many individuals launder money to conceal illegal activity, such as drug trafficking, health
insurance fraud, tax evasion, and even terrorism. It fuels criminal conduct, allowing drug
dealers, smugglers, terrorists, arms dealers, and tax evaders to maintain control over their
proceeds and ultimately to provide a legitimate cover for their sources of income. Law
enforcement officials estimate that such individuals yearly launder one to two trillion dollars
worldwide through different types of financial institutions and businesses.
One of the types of financial institutions money launderers use are the Money Services
Businesses (MSBs) that issue, sell, or redeem traveler's checks or money orders, transmit
money, or exchange currency. Since they are targets for money launderers, the Bank
Secrecy Act requires MSBs to file suspicious activity reports with the U.S. Department of
the Treasury's Financial Crimes Enforcement Network.
The MSB task force is a sub - program area of the SAR program, and they depend and
complement each other. Since Los Angeles receives over 15,000 SARs each month
within the Los Angeles Metro area alone, MSB SARs are substantial enough to comprise
a necessary task force.
The Los Angeles SAR & MSB Task Force (LA -SMTF) is a multi- agency task force and is
comprised of agents from the IRS, ICE, US Postal Inspector Service, DOJ Bureau of
Narcotics Enforcement, LA District Attorney's Office, LAPD, LASD, and Long Beach PD.
The task force focuses on the financial activities of national and international organized
crime syndicates, including drug trafficking organizations. The objective of the task force is
to identify, disrupt, and dismantle national, transnational, and international organized crime
syndicates along with their support system that utilizes MSBs to launder illicit proceeds.
The task force conducts SAR seizures while developing criminal cases, and the seized
assets are distributed amongst participating task force members.
DISCUSSION
LA -SMTF has grown and the need for a larger workspace has become a necessity. The
task force has considered relocating to several other cities around Los Angeles County,
but they have shown an interest in Arcadia because of the community itself, business
demographics, overall economic makeup of the City, and its proximity to the U.S.
courthouse, U.S. Attorney's office, and the Federal Building.
There are many local, state, and federal agencies that would like to participate in the task
force and are on a waiting list. However, LA -SMTF is offering a full -time task force officer
(TSO) position to an Arcadia police officer. By participating in the task force, each agency
will receive a minimum of 5% of all annual seizures. However, the percentage could be
much higher. For example, if the TSO is the primary officer who initiates an investigation,
then his agency will receive 60% of the seized assets. If he is the second lead officer in an
investigation, then his agency's share will be 20 %. The remaining 20% of seized assets
will then be divided amongst the other four participating agencies.
In addition to receiving a minimum of 5% of all annual seizures as an agency participant,
the LA -SMTF will also pay the City an extra 5% of the seizures to substitute as payment
for rent. Therefore, the City will receive a minimum of 10% of all seizures by providing a
TSO and leasing an office space. Furthermore, the equitable sharing guidelines
established by the Treasury Executive Office of Asset Forfeiture indicate there are no
restrictions on the use of forfeited funds.
In 2009, the task force seized $2.5 million; in 2010, over $5.6 million was seized. Between
October 2010 and May 2011, $3.9 million was seized. If $5 million is seized in a year,
then the City's share will be at least $500,000. By assigning a TSO, the City may be able
to obtain more revenue in addition to paying for the rental of office space.
The task force is looking for an 8,000 square foot office space that includes a generous
amount of parking. Staff has found a location at the Vons headquarters that meet their
requirement and the cost is $1.70 /sq. ft. for the first year, which equates to $13,600 per
month; and $1.75/sq. ft. for the second year, which equates to $14,000 per month. The
amount for a two -year lease will be $331,200, and staff requests that $18,800 be set aside
for contingencies, for an amount not to exceed $350,000.
Initially, Asset Forfeiture funds will be used to pay for the two -year lease of the office
space, but any funds received from the task force will first go back to reimbursing the
Asset Forfeiture account. Any remaining seized assets will then go toward the General
Fund.
FISCAL IMPACT
No impact to the General Fund. Asset Forfeiture funds, in an amount not to exceed
$350,000, will be expended for the two -year lease of the office space. Any seizure
money received from LA -SMTF will first go to reimburse the Asset Forfeiture account,
and any remaining funds will go to the General Fund.
RECOMMENDATION
Staff recommends that the City Council authorize the Police Department to assign a police
officer to the Internal Revenue Service Los Angeles SAR & MSB Task Force and the
utilization of Asset Forfeiture funds to lease office space for two years for the task force in
the City of Arcadia, in an amount not to exceed $350,000.
Approved:
Donald Penman, City Man er