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U.S. DepartmeDt 01 Justice
Law Enforcement Assis!:ance Administration
National Criminal Justice Reference Service
nCJrs
JUNE 1980
WH!TE COLLAR CRIME
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FOR PROGRAMS TO COMBAT
WHITE COLLAR CRIME
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MODEL CURRICULUM
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THE NATIONAL CENTER ON WHITE-COLLAR CRIME
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Battelle Law and Justice Study Center
4000 N.E. 41st Street
Seattle, Washington 98105
(206) 525-3130
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Herbert-Edelhertz, Project Director
Clifford Karchmer, Director of Training
and Operations
MODEL
CURrLM.AND·T1E~S
GUIDE FOR
PROGRAMS TO COMBAT WHITE-COLLAR CRfME
by
Clifford L. Karchmer
Proj ect l-1oni tors:
James o. Golden, Director
Criminal Conspiracies Division
Office of Criminal Justice Programs,
Jay Marshall
Conspiracies Division
Office of Criminal Justice Programs
Cri~nal
~J
U.S. Department of Justice
National Institute of Justice
This document has been reproduced exactly as received from the
person or organization originating it. Points of view or opinions stated
in this document are those of the authors and do not necessarily
represent the official position or policies of the National Institute of
Justice.
Permission to reproduce this 1!Bpj I isllt!ld material has been
granted by
Public Domain
LEAA, U.S. pept. of Justice
to the National Criminal Justice Reference Service (NCJRS).
Further reproduction outside of the NCJRS system requires permission of the ~
owner.
This project was supported by Grant Numbers 77-TA-99-0008 and 78-TA-AX-OOSO
awarded to the Battelle Memorial Institute Law and Justice Study Center by
the Law Enforcement Assistance Administration, U.S. Department of Justice,
under the Omnibus Crime Control and Safe Streets Act of 1968, as amended.
Points of view or opinions stated in this document are those of the authors
and do not necessarily represent the offir.ial position or policies of the
U.S. Department of Justice.
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TABLE'0F'C0NTENTS
I.
How Trainers Can Use and Modify the
Model Curriculum •
• ••••
A.
B.
C.
1
Recruiting and Orienting Instructors •
3
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E. Obtaining Instructional Materials
·..
Comprehensive Curriculum on White-Collar
Crime Enforcement Training • • • • • • · . . . . .
D.
II.
..·..
Introduction . . . . . . . . · . . . . . . . .
Adapting the Model Curriculum to Meet
Specific Needs • • • • • • • • • • · . . · . .
Selecting Participants •
Orientation to the Problem, I:
Introduction--What Is White-Collar Crime?
Orientation to the Problem, II:
Relationship of White-Collar Crime to
Other Crime Problems
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7
9
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12
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Detection:
Intell igence Colle.ction and Analysis • • • • • •
18
Detection:
Handling of Complaints •
20
Detection:
Conducting Searches 'for
·.........
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Detection and Investigation:
Employing Financial Investigation Tools
24
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Detection and Investigation:
Locating Sources of Documentary Information
; Preceding page blank
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Violations . . . . . . .
Investigative Planning
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FOREWORD AND ACKNOWLEDGMENTS
Investigation:
Interviewing Victims and Witnesses • • • • • • •
26
Investigation:
Interviewing Suspects
28
.............
Investigation:
Computer-Related Fraud
Investigation:
Using the Computer as an
............
Investigative Aid . . .
30
32
Post-Investigation:
Presentation of a Completed Investigation
to the Prosecutor • • • • • • • • • • •
34
Post-Investigation:
Use of Civil and Administrative Remedies •
36
This model curriculum is one of a series of publications
by Battelle's National Center on White-Collar Crime as part·
of its program of support services to agencies engaged in the
prevention, detection, investigation, and prosecution of
white-collar crime and related abuses. These publications
are intended for use in actual law enforcement operations, as
well as training, on the theory that the best training
materials are those which most respond to the day-to-day needs
of users who regularly practice"their skills.
This model curriculum is based on a comprehensive view
of the relationships between the elements of white-collar
crime and the operational needs of the law enforcement
community. It is, we hope, a roadmap which will assist law
enforcement agencies to initiate effective programs for on-thejob training as well as formal training operations. It has
been structured to encourage its users to adapt its contents
to respond to specific agency needs.
Special mention should be made of the support· and
encouragement of James O. Golden, Director of the Criminal
Conspiracies Division of the Office of Criminal Justice
Programs, Law Enforcement Assistance Administration, and of
Mr. Jay Marshall who is oUA L.E.A.A. Project Monitor. Last,
we gr.atefully acknowledge the invaluable support of members
of the Battelle Law and Justice Study Center staff,.and
particularly that of Cheryl Osborn and Charleen Duitsman who
typed our manuscripts, kept our files, and did all those things
without which this series could not have been created.
Herbert Edelhertz
Project Director
National Center on White-Collar Crime
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HOW'TRAINERS'CAN'USE'AND'MODIFY
THE'MODEL CRRICULUM
A.
About the Author
_ _ r.
Clifford Karchmer is a Battelle Research Scientist at the
Law and austice study Center, Battelle Human Affairs Research
Centers, Seattle. Currently he serves as Director of Training
and Operations of the National Center on White-Collar Crime,
located at Battelle, Seattle.
Prior to joining Battelle, the author served as Director of
the Massachusetts Organized Crime Control Council, as Police
Program Specialist for the Massachusetts Committee on Criminal
Justice, and as a special agent and research coordinator for
the Pennsylvania Crime Commission.
Other law enforcement publications, which he co-authored,
include The Report on Organized Crime (Pennsylvania Crime
Commission, 1970), and Compendium of Planning and Operational
Guides to White~Colar
Crime Enforcement (Washington, D.C.:
Government Printing Office, 1979). Presently, he is completing
an enforcement manual on arson-for-profit under a 1979 LEAA
technical assistance grant to Battelle.
Introduction
Over the past-decade, we have seen nationwide interest in
white-collar crime grow at a tremendous pace. Whether this
concern has been generated by scandals or by the abuses
uncovered by crusading public officials, the term "white-collar
crime" has become a catchall expression. Often this term is
used without clearly defining the abuse(s) it is intended to
describe. In order to avoid a lengthy discussion of what
should or should not be included in the term, the model
curriculum uses this definition of white-collar crime:
. • • an illegal act or series of illegal acts
committed by nonphysical means and by concealment or
guile, to obtain money or property, to avoid the
payment or loss of money or pro~ety,
or to obtain
business or personal advantage.
A number of major crime problems which are often treated as
separate issues can fall within this definition. These include
organized crime (especially where illicit profits are secretly
plowed into legitimate businesses) and official corruption.
Other problems could also be included within the definition,
depending upon whether criteria such as concealment or criminal
intent are applied. In the last analysis, the value of any'
training program developed from the following model depends
upon whether enforcement resources are committed primarily to
invoke remedies for white-collar crime.
lHerbert Edelhertz, The Nature, Impact, and Prosecution
of White-Collar Crime (Washington, D.C.: U.S. Government
Printing Office, 1970), p. 3.
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Adapting the Model Curriculum to Meet Specific Needs 2
This model curriculum is addressed to the training needs of
personnel working in general white-collar crime assignments
(often known as "fraud" or "economic crime" units) which aJ:'e
located in state or local police or prosecutors' offices.
This curriculum is designed intentionally to orient
personnel to the requirements of building a case as it moves
along the enforcement process. This focus is substantially
different from that of other approaches, which stress methods
to attack specific types of fraud or to utilize particular laws
or administrative remedies. Because this curriculum has been
geared to requirements of the enforcement process as a whole
rather than to its specific parts, it follows that the model
curriculum will be most beneficial for those who want to
conduct a process-oriented training program.
Clearly, personnel in highly specialized enforcement units
or in regulatory agencies will find some topics in this
curriculum more helpful than others, depending upon their
units' legal jurisdiction, policies, and priorities. In order
to adapt the curriculum for personnel with specific needs
(e.g., beginning, advanced, or specialized personnel), the user
is provided with one or more references at the end of each
topic discussion. These references can be reviewed in order to
gauge the need to raise, lower, or otherwise modify the
sophistication level by which each topic is addressed.
One way to modify the curriculum for a particular group is
to select course instructors directly suited to the needs of
that group. For example, the treatment of financial
investigation could be split into more than one lecture
B.
. 2~or
segment, with a special instructor teaching advanced stUdents
who are already familiar with the basics of accounting and
financial investigation. Another method of adapting the
curriculum is to select technical and specialized background
readings for the students and to gear these readings to the
students' experience levels or specialized disciplines. One
publication designed to identify such material is the
Compendium'of'Training'and Operational Guides to White-Collar
Crime'Enforcement which contains over 60 references to
technical materials. Limited copies are available from either
the National Center on White-Collar Crime, located at Battelle,
Seattle, or from the Criminal Conspiracies Division, Office of
Criminal Justice Programs, Law Enforcement Assistance
Administration, Washington, D.C. 20531.
C.
Recruiting and Orienting Instructors
Recruiting qualified white-collar crime instructors is not
difficult if trainers know what qualities to look for. One of
the best ways to match instructors with training needs is to
select several candidates for each course topic, each of whom
might do a satisfactory job with that topic. Then, jointly
with someone else either working on the development of the
course or engaged directly in white-collar crime enforcement,
discuss the strengths and weaknesses of each candidate. There
is ample justification for selecting instructors on the basis
of rigid criteria. First, it is important to examine the
records of instructors as communicators of knowledge, as well
as their records as investigators, prosecutors, or
supervisors. Instructors may develop reputations as "terrific
speakers" only because they are tellers of crilorful "war
stories", not necessarily because they are good communicators
of practical enforcement knowledge.
Whether instructors will be paid or will volunteer their
services, it is important to set forth for them a clear"
concise statement that covers exactly what they are to speak
ba~kgrund
reading on refining educational and
.see Ro~ert
F. Mager, Preparing
Inst~uc10alObJev,
2a ed. (Belmont, Calif.: Fearon
Pub~lhers,
1975) .. The development of white-collar crime
tra1nlng programs 1S also covered in Appendix A of the manual
by.Herbert ~delhrtz,
et al., The Investigation of White-Collar
Cr1me (Washlngton, D.C.: U.S. Government Printing Office, 1977).
tra1ng.obJecl~s,
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about. This statement should also explain where and how each
topic fits into the overall course theme. Conscientious
instructors usually appreciate these efforts to help them
structure their presentations. However busy they may be, they
usually find time to prepare adequately for the course if they
know'what is expected of them. If instructors work under a
contractual (e.g., consultant) arrangement, it should be
possible to include contract provisions covering both the
required preparation and prior mutual agreement on subject
matter. If the training budget can support these provisions f
it will be a worthwhile investment of time--and money.
In orienting instructors, it helps to obtain from them an
outline of the points they will make in their presentations.
If possible, encourage them to express each point in their
outline as a simple, declarative sentence. These outlines can
then serve several purposes. First, the outlines can be
distributed to students so that they can follow each lecture,
point by point. Second, they can be used by training Course
administrators to spot needless overlap or to help detect gaps
in coverage of important points so the problems can be remedied
well before the Course. Third, outlines can be distributed to
other instructors to give each one an idea of what the others
will be covering and how each can develop or embellish a point
made by another instructor.
The National Center on White-Collar Crime is identifying
expri~cd
instructors in this field. Inquiries are welcome
from those planning to conduct white-collar crime and related
training courses. Other organizations which have sponsored
training courses on or related to white-collar crime should
also be contacted for advice and possible assistance:
•
•
Economic and Financial Crimes Training Unit
FBI Academy
Quantico, Virgin{a 22135
Federal Law Enforcement Training Center
Glynco, Georgia 31520
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•
National Training Center
Internal Revenue Service
2221 Jefferson Davis Highway
Arlington, Virginia 22202
•
Cornell Institute on Organized Crime
Cornell University Law School
Myron Taylor Hall
Ithaca, New York 14853
•
Dade County Institute on Organized Crime
Biscayne Community Col~eg
16400 N.W. 32nd Avenue
Miami, Florida 33054
•
National College of District Attorneys
Bates College of Law
University of Houston
Houston, Texas 77004
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In many locations, industry and professional associations have
sponsored programs on white-collar crime issues. The most
popular courses seem to be in the fields of insurance fraud,
computer fraud, financial investigation, and business
security. Local offices or chapters of national agencies and
organizations can often provide information on available
instructors and may be able to help rate their suitability for
law enforcement audiences.
D.
Selecting' Participants
Whether or not an organization has a selective admission
policy depends upon local conditions of manpower availability,
funding, and time. Assuming that it will be possible to select
students from a list of applicants, the following criteria
should be considered:
Criterion
Length of involvement
in white-collar crime
enforcement
Reason"for'Concern
Novice personnel may be too new
to criminal investigation or prosecution to be able to ~istnguh
the special requirements of whitecollar crime enforcement
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Prior relevant
training
Students may have attended other
courses as basic (or advanced) as
that planned, and therefore may
derive little or no benefit
Degree of
specialization
Some specialists in white~'colar
crime enforcement may have little,
if anything, in common with the
other studentsJ or they may have
such Jimited involvement in the
enforcement process that the bulk
of the course may be inapplicable
(and uninteresting) to them.
In many cases, students who are more advanced than the majority
of the other attendees may be helpful course participants for
several reasons. First, they may serve as good evaluators of
the course for·the·course·sponsor. Because of these students'
experience, they are often good judges of the value of each
instructional segment for the less-experienced students.
Second, they can make use of their p~er
status with other
students to assist the less-experienced students in absorbing
the course material--both formally in ~las
and informally at
meals and during free time.
There are many viewpoints on ways to divide course
attendees into workshop or discussion groups. Some believe
that it is more helpful to "track" the students by placing into
each workshop students with similar terms of service or
specialized duties. In this way, novices, intermediates, and
more experienced students will discuss problems at their
respective levels of competence and in terms of mutual
concerns. Others believe that it is best to mix students and
avoid tracking. As a compromise, one might consider having
some.workshops and discussion groups consist of a mix of all
types of students, and others made up of students who are
either tracked or assigned according to their specialities
(e.g., police/prosecutors, or managers/operational personnel).
Whatever method is chosen, it is important to be guided by
one's own assessment of the background and needs of the student
body. Clearly, concerns about workshop assignments in a
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seminar for chiefs of securities enforcement units are very
different from those involved in training 50 investigators and
50 prosecutors from general fraud units. As a rule of thumb,
it helps to develop a profile of course stude.nts which covers
their backgrounds, specialities, and experience levels. One
option to consider is to aim each course at the majority of
students who form the "middle ground." Then, t"ime can be set
aside to address the needs of special groups (e.g., novices,
advanced, and/or highly specialized participants).
E.
Obtaining Instructional Materials
With some searching, it is possible to locate a good deal
of useful and relatively low-cost instructional material.
First, consult the Compendium of Planning and Operational
Guides to White-Collar Crime Enforcement, copies of which are
available (in limited supply) from the National Center on
White-Collar Crime. Second, canvass industry and professional
organizations concerned with white-collar crime. The larger
the jurisdiction, the more likely it is that a regional office
or local chapter of such an organization is located within the
area ser·ved. Many such organi zations maintain training
staffs--nationally and sometimes locally--that have conducted
programs for law enforcement agencies, as well as for their own
personnel. If local staff members cannot help immediately,
they can often place the requestor in touch with the national
office's training or research staff. Frequently, training
materials developed for "in-house" use ~an
be made available to
outside agencies if the requestor knows what to ask for and can
assure the issuing organization that such materials will be
kept within his or her distribution and security restrictions.
Material published in government reports, including the
products of LEAA-sponsored projects, can usually be obtained
inexpensively or reproduced without copyright approval. There
is a wealth of other material that is protected by copyright;
f
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8
however, permission can often be obtained from the copyright
holder.s to reproduce these materials.3
An initial search for instructional material should include
those federal agencies that conduct training programs and
develop their own material, such as the FBI, IRS, SEC, and
LEAA.4 Private organizations that ~onduct
educational
programs on white-collar crime include the Insurance Crime
Prevention Institute, Westport, Connecticut; The American
Society for Industrial Security, Washington, D.C., the
Institute of Internal Auditors, Altamonte Spr.ings, Florida; the
Bank Administration Institute, Park Ridge, Illinois; and the
Computer Security Institute, Northboro, Massachusetts.
II.
COMPREHENSlVE-CURRICULUM-ON-WHITE-COLLAR
CRIME-ENFORCEMENT-TRAINING
3In view of recently enacted federal copyright
legislation, this is a particularly important issue to be
considered in preparing materials for training programs.
4As of this writing, training programs were being
developed by the Enforcement and Compliance Division,
Comptroller of the Currency, U.S. Treasury Department,
Washington, D.C. 20219; and the Federal Law Enforcement
Training
Center, U.S. Treasury Department, Glynco, Georgia
31520.
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Enforcement Issue:
4.
Orientation to the Problem; I:
Introduction - What Is White-Collar Crime?
To communicate the responsibility that personnel have
to educate the public in general, and busines.ses and
professional associations in particular, about the need to
combat white-collar crime, to deter such violations, to make it
Instructional Goal:
To educate enforcement personnel about (1)
white-collar crime, and (2)
the nature of
the harm done to individuals and to
more likely that violations will be reported, and to increase
community cooperation with enforcement personnel.
society by white-collar crime offenders.
Resource ,Materials:
Rationale:
Investigators must develop a thorough working knowledge of
what is meant by "white-collar crime," the relevance of this
enforcement area to the broad range of
indv~ual
agency
objectives, and the kinds of responses they may be capable of
effecting.
Unless investigative personnel are exposed to a
well-developed and comprehensive session of "consciousness
raising" at the beginning of their training, the various skills
Ede1hertz, Herbert.
White-Collar Crime.
Office, 1970.
The'Nature; Impact, and Prosecution of
Washington, D.C.: Government Printing
Ede1hertz, et al., The Investigation of White-Collar Cr ime,
Chapters I-III. Washington, D.C.: Government Printing
Office, 1977.
A'Handbook on White-Collar Crime.
Chamber of Commerce, 1974.
Washington, D.C.:
and techniques taught later may not seem relevant to the needs
of the trainees and their agencies.
White-collar crime refers
to an enormous variety of individual crimes. Therefore, it is
critical that the students develop an understanding of how
white-collar crime offenders operate, and a perception that
with their individual and collective energies they can combat
them effectively, as well as advance their personal and agency
objectives at the same time.
Training Objectives:
1.
To communicate a specific, operational definition of
white-collar crime--one which includes the various offenses to
which the term applies.
2.
To clarify the nature and extent of white-collar crime
in the nation and the different harmful effects that it has on
individuals and economic and political institutions.
3.
To understand the roles and relationships among
criminal justice personnel who investigate, prosecute, and
i
otherwise combat white-collar crime.
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Enforcement· Issue:
Orientation to the Problem, II:
Relationship of White-collar Crime to
Other Crime Problems
Instructional'Goal:
To establish that white-collar crime is not an isolated
problem, that it causes and grows out of other crime problems,
including organized crime and corruption, in both the private
and the public sectors.
Rationale:
White-collar criminal activities are closely related to
other criminal activities. For those who intend to steal,
white-collar crime is an alternative approach to theft, whether
it is theft from the government or from private parties. Often
those who are engaged in highly organized forms of crime
(organized crime) commit white-collar crimes in order to
realize and hold on to their illicit profits, or to find new
(and perhaps otherwise legal) ways of investing their illicit
earnings. It is essential that white-collar crime enforcement
personnel develop a thorough understanding of all relationships
between and among white-collar and related crimes, primarily to
develop working relationships with units and 'agencies specializing in combatting these particular criminal activities.
13
3. To understand when, why, and how criminals active in
organized crime engage in white-collar crime activities, or
develop working relationships with criminals involved in fraud
schemes.
4. To know the characteristics and indicators of
corruption in public agencies, and how corruption develops in
them.
5. To develop and maintain both liaison and operating
relationships with agencies responsible for preserving
integrity in governmental programs, as well as with agencies
that investigate organized crime, corruption, and other types
of well-planned and ongoing criminal activity.
Related'Skills:
1. Interagency liaison
2. Intelligence analysis
Resource'Materials:
DeFranco, Edward. Anatomy of a Scam.
Government Printing Office, 1973.
To develop an awareness of characteristic white-collar
criminal activities that naturally develop out of common street
crimes and organized crime.
2. To develop a knowledge of criminal organizations in
which planning, division of labor, secrecy, and inSUlation of
leadership are the major characteristics that present detection
and investigation problems.
t al
The Investigation of White-Collar'Crime,
ewashington, D.C.: Government Printing Office,
~:t
1977.
Gardiner, John A. Politics of Corruption.
Russell Sage, 1970.
Training'Objectives:
1.
Washington, D.C.:
Prevention, Detection; and.
Local Government. Wash1ngton,
D.C.: Government Printing Office, 1978.
c~retion·fuP
L man
New York:
Theodore, et ale
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Enforcement Issue:
Inv.estigative Planning
Instructional Goal:
To familiarize the investigator with the value of early and
continuing information analysis in order to plan for the
various events that might arise during the investigation; and
where necessary, to alter the direction of the investigation
according to the findings of continuing information analysis.
Rationale:
Fraud often involves complex crimes in which the full
dimension of the scheme is evident only after a prolonged
investigation. In order to manage a fraud investigation
successfully, it is important at the outset of the inquiry to
determine:
(1) that there is a strong prospect that the
inquiry will be as productive as was initially expected; and
(2) the different offenses that might have been committed. By
proceeding in this manner, investigators will be able to build
a case involving the maximum number of defendants involved. In
addition, the investigator may select the most appropriate and
effective charges to bring against the defendants, based upon a
thorough review of alternative charging options.
Training-Objectives:
1. To enable the investigator to analyze intelligence
data, agency referrals, complaints, and other pertinent
information to determine whether an investigation, in its early
stages, has enough potential to proceed.
2. To gather all available information about a fraud
scheme or a variety of schemes in order to chart all probable
events and relationships that could account for the way in
which the fraud developed.
3. To examine all possible patterns of facts and
circumstances that explain a scheme or pattern of activity, in
order to select, given the range of all possible options, the
most effective criminal, civil, and/or administrative action.
4. To determine whether there are legitimate business
explanations for the conduct under examination so that
tmjustified enforcement action may be avoided; but, if the
actions are determined to have no legitimate explanation, to
increase the impact of the completed investigation.
5. To make use of a system for the management of
materials, documentary and otherwise, gathered in the course of
an investigation, and an indexing system to assure prompt,
accurate access and retrieval of the material.
Relevant Skills:
1. Intelligence collection and analysis
2. Document review and analysis
Resource-Materials:
O'Neill, Robert. InvestigaPl~.
D.C.: Government Printing Office, 1979.
Washington,
Visual Investigative Analysis. Sacramento: California
Department of Justice, Advanced Training Center, 1975.
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Conducting Searches for Violations
Instructional-Goal:
To identify methods that investigators can use to uncover
incidents and patterns of fraud in the .absence of complaints.
Rationale:
It is important that investigators know where and how to
search for probable white-collar crime violations. Different
types of fraud victimize different segments of the population.
Investigators should be able to satisfactorily answer the
following questions: how much fraud is there in my
jurisdiction that may concern my agency? who are the citizens
and what are the institutions victimized? and who are the
probable offenders?
Training Objectives:
1. To develop a special sensitivity to the indicators of
fraud in one's jurisdiction, and to the existence of vulnerable
situations in which such crimes are likely to occur.
2. To know the sources of public document and news media
information that can enable thp- investigator to extract leads
on probable fraud violations.
3. To obtain information on probable violations by
developing cooperation with business and professional
organizations.
4. To develop a liaison with other public agencies (e.g.,
licensing, regulatory, and revenue) in order to encourage the
reporting of violations.
5. To use knowledge obtained from investigations in other
types of cases (e.g., theft or organized crime) to help develop
white-collar crime investigations of the same or other subjects.
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Enforcement Issue:
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6. To develop a familiarity with information on possible
fraud violations contained in computer copy, and to be able to
identify patterns of illegal activity from such information.
Relevant Skills:
1. Document review and analysis
2. Intelligence aaalysis
3. Interviewing
4. Interagency liaison
Resource Materials:
A Handbook on White-Collar Crime.
Chamber of Commerce, 1974.
Washington, D.C.: U.S.
Ede1hertz, et a1. The Investigation of White-Collar Crime,
Chapter IV, pp. 179-199. Washington, D.C.: Government
Printing Office, 1977.
Godfrey, E. Drexel, et a1. Basic Elements of Intelligence
(revised edition). Washington, D.C.: Government Printing
Office, 1976.
Villano, Clair E. Complaint and Referral Handling.
Seattle: National Center on White-Collar Crime;
forthcoming, 1980.
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Enforcement Issue:
Detection:
Intelligence Collection and Analysis
Instructional Goal:
To enable the investigator to gauge the extent of fraud
patterns in his or her jurisdiction and to identify probable
fraud offenders.
Rationale:
The time and personnel of white-collar crime units are
valuable. Time and personnel should be allocated according to
priorities which in turn are based upon an accurate determination of the jurisdiction's fraud problems. In order to
accomplish this, it is necessary for fraud unit personnel to
develop skills in collecting intelligence (in the normal course
of detection and investigation), in analyzing int.elligence to
determine its reliability and importance, and in storing and
retrieving such information.
Training-Objectives:
1. To know what kinds of information to collect on the
variety of fraud schemes and offenders operating in the
investigator's jurisdiction, and how to collect them.
2. To elicit intelligence on a routine basis from other
investigators in the same agency, in other agencies, and in
private agencies, and to remain aware of interagency protocols,
and security and privacy restrictions.
3. To analyze information on the various types of fraud
schemes and offenders, demonstrating familiarity with such
techniques as link, event, cash flow, and visual investigative
analysis.
4. To identify and draw upon sources of public record
information and confidential informant intelligence in the
j ur isdiction.
5. To employ collection and analytical skills
satisfactorily to the point that indicators of fraud schemes in
their early stages of growth can be identified and such
activities combatted through investigation ,and prosecution.
6. To be able to collect both strategic intelligence (at
the detection stage) and tactical intelligence (during
investigation) •
7. To use the intelligence gathered for planning the
conduct of fraud investigations.
8. To use information contained in files of closed or
terminated cases as intelligence on possible offenders.
Relevant Skills:
1. Report writing
2. Document review and analysis
3. Interviewing
Resource Materials:
Edelhertz, et ale The Investigation of White-Collar Crime,
Chapter III. Washington, D.C.: Government Printing Office,
1977.
Godfrey, E. Drexel, et ale Basic Elements of-Intelligence
(Revised edition), Chapter IV and Appendix F. Washington,
D.C.: Government Printing Office, 1976.
Hagen, Roger. The Intelligence Process and White-Collar
Crime. Washington, D.C.: Government Printing Office, 1979.
Handbook of Self-Evaluation Guidelines for Intelli ence
Units. Sacramento: Cali ornia Department of Justice,
Organized Crime and Criminal Intelligence Branch, 1976.
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Enforcement Issue:
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Detection:
6.
Handling of Complaints
To use complaints as a means of determining whether Or
not to initiate investigations and to allocate necessary
resources.
7. To use the analysis of complaints as an indication of
Instructional Goal:
To teach the investigator the importance of encouraging and
the unit's effectiveness.
properly handling victim complaints, and procedures for
8.
processing, retrieving, and tracking such information.
To develop the capability of generating referrals to
other agencies with jurisdiction over fraud problems, and to
encourage referrals from other agencies to the investigator's
Rationale:
own.
In general, enforcement agencies lack standard procedures
for encouraging members of the public victimized by fraud to
report such activity.
Relevant Skills:
By establishing both formal procedures
1.
Interviewing
and sensitive methods of handling personal interactions, fraud
2.
Report writing
unit personnel should be able to encourage citizens to report
3.
Resource allocation
white-collar crime offenses.
Resource Materials:
Training"Objectives:
1.
Edelhertz, et ala The" Investigation" of White-Collar Crime,
Chapter II, pp. 53-64 and 72-78. Washington, D.C.:
Government Printing Office, 1977.
To understand the crucial importance of complaints to
the functions of detection, investigation, and prosecution.
2.
To familiarize the investigator with methods to
Villano, Clair E. Complaint" and Referral Handling.
Seattle: National Center on White-Collar Crime;
forthcoming, 1980.
initiate and maintain contacts with citizens organizations and
business owners in order to create an incentive for reporting
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fraud victimization.
3.
To develop the capability to effectively assemble and
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analyze complaint information from different sources and/or
agencies, including complaint information that is related but
does not initially appear to be related.
4.
To determine which complaints should be retained by the
unit for verification and/or further investigation, and which
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To enable the investigator to monitor at any time the
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should be referred to other departmental units or outside
agencies.
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status and progress of all complaints received.
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Enforcement· Issue:
23
Detection and Investigation:
Locating Sources of Documentary Information
4. To know when and how to obtain information through the
use of search warrants and subpoenas, and any special
applications that warrants and subpoenas may have in
white-collar crime cases.
Instructional Goal:
To enable the investigator to identify all sources of
public record information about a subject, business entity,
and/or fraud scheme from public and private agencies.
5. To understand the requirements of state and federal
privacy and security legislation for access to, and usage of,
records.
Relevant Skills:
Rationale:
Investigators may embark on criminal investigations without
obtaining and analyzing all available background information.
Substantial information about offenders and their businesses
ana fraud schemes is often readily available from a wide range
of public licensing agencies, regulatory agencies, and other
agencies, and even from professional associations. It is also
important to obtain such information in order to determine
whether regulations and laws regarding disclosure,
registration, filings, and false statements may have been
violated.
1.
2.
3.
Resource
Materils~
Edelhertz, et ale The Investigation of White-Collar' Crime,
Appendix B, pp. 267-275. Washington, D.C.: Government
Printing Office, 1977.
Glick,. Rush, et ale
Police, pp. 271-288.
1974.
Training Objectives:
1. To familiarize investigators with the existence of
repositories of information on prior investigation, litigation,
licenses, property transfers, permits, registrations, filings,
and other data on individuals, businesses, and fraud schemesJ
Document review and analysis
Report writing
Interviewing
Fraud Investigation: Fundamentals-for
Springfield, IL: Charles C. Thomas,
Real Estate and Title Research. Miami: Dade County
Department of Public Safety, 1975.
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and how to best obtain, store, retriever and utilize such
information.
2. To locate those kinds of documents in each jurisdiction
where the submission of false or incomplete information may be
cause for administrative, civil, or criminal action.
3. To assemble a' file of all such available information in
order to augment intelligence information about individuals and
fraud schemes.
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24
Enforcement Issue:
4.
Detection and Investigation:
Employing Financial Investigation Tools
accounting terms.
5. To guide auditors, accountants, and other financial
examiners in uncovering the elements of fraudulent activity in
Instructional Goal:
To enable personnel to make productive use of financial
documents _and, examinations to detect possible fraud and to use
such information to guide investigations.
Rationale:
A frequent reason given for the reluctance to combat
white-collar cr'ime is that investigators need to have extensive
accounting backgrounds. Although such knowledge is helpful, it
is not essential to the investigation of most types of fraud.
It is important that investigators develop a general working
knowledge of financial statements and balance sheets in order
to make some preliminary determinations about: (1) what the
statements alone tell about possible frauds; and (2) what leads
the investigator can extract from the statements in order to
ask the auditors or accountants specific questions. It is also
essential that an investigator realize that the detection of
fraud is largely assisted by a working knowledge of business
practices and the financial conditions reflected in financial
statements.
Training' Objectives:
1. To identify likely sources of financial information,
e.g., statements, books, checks, business records, mortgage
documents, and sales and purchase documents.
2. To develop the capability to ask specific and relevant
questions of auditors, accountants, bank examiners, and other
preparers of financial examinations regarding possible
fraudulent activity.
3. To be able to develop specific questions and
assignments for financial examiners in order to obtain
follow-up information.
To develop a working knowledge of business and
the course of investigations.
6. To use information generated by computers to detect and
investigate fraud relating to financial transactions.
7. To be able to trace the movement and control of assets
from the actual owner to straws and other parties.
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Relevant'Skills:
1. Document review and analysis
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3.
Report writing
Interagency liaison
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Resource 'Materials:
Briloff, Abraham. More'Debits'Than'Credits:The'Burnt
Investigators Guide to Financial Statements. New York:
Harper and Row, 1976.
Edelhertz, et ala The'Invstigao9fW~-Clr
Cr~me,
Appendix D, "The SRventh Basic Invest1gat1ve Techn1que.
Washington, D.C.: Government Printing Office, 1977.
Introduction to Books and Records.
Academy, 1975.
Quantico, VA: FBI
'.
Nossen, Richard. The'Determination of Undisclosed
Financial Interest. Washington, D.C.: Government Printing
Office, 1979.
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Enforcement Issue:
Investigation:
Interviewing Victims and Witnesses
Instructional-Goal:
To enable personnel to interact with fraud victims and
witnesses in order to encourage cooperation and elicit the
maximum amount of information.
Rationale:
Because fraud investigation usually involves determination
as to whether a crime was committed rather than the identity of
the offender, the investigation of white-collar crimes requires
frequent contacts with possible victims and witnesses of the
fraudulent activities. In order to interact with citizens
sensitively, investigators must conduct themselves in such a
manner as to persuade victims and witnesses not only to report
offenses, but also to cooperate fully throughout the ensuing
investigations.
Training Objectives:
1. To conduct the interview in a manner to secure
complete, detailed, and explicit information about fraud
schemes and offenders.
2. To obtain all documentation relevant to the incident or
scheme communicated by the victim or witness.
3. To reinforce the cooperation of the witness or vic~m
by remaining sympathetic to, and cognizant of, his or her
motives, so that continued cooperation will be forthcoming.
4. To remain aware at all times of the legal requirements
in electronically recording and otherwise documenting
interviews.
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Relevant Skills:
1. Note taking and report writing
2. Analysis of victim/witness motivations
Resource Materials:
Ede1hertz, et ale The'Investigation of White-~01ar'Cm,
pp. 261-262 and Chapter IV, pp. 153-166.
Government Printing Office, 1977.
Washlngton, D.C.
"Financial Interviewing," in Financial Investigative
Technigues: Student'Coursebook. Arlin~t,
VA: U.S.
Internal Revenue Service, National Tralnlng Center, 1978.
Condon, Richard. Interviewing'and Interoga~
in
White-Collar Crime'Enforcement. Seattle: Natlona1 Center
on White-Collar Crime; forthcoming, 1980.
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Enforcement Issue:
5. To distinguish between the enforcement implications of
interviews held at the request of a suspect and those held at
the request of the investigator, and to distinguish between the
Investigation:
Interviewing Suspects
different considerations that would detrmin~
Instructional Goal:
To enable personnel to determine when, how, and under what
conditions during the course of the investigation they should
arrange to question those centrally involved or victimized.
Rationale:
Depending upon the nature of the case and progress of the
investigation, it may be helpful at some point to interview
suspects. The investigator's purpose may be to incriminate the
suspect, or to persuade the suspect that the strength of the
evidence against him or her warrants a plea of guilty. Since
white-collar crime offenders can be better educated and more
articulate than other criminals, investigators need to take
special precautions and make extraordinary preparations when
undertaking an interview. Interviews which are prem'ature,
either in terms of scheduling or in preparation, may result in
the failure of an investigation.
Training Objectives:
1. To know at which point(s) in the course of a fraud
investigation it is most beneficial to interview a suspect.
2. To understand the relative costs and benefits of
conducting interviews at various stages of the investigation.
3. To remain cognizant at all times of constitutional and
other legal requirements which can affect subsequent
enforcement use of the products of the investigation.
4. To maintain a working relationship with a prosecuting
attorney for the purpose of determining whether the suspect
should be given a formal grant of immunity or other special
consideration in return for his or her cooperation, and to
avoid mistakes that, in effect, confer de facto immunity upon
the suspect.
the
investigator's procedure in each case.
6. To plan thoroughly for questioning and to postpone it,
if necessary, until able to pose the desired questions.
7. To conduct an interview successfully in the presence of
the suspect's attorney, but in the absence of a prosecutor.
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Relevant'Skills:
1. Note taking and report writing
2.
Interviewing
Resource'Materials:
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Edelhertz, et ale The'InvestigationofWhite-Collar-Crime,
Chapter IV, pp. 167-172 .• Washington, D.C.: Government
Printing Office, 1977.
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5. To understand requirements involving evidence gathering
and preservation, including special issues in search and
seizure, in computer-related fraud investigations.
Investigation:
Computer-Related Fraud
Instructional Goal:
To enable the investigator to identify, obtain, and
preserve evidence of the range of fraud schemes and offenses
growing out of the use of computers.
Rationale:
Computers can be used to produce false billings, account
entries, and other instrumentalities to commit white-collar
crime. This requires that investigators be familiar with the
computer as a data-processing mechanism, with the various
illegal methods for manipulating computer operations, and with
special approaches that computer technology requires in the
course of a fraud investigation. Investigators often avoid
this type of investigation because of an unwarranted belief
that expertise in--rather than familiarity with--computer
operations is required. Therefore, it is important that
investigators become familiar with basic computer operations
and terminology, but they should also learn where to locate
experts in this field who can furnish specialized assistance.
Training'Objectives:
1. To develop a basic understanding of computer operations
and terminology.
2. To understand how computers are used as a
data-processing tool in governmental and business operations.
3. To use computer operation audits as sources of
investigative leads that may reveal the vulnerability of a
system to fraud.
4. To determine when, in the course of a computer fraud
investigation, it may be necessary to enlist the services of a
computer expert, and what questions to ask.
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31
30
Enforcement Issue:
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Relevant Skills:
1. Document review and analysis
2. Knowledge of financial examinations
Resource Materials:
Becker, Jay. The' Investigation of Computer ,Crime.
Seattle: National Center on White-~olar
~r1meJ
and
Washington, D.C.: Government Printlng Offlce, 1980.
Edelhertz, et ale The Investigation of White-Collar Crime,
Chapter V, pp. 199-210. Washington, D.C.: Government
Printing Office, 1977.
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Leibholz, Stephen, and Louis Wilson. User's Guide' to
Computer'Crime, ChapterB 1-4, 11, and 12. Radnor, PA:
Chilton Books, 1974.
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Enforcement Issue:
Relevant Skills:
1. Interagency liaison
2. Document review and analysis
Investigation:
Using the Computer as an Investigative Aid
Instructional Goal:
~To familiarize personnel with methods of organizing.
investigative information for orderly retrieval and analysis
through computers.
Resource Materials:
Edelhertz, et ale The'InvstigaofW:C~lrm,
pp. 210-213. Washington, D.C.: Government Prlntlng Offlce,
1977.
National District Attorneys ASS?ciation .. Eviden~
Tracking: A Manual for·Psecutl~An.
National District Attorneys AssoClatlon, 197~
Rationale:
Investigators store large amounts of information
inefficiently in their heads, on scraps of paper, in narrative
reports, as well as in well-organized and indexed manual filing
systems. Computers can assist with the organization and
retrieval of information in individual investigations, and may
also search through voluminous data in order to identify
possible violations Ot patterns of such violations.
Training Objectives:
1. To monitor by computer the receipt, flow, and outcome
of complaints received by the unit; and according to such
criteria as type of victim, kind of fraud schemes, and method
of operation.
2. To use computerized printouts of information such as
billings in order to obtain possible leads for further fraud
investigation.
3. To pose specific investigative needs so that a computer
specialist can provide the necessary information needed by the
investigator in areas such as procurement bidding and billing
of Medicaid services.
4. To be able to input, retrieve, and use information
about fraud perpetrators, their schemes, methods of operation,
and other data as an aid to an ongoing investigation.
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Enforcement Issue:
Post-Investigation:
Presentation of a Completed Investigation
to the Prosecutor
Instructional Goal:
To enable the investigator to present all of the products
of a completed investigation to the prosecutor in a format that
met~
the prosecutor's basic requirements, and thereby enhances
the likelihood of a favorable evaluation by the prosecutor.
Rationale:
Investigators normally submit their findings to prosecutors
in the form of case summaries and collected investigative
reports, supported by evidence displayed or described in an
orderly manner which tracks the elements of the most likely
criminal violations. This is frequently accompanied by some
form of oral presentation. The loose format in which this
material is presented may obscure the full value and impact of
the investigator's findings. Often, what. is needed is more
than a technical summary of the evidence s;_~\
\. . orting the case.
It is crucial that the presentation show:
(1) that there is a
prosecutable case~
(2) how it should be presented in order to
motivate the jury to return a verdict of guilty; (3) why the
case is worthy of prosecution in the competition for court and
prosecutor time; and (4) any community or public safety
purposes that may be served by the prosecution. Where
investigators have developed solid cases with sufficient
evidence, frequently all that remains is that they organize the
facts of the case into a tight, well-ordered, and coherent
"package" for the prosecutor. This approach allows the
prosecutor to make an accurate assessment of the merits of the
case and to ask the investigator crucial questions based on the
information presented.
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Training Objectives:
1. To enable the investigator to gather and present the
findings of the criminal investigation in a complete and
concisely written factual summary covering the nature of the
offense and all pertinent evidence.
2. To enable the investigator to make a complete and
concise oral summary of the case.
3. To organize all case information in the form of
investigative reports, statements, do~umentary
and other
evidence in a manner that facilitates thorough review and easy
reference.
Relevant'Ski11s:
1. Report writing
2. Interagency liaison
Resource 'Materials:
Edelhertz, et a1. The Investigation'ofWhite-Collar Cri~,
pp. 195-198. Washington, D.C.: Government Printing Office,
1977.
Keutzer, Stephen H., and Clark E. Mears. Investigative
ReP9 rt 'Writing. Salem: Oregon Department of Justice,
Special Investigation Pivision, 1975.
Internal Revenue Service. Financial Investigation
Techniques. National Training Center, 2221 Jefferson Davis
Highto1nV, Ar 1ington, VA 22202.
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Enforcement Issue:
37
Post-Investigation:
4.
Use of Civil and Administrative Remedies
To develop complete knowledge of all regulatory and
licensing bodies in one's jurisdiction, and the range of
information available to them in applications, filings, and
Instructional Goal:
repo~ts,
To make the investigator and prosecutor aware of the
including their powers to obtain documentary evidence
existence and value of noncriminal sanctions that can be
and other evidence of possible fraud.
invoked to meet objectives of prosecution, deterrence, and
restitution.
Relevant Skills:
Rationale:
Investigators and prosecutors frequently fail to make full
use of information gathered in the course of an investigation,
A number of civil and administrative
criminal actions.
These remedies obtain relief for the fraud
scheme victims through restitution, and by effecting
Training Objectives:
1. To assess the relative benefits of exploring civil or
administrative alternatives early in the course of a fraud
investigation, so that if there is a later fallback to a civil
remedy, or if this option is selected initially, the
investigation can most effectively proceed.
2.
2.
Interagency liaison
3.
Report writing
Blakey, et ale
"Enjoining Illegality," Apendi~
to Rackets
Bureaus: Investigation and Pros~cuin
of,Organlzed Crime.
Washington, D.C.: Government Prlntlng Offlce, 1978.
remedies may be invoked, either in place of or in addition to
punishment, may also serve the objective of deterrence.
Document review and analysis
Resource Materials:
or the evidence which does not fall within their focus on
making a criminal case.
1.
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The Use of Civil Remedies in Organized Crime Control.
Raleigh, NC: National Association of Attorneys General,
1977.
The Use of State Re~ulatory
Action Against Criminal
Infiltration of Legltimate Business. ,Sal:m: O:e?o~
Department of Justice, Special Investlgatlon Dlvlslon, 1974.
"Federal False Claims Act: A 'Remedial' Alterna~iv
~or2
Protecting the Government from Fraudulent Practlces,
Southern-California Law Review 159 (1978).
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To develop interagency liaisons with licensing,
revenue, and regulatory bodies early in an investigation in
order to explore the complete range of available remedies.
3. To use such remedies as the Racketeer Influenced and
Corrupt Organizations (RICO) law's civil provision, * and the
Federal False Claims Statute; and to develop evidence according
to the requirements of state and federal antitrust laws.
* 18
U.S.C. sec. 1964(c).
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