Sunday, September 16, 2012

Outsourcing the prosecutorial discretion and diversion functions in check "fraud" cases

Today's New York Times contains an article on the apparent outsourcing, from district attorneys to debt collection companies, of the prosecutorial discretion and diversion functions in bounced check cases.  

According to the article (which is located here):   

[L]etters are sent by the thousands to people across the country who have written bad checks, threatening them with jail if they do not pay up.
They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors for a class on budgeting and financial responsibility, some of which goes back to the district attorneys’ offices. 
The practice . . . has spread to more than 300 district attorneys’ offices in recent years. . .
. . . . What makes this approach unusual is that the ultimatum comes with the imprimatur of law enforcement itself — though it is made before any prosecutor has determined a crime has been committed.
Why are district attorneys involved in debt collection for bad checks?, you might ask.  Is this not a simple matter of a breach of contract claim between the check writer and the check casher?  

As I understand it, bouncing a check is not a crime.  But fraud is.  So bounced checks become a matter for the district attorney when there is probable cause to believe that the check was bounced due to fraud.  Bouncing a check when you intend to pay it (even if you know you do not have the money in your account to cover it today because, for example, you are getting paid tomorrow) is not a crime.  Nor is bouncing a check and then later not having enough money to pay it due to unanticipated financial difficulties.  Fraud requires intentional deceit -- i.e., intending to write a worthless check that you will never pay.  

So as this article explains is that, traditionally:
[M]erchants who received a bad check typically tried to retrieve the money themselves or through a private collection company. . . . Those merchants who suspected fraud could send along the checks to their local district attorneys.
What's happening now, according to this article (at least with respect to the contracts reviewed by the author of the Times article), is that, at least sometimes, bad checks are "sent directly from the merchant to the debt-collection company, without any prosecutor reviewing the facts to determine whether [the check writer]  had actually committed a crime.  Instead, under the contracts between the district attorneys and the debt collection companies, merchangs can "refer checks directly to the company, circumventing the prosecutors’ offices," so long as merchants have "attempt[ed] to contact the check writer" and the check writer has not responded within a specified period, "typically within 10 days."

To my mind, failing to respond to a debt collector within 10 days (or any period, for that matter) is not evidence sufficient to make out a prima facie case of bad check fraud.  It could mean many, many other things -- e.g., that the check writer either did not receive the letter, that the check writer does not recall the check, that the check writer thought the check was paid no longer has the money to pay the check.

And it's not only prosecutorial discretion that has been outsourced.  The prosecutors' diversion function has also been outsourced.  According to the article, in addition to writing to demand collection of a debt on district attorney letterhead, the debt collectors are demanding in those same letters that the writer of a bad check attend a "financial accountability" class in order to avoid prosecution -- despite that, in most instances, no prosecutor has passed on the facts of that particular case.  In fact, the article explains, "few" bad check writers are ever prosecuted because of the difficulty of providing a case of fraud.  But that does not stop them from demanding that bad check writers take the class or face prosecution.

As the article explains:
Because the cases are not fully investigated, there is no way of knowing whether the bad checks were the result of innocent mistakes or intentional fraud. The so-called bad check diversion programs start from the position that a crime has been committed.
This, to me, is an outrage.  I seriously doubt that, back before these type of arrangements between district attorneys and debt collectors existed, any district attorney would send out a letter like this without first reviewing the facts of the case to determine that there was probable cause to believe that the check writer had committed fraud.  Sending such a letter without even reviewing the facts of the case would constitute an abuse of the prosecutor's discretion and an abuse of the public trust.  

That, it appears, is exactly what has happened with the outsourcing of prosecutorial discretion and diversion here.  Does this bother anyone else?  If so, I would be interested to see your comments.

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