Florida and International Private Investigators   ::   Financial Fraud Investigations  ::   Corporate Intelligence

A Bad Rapp
By Bill E. Branscum
© Copyright 1999

I suppose that the entire investigative industry is familiar with the general issue related to the practice of obtaining information via pretext that would not be otherwise available, and I suspect that we are all thoroughly sick of hearing about the Touch Tone case. Every industry has black sheep; unfortunately, James J. Rapp and Regana L. Rapp, the owners of this "information brokerage" are a couple of ours.

The issue is "pretexting" - the long established, widely used practice of lying about who you are or what you are doing in an effort to develop information you could not otherwise get. No federal law specifically criminalizes the act of lying in an effort to obtain confidential, or otherwise unavailable, information.

With the indictment of the Rapps, the FTC has launched an all out assault on the issue of pretexting financial information, it is hard to imagine why it took so long. With a horde of greedy halfwits advertising to everyone with a web browser that they will find out anything, for anyone with a credit card, it was inevitable. Those who will not exercise common sense invariably cause someone to step in and exercise it for them.

Considering how many of these characters there are on the Net, one might wonder how the FTC came to focus on the Rapps. According to an affidavit filed by Robert Brown, the agent in charge of the Colorado case, the Colorado Bureau of Investigation became aware of the Rapps last January after receiving an inquiry from the Los Angeles Police Department. Following the execution of a search warrant at the residence of an LA private investigator, the LAPD discovered that the Rapps had provided him with home addresses, phone numbers and pager numbers for detectives on the LAPD Organized Crime unit.

The LA private investigator had obtained the information for Assaf Waknine, an Israeli national who is reported to be involved in Organized Crime. Mr. Waknine put the information to good use - he "cloned" at least one detective's pager and monitored his pages in an effort to discover the identity of a confidential informant. There is no evidence that the Rapps conspired to assist Waknine in this regard - they simply sold anything requested to anyone who could pay for it.

And I do mean anything they could get to anyone that would pay for it; but what would you expect from a business formerly known as Dirty Deeds Done Dirt Cheap? Well, how about the unlisted phone numbers of the families of the children killed at Columbine High School so the media could hound them, a major corporation's client list so their competitor could cost them a half million in revenue, or Ennis Cosby's phone records and charge card statements after he was murdered in Los Angeles. Anything to anyone - do with it as you like.

No doubt motivated by righteous indignation that isn't hard to imagine, the Colorado Bureau of Investigation set out to "sting" Rapp. Working through a former journalist turned PI Jane Cracraft, they asked Rapp to obtain the bank records of Kristina Koellner, a female employee of the Colorado Bureau of Investigation. Rapp got $460 for the records but it may cost him 24 years in jail and a million dollars in fines and penalties. In my humble opinion, Jane Cracraft deserves an, "Investigator of the Year Award."

The Rapp Case offers at least one wonderful irony. Colorado, the state from which the Rapps operated is one of the few states that do not license private investigators. Having served time related to a 1982 conviction for auto theft, James Rapp is a convicted felon who could not operate in a state that requires licensure. Nevertheless, it was a terrible choice for their base of operations; the irony is that Colorado is one of very few states where it is a crime to impersonate someone else for financial gain.

The story is not without some humor either. One of Rapp's clients was the well known Denver PI, Al Schweitzer. Nearly legendary for his "innovative" approaches to gathering information, indicted thrice and convicted once by the federal government, and the author of a widely circulated book on pretexts, he testified before the House Banking Committee during their hearings on the subject last summer. When he was recently asked about his relationship with Touch Tone, Al is reported to have stated that he quit using their services more than two years ago because, "he did not condone Rapp's methods." A proselyte's epiphany I suppose.

On a foreboding note, it has been widely reported that Rapp's records reveal that a Florida information broker, Action Research Group, was one of his largest clients to the tune of about $5,000 a month. I have not heard whether Action Research Group has been required to produce their records yet, but I would certainly expect it.

Unfortunately, as is the case with most issues, there is another side to tell - an aspect of this issue that our government utterly declines to address. Buried deep beneath the avalanche of evidence that Rapp is a profiteering outlaw with no demonstrable integrity is the question, "What EXACTLY is a bankruptcy trustee, bankruptcy creditor, mother pursuing a deadbeat dad, attorney attempting to execute upon a judgment, etc., supposed to do when the debtor is willing to outright lie under oath?"

In an effort to attack the practice of pretexting, the government prosecutes a case where the fact situation is so outrageous as to eclipse the actual issues. The fact is, people and Presidents lie under oath with impunity and thereby neuter the judicial process. In the face of blatant perjury, a deposition in aid of execution is nothing but an exercise and you cannot use third party production mechanisms when you cannot identify the appropriate third party. How could you possibly subpoena records you have no way to know exist?

The FTC has adopted the position that obtaining information by pretext should be outlawed as an unfair and deceptive trade practice. To this I would say that shooting people is bad too but there is a time and a place for it.

The government argues and adamantly insists that "people have a legitimate expectation of privacy with regards to their bank account information" - it does sound good to the constituents back home I suppose. I say that is utter nonsense and cite as my authority the US Supreme Court case, U. S. v. Miller, 425 U.S. 435, 96 S. Ct. 1619, 48 L. Ed. 2d 71 (1976), which established that, "an individual has no protectable privacy interest in a bank record."

In response, there are those who maintain that subsequent legislation, The Right to Financial Privacy Act of 1978, established a right to privacy; they obviously have not read it. Enacted by Congress to restrict access to banking records, the Act only prohibits access to an agency or department of the United States. In support of that interpretation, I would cite the Supreme Court of Rhode of Island, Pontbriand, et al. v. Sundlun, No. 95-571 (R.I. 08/15/97).

The notion that the identity of your bank and your account number is some sort of secret worthy of all this hoopla is nonsense. Your bank sends this information to everyone who writes you a check as evidence that you cashed it. When you pay your property taxes, the tax office copies both sides of your check and that is generally public record. There are many, many examples of ways in which to obtain this sort of information.

Nevertheless, there is no doubt in my mind that the government is going to put the habeas haltus to the act of using pretexts to obtain financial information, the fastest, most dependable and least expensive way to get it. As a consequence, debts will go uncollected -- the big losers will be the big creditors (the number one consumer of this sort of information). Who do you suppose they will pass their losses on to?

It would be nice to think someone in a position of authority would recognize the realities involved, and exercise some common sense, but this situation is about money in more ways than one. In the federal system, as in most bureaucracies, budgets depend upon perceived significance. Everyone knows Congress is studying the issue of pretexts used to gather financial information; they have been holding hearings for quite some time.

The FTC did not merely "jump on the bandwagon." They outright preempted the deliberative process and seized this as an opportunity to remind Congress that they are a significant enforcement mechanism. The FTC has thereby generating a lot of generally favorable ink and positive ink means budgetary allocations to any federal agency. For those who are "information brokers" as opposed to investigators, I believe this to be the harbinger of doom and gloom. Assuming that it becomes clear that this activity is prosecutable, we are going to see a lot more ink.

Rather than bureaucratic grandstanding, the answer is to put a stop to the wholesale marketing of financial information to anyone with a credit card and provide a meaningful way to access information that judgment debtors are supposed to be required to provide. By all means do away with the lying - mandate the availability of this information to licensed investigators, law firms, credit collection agencies and so forth where circumstances such as bankruptcies, judgments and child support justify it.

This is not without precedent - the FCRA, as most recently amended, protects the public's right to privacy in their credit reports except when the person seeking that information has judgment in hand. It would be a simple matter to enact legislation requiring that financial institutions respond to a request for information accompanied by a certified copy of a Bankruptcy Petition, Judgment or Order of Support just as they would to a subpoena.  

I long ago lost any illusion that the government could be counted on to do the reasonable thing. I fear that a knee jerk reaction is forthcoming - I expect it to do a lot more harm than good.

Bill Branscum is a licensed Private Investigator and owner of Oracle International, an investigative agency he established in Naples, Florida following his career as a federal agent. His experience includes investigations related to narcotics smuggling, money laundering, securities fraud, the unlawful exportation of critical technology, the sexual exploitation of children and contract murder.

Oracle International maintains a web site at http://www.OracleInternational.com.

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