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Home My WebLink About15 - OC Real Estate Fraud Prosecution Trust Fund AwardCITY OF SEW Pp�T NEWPORT BEACH a City Council Staff Report Agenda Item No. 15 September 10, 2013 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Police Department Jay R. Johnson, Chief of Police 949 - 644- 3701,JJohnson @nbpd.org 1 =142_1 :1"7F]7 TITLE: ABSTRACT: Dale Johnson, n @nbpd.org County Real Estate Fraud Prosecution Trust Fund Award The Police Department seeks acceptance of a $16,000 award granted from the Orange County District Attorney's Office for the investigation of real estate fraud crimes. RECOMMENDATION: 1. Authorize the City Council to accept a $16,000 award granted to the Police Department by the Orange County Real Estate Fraud Prosecution Trust Fund per Council Policies F -3 and F -25. Therefore, to comply with Council Policy F -3, City Council must formally accept the award of $16,000 and create a new appropriation to expend the money. 2. Approve a Budget Amendment increasing revenue appropriations by $16,000 in 1820 -489E. 3. Per the award letter, carryover unspent funds for Fiscal Year 2012 -2013. FUNDING AVAILABILITY: The Budget Amendment records and appropriates $16,000 in additional revenue from the Orange County District Attorney's Office. The revenue will be posted to Account #1820 -489E for the Police Department. The Police Department's Fiscal Year 2013 -14 budget already includes expenditure funding for the investigators who will be assigned to perform grant - related activities. Orange County Real Estate Fraud Prosecution Trust Fund Award September 10, 2013 Page 2 According to Orange County Assistant District Attorney Elizabeth Henderson (fund administrator), the funds awarded by the Orange County Real Estate Fraud Prosecution Trust Fund for FY 13/14 are now available. DISCUSSION: Background: On June 19, 2013, the Police Department submitted a letter of application to the Orange County District Attorney's Office requesting to encumber the unexpended funds from FY 2012 -2013. The letter of application indicated the Police Department has an Economic Crimes Unit consisting of two investigators within the Detective Division that are dedicated to investigating various economic crimes, ranging from identity theft, credit card fraud, embezzlement, forgery, as well as real estate. In a letter from the Orange County District Attorney's Office dated August 9, 2013, the Police Department was notified that we had been awarded $16,000 from the Orange County Real Estate Fraud Prosecution Trust Fund and approval to carryover any unused funds from the previous year. The letter indicates that the funding is to be used to partially fund the salary and benefits of an investigator for real estate fraud cases in our jurisdiction. Per the instructions outlined in the award letter, a response will be sent to the Orange County District Attorney's Office indicating our desire to receive these funds, pending City Council approval. The responsibility of providing the required end of fiscal year reporting back to the Orange County District Attorney's Office will be the responsibility of the Grant Administrator, Captain Dale Johnson. The end of year report will include a detailed list of all investigations conducted related to real estate fraud, the hours involved in each investigation, and the salary and benefit costs for the investigator(s) who conducted the investigations. This Staff Report requests approval by the City Council to accept these funds pursuant to Council Policies F -3 and F -25. Last year, the Police Department received $25,000 from this trust fund for FY 12/13 and the City Council approved the acceptance of those funds. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the 4 Orange County Real Estate Fraud Prosecution Trust Fund Award September 10, 2013 Page 3 environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: J yA A oh n C ief of Police Attachments: A. Application Letter to Orange County District Attorney's Office B. Orange County District Attorney's Office Letter of Award of Funding C. Budget Amendment E Beach Police Jay R. Johnson June 19, 2013 870 Santa Barbara Drive • P.O. Box 7000 Ms. Elizabeth Henderson, Assistant District Attorney Orange County District Attorney's Office Major /Insurance Fraud Unit 401 Civic Center Drive West Santa Ana, CA 92701 Dear ADA Henderson: The Newport Beach Police Department (NBPD) is not requesting any additional funding from the Real Estate Fraud Trust Fund for Fiscal Year 2013/2014. Previous funding has not been fully expended, and it is our request to encumber the unexpended balance for use in FY 13/14. Currently, NBPD has an Economic Crimes Unit within the Detective Division that is dedicated to investigating various economic crimes, ranging from identity theft, credit card fraud, embezzlement, forgery, as well as real estate fraud. The Unit once consisted of four, full -time detectives. Currently, the Unit is operating with only two, full -time detectives to work the variety of crimes investigated, including real estate fraud. The City of Newport Beach is a financial hub of Orange County, is home to myriad firms associated with the real estate industry, and also has high value real estate. As a result, Newport Beach is often targeted by criminals committing crimes associated with real estate fraud. While the NBPD has a long history of investigating and seeking prosecution in real estate fraud cases, the Department's ability to effectively investigate real estate fraud has been affected by the reduction of the Economic Crimes Unit. The grant funds awarded in FY 11/12 and FY 12/13 has allowed the NBPD to focus on cases specifically related to real estate fraud. Eligibility The Newport Beach Police Department does not have a unit devoted exclusively to investigating real estate fraud; however, we have regularly investigated and actively prosecuted cases of suspected real estate fraud in the past. The Economic Crimes Unit of the Detective Division, as mentioned above, has been responsible for investigating these crimes. The Department assigns one of the two detectives within the Economic Crimes Unit to investigate these crimes, based on current caseloads. Office of the Chief (949) 644 -3701 • Support Services (949) 644 -3654 • Patrol-Traffic (949) 644 -3742 • Detectives (949) 644 -3790 In past years, Detectives Bob Watts and Steve Rasmussen were assigned to investigate crimes involving real estate fraud. The times of their assignments were as follows; Bob Watts, August 1, 2006 — May 1, 2010; Steve Rasmussen, September 1, 2006 — February 15, 2010; and Garrett Fitzgerald May 17, 2010 — January 1, 2013. Currently, Detectives Kyle Cammack, February 15, 2010 — present; and Detective Jason Blakely January 1, 2013 — present, are assigned to investigate these crimes. They are supplemented by Sergeant Keith Krallman, who supervises the unit. Required Statistical Information See Attachment A. Proposed Use of Funds Budget Detail for Personnel (one, full -time detective): Sala /Benefits $155,417.60 Equipment/Supplies 0 Training Expenses $800.00 Training Travel Expenses $1,200.00 Total Budget Estimate $157,417.60 Prior Use of Funds The NBPD received $75,000 from the Real Estate Fraud Trust Fund in FY 11/12, and $25,000 in FY 12/13. Those funds were used to offset the salary and benefits of Detective Cammack and Sgt. Krallman during their assignment in the Economic Crimes Unit. During FY 11/12, NBPD personnel spent 209.5 hours investigating crimes related to real estate fraud. Based on an average hourly rate of $75 (salary and benefits) for an NBPD investigator, we expended approximately $15,712.50 of the $75,000 awarded, leaving an unexpended balance of $59,287.50. An additional $25,000 was awarded in FY 12/13. During this fiscal year, Detective Cammack spent 329 hours investigating crimes related to real estate fraud at an hourly rate of $74.72, for a total of $24,582.88. Detective Sergeant Krallman spent 50 hours investigating crimes related to real estate fraud at an hourly rate of $83.06, for a total of $4153. Combined, the NBPD spent 379 hours investigating crimes related to real estate fraud for a total of $28,735.88. As of this date, the NBPD has an unexpended balance of $55,551.62. In light of this balance, the NBPD does not request any addition funds for FY 13/14. It is our request to encumber the remaining balance for use in FY 13/14. We will continue to track our real estate fraud investigations and report our final statistics and expenditures to the Orange County District Attorney's office at the conclusion of the current grant period (June 30, 2014). See Attachment B. If you have any questions regarding this application, please contact Captain Dale Johnson at (949) 644 -3750, or Lieutenant Jeff Brouwer at (949) 644 -3778. Thank you for your consideration. Sincerely, ;0_?�-- Jay R. Johnson CHIEF OF POLICE Attachments REAL ESTATE FRAUD INVESTIGATIONS FY 2010/2011 THROUGH 2012/2013 SUSPECT DATE INVESTIGATOR TYPE OF CASE ESTIMATED LOSS NUMBER OF EST.PERSONNEL RESULT OF INVESTIGATION NAME(S)+ DR # RECEIVED VICTIMS HOURS SPENT Parker, G 05/26/2010 Cammack 487 PC Approx. $25,000 8 234 Filed TBD (potential Pines, M 10/13/2010 Prouty /Cammack 487/47OPC $100,000 +) 1 182 Filed Jahngiri 09/18/2010 Fitzgerald 487 PC $12,702 1 5 Unfounded Duncan,C 10/26/2010 Fox 459 PC Unknown 1 49 Filed Alvarez, C 01/20/2011 Fitzgerald 487 PC $12,702 1 67 Filed Shaheb, A 01/31/2011 Cammack 487 PC $2,996 1 34 Filed Tow,M none Cammack/Fitzgerald 487 PC Unk. Unk. 6 Ongoing Howard 05/10/2011 Fitzgerald 10085.6(a)BP $2,300 1 34 At DA's office Unknown 06/24/2011 Fitzgerald 470 PC $15,500(potential) 1 4 Unfounded Watttanachinda 07/13/2011 Cammack 470 PC $33,000 1 39 Guilty Carriger 04/19/2011 Cammack 487 PC $27,000 3 24 Closed Duncan 07/14/2011 Fitzgerald 470 PC $200,00(potential) 1 24 Submitted Dobis 01/18/2011 Fitzgerald 487 PC $586,405 1 44.5 Submitted Gressier 09/25/2012 Cammack 487 PC Unknown Unknown 329 On -going Willis 06/26/2012 Krallman 487 PC Unknown Unknown 50 On-going REAL ESTATE FRAUD CASES SUBMITTED FOR PROSECUTION FY 2010/2011 - 2012/2013 SUSPECT CASE NUMBER NAME(S) + DR# NUMBER INVESTIGATOR TYPE OF CASE MONETARY LOSS OF ASSIGNED DDA CASE RESULT OR STATUS VICTIMS Parker, George 11HF0400 Cammack 487 PC Approx. $25,000.00 8 McFetridge Dismissed Duncan, 11F00241 Fox 459 PC 1 Pierce Convicted Alvarez, Cecilia 11HF0809 Fitzgerald 487 PC $12,702 1 Van Der Ahe Convicted Shaheb, Adel 11HF1032 Cammack 487 PC 2,996.00 1 Varner Convicted Pines, Michael 11HF1314 Cammack 602 PC TED 1 Pierce Convicted Duncan Fitzgerald 470 PC $200,000 Kralick DA Reject Watttanachinda 11HF1917 Cammack 487 PC $33,000.00 2 Convicted Dobis Fitzgerald 534 PC $586,405 1 Patko DA Reject TONY RACKAUCKAS ORANGE COUNTY DISTRICT ATTORNEY ORANGE COUNTY DISTRICT ATTORNEY'S OFFICE 401 CIVIC CENTER DRIVE WEST • SANTA ANA, CA 92701 (714) 834 -3636 August 9, 2013 JAY R. JOHNSON, Chief Newport Beach Police Department P.O. Box 7000 Newport Beach CA 92658 Dear Chief Johnson: On behalf of the Orange County Real Estate Fraud Trust Committee, created to administer the funds in the Real Estate Fraud Trust pursuant to Government Code 27388, we are pleased to award funding to the Newport Beach Police Department in the amount of $16,000.00 (plus carryover from 2012 2013 of $59,287.50) for a total of $75,287.50 for fiscal year 2013 -2014 to be used to partially fund salary for an investigator of real estate fraud including training costs of up to $1,000. The Committee is pleased to support your department's efforts to investigate real estate fraud with this award. Under the terms of Government Code 27388(d), law enforcement agencies who receive funding under the statute are required on a yearly basis to submit a detailed accounting of the funds received and to provide statistics on the number of investigations and arrests that resulted from the use of the funds. That accounting of funds for 2012 2013 can be directed to Assistant District Attorney Elizabeth Henderson through e -mail at the following: Elizabeth.hendersonC @ da.ocgov.com. The Trust Fund Committee and the Orange County District Attorney's Office Real Estate Fraud Unit continue to look forward to working together with your department to investigate and prosecute real estate fraud crimes. To accept funding for this program, please submit a letter from your city council, mayor or city manager agreeing to use the program funding for the purpose stated above. Best Regards, Ton ackauckas Orange County District Attorney :vlb cc: Hugh Nguyen, OC Clerk Recorder .-Margaret Cady, CEO Designee RECEIVED AUG 12 201,_ City of Newport Beach BUDGET AMENDMENT 2013 -14 EFFECT ON BUDGETARY FUND BALANCE: �X Increase Revenue Estimates Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations X from additional estimated revenues from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: NO.- 14BA -011 AMOUNT: $16,000.00 �X Increase in Budgetary Fund Balance Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance To increase revenue estimates due to award granted from the Orange County District Attorney's Office for the investigation of real estate fraud crimes. The Police Department's Fiscal Year 2013 -14 budget already includes expenditure funding for the investigators who will be assigned to perform grant - related activities. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 REVENUE ESTIMATES (360 1) Fund /Division Account 1820 489E EXPENDITURE APPROPRIATIONS (3603) Signed: k)(— Signed: General Fund - Fund Balance Description OC Real Estate Fraud Trust City Manager Amount Debit Credit $16,000.00 $16,000.00 Date Sa is ate Signed: City Council Approval: City Clerk Date