311 lines
15 KiB
Plaintext
311 lines
15 KiB
Plaintext
October 1991
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TAKING THE BOUNCE OUT OF BAD CHECKS
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By
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Vinse J. Gilliam
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Senior District Attorney Investigator
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Ventura County, California, District Attorney's Office
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Today, banking officials estimate that about 1 percent of
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the 50 billion checks written in the United States each year are
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returned due to nonsufficient funds (NSF). This figure
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translates into approximately 500 million NSF checks annually,
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1,369,860 daily, 57,075 per hour, or roughly 15 every second.
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In many jurisdictions, NSF checks are so numerous that the
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problem overwhelms local law enforcement agencies. The sheer
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volume also restricts the type of NSF checks that can be
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investigated and prosecuted effectively.
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Traditionally, only those individuals who are prolific or
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pass NSF checks for large dollar amounts are pursued. And,
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restitution is available only for those victimized individuals
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or businesses that are included in the criminal prosecution or
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are able to pursue a civil remedy successfully. As a result,
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many victims simply stop submitting NSF checks to local law
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enforcement agencies.
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In Ventura County, California, conservative estimates have
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placed the business community's losses due to NSF checks at more
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than $3 million per year. In a non-cash-carrying society,
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accepting checks for goods and services has become a requirement
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for conducting business. However, when an accepted check marked
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"NSF" is returned by the bank, the business incurs a double
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loss--one for the purchased item and another for the cost of
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trying to obtain restitution. As a result, businesses are
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forced to raise prices in an attempt to cover their losses,
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thereby passing the cost of NSF checks on to the customer. This
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article will address how Ventura County, California, attacked
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the pervasive problem of NSF check writers successfully.
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THE RESTITUTION/DIVERSION PROGRAM
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In order to combat effectively the NSF check problem in
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Ventura County, the district attorney's office established an
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NSF Check Restitution and Prosecution Unit, which became
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operational in February 1986. This unit, staffed with one
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district attorney investigator, two investigative assistants,
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and four collections officers, formulated and operated a unique
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restitution/diversion program.
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Ventura County's NSF Check Program begins with processing
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all NSF and account-closed checks directly into the district
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attorney's office, using an official complaint form. Then, in
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each case, a decision is made as to whether the offense is a
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felony or misdemeanor.
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Cases involving felony conduct are referred directly to the
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appropriate law enforcement agency for investigation, and if
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possible, returned to the district attorney's office for
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prosecution. If the NSF check constitutes a misdemeanor
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offense, it is earmarked for deferred prosecution and
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restitution efforts.
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At this point, the unit prepares and sends letters to NSF
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check writers, giving them the opportunity to make full
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restitution and pay a $25 administrative fee for each NSF check.
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If these individuals fail to respond to the first letter, a
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second letter is sent. This letter, in addition to requesting
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full restitution and a $25 administrative fee for each NSF
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check, states that the addressee must attend a 4-hour diversion
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class for which there is a $40 fee.
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CHECK DIVERSION CLASS
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The NSF check diversion class, similar to existing classes
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for traffic and alcohol offenders, emphasizes prioritizing
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resources, value orientation, and how to balance a checkbook
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accurately. Its curriculum, reviewed and approved by the
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county's personnel department, is taught by certified private
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instructors.
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Since the inception of the NSF Check Program, a total of
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1,422 individuals have attended the diversion class. The
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success of this educational segment can be demonstrated best by
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the fact that fewer than five of the class participants
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continued to write NSF checks and were criminally prosecuted.
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RESTITUTION FUNDS
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All restitution funds received directly from NSF check
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writers as a result of the letters are deposited through the
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county auditor's office. The victim merchants then receive
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restitution via a county warrant issued by this office.
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Handling restitution in this manner serves as a deterrent and
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prevents the NSF Check Unit from issuing a warrant for the bad
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check writer's arrest unnecessarily.
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If the NSF Check Unit is unable to obtain restitution, the
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district attorney investigator evaluates the case and makes a
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decision regarding criminal prosecution. Where criminal
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prosecution is supported, the investigator completes the
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necessary followup and prepares the case for filing. This
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eliminates the need to refer the case back to the local law
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enforcement agency. If criminal prosecution is not possible,
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the NSF check is returned to the victim merchant, and the
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district attorney's small claims advisor assists the merchant
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with obtaining a civil judgment.
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GOALS AND OBJECTIVES
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Ventura County's NSF Check Program targeted four primary
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goals and objectives. The program:
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* Provides a central clearinghouse for all NSF/account
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closed checks
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* Establishes a deferred restitution/prosecution program
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that allows NSF check writers the opportunity to pay
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restitution in lieu of prosecution
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* Ensures timely prosecution of NSF check writers who
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failed to make full restitution, and
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* Is self-sufficient based on administrative and diversion
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fees collected from the NSF check writers.
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At first, enabling legislation authorized the Ventura
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County District Attorney's Office, along with six other district
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attorneys' offices, to institute this program as a 1-year pilot
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project. (1) However, at the conclusion of the pilot project,
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the programs results were so noteworthy that the California
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Legislature amended the legislation to allow the district
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attorney in each of California's 58 counties to establish similar
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deferred prosecution programs. The continued success of the
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Ventura County NSF Check Program throughout the first 5 years of
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operation has proved that it provides a viable and
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cost-effective way to attack the spiraling NSF check problem.
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PROGRAM SUCCESSES
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During the program's first 5 years of operation, 3,811
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individuals and merchants submitted 53,748 NSF and account-closed
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checks to the NSF Check Unit. These NSF and account-closed
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checks were written by 14,515 different people. During the same
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period, the NSF Check Unit collected and returned over $2,195,500
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in restitution on over 25,400 checks to local victim merchants.
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Each year, the amount of restitution to victim merchants has
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steadily increased. During 1990, restitution averaged $47,000
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monthly.
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Of the 53,748 NSF and account-closed checks submitted to
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the NSF Check Unit, followup investigation has been completed on
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a total of 48,412 checks. Fifty-two percent (25,174) of the
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investigated checks were cleared by the check writer making full
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restitution through the diversion component of the NSF Check
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Program. However, 32 percent (15,492) of the investigated
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checks were not cleared, and the check writers failed to
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participate in the diversion phase of the program. As a result,
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felony and misdemeanor arrest warrants were issued against these
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1,700 individuals. To date, 738 of these offenders have been
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apprehended and successfully prosecuted. The sentences imposed
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in these cases have ranged from probation and restitution on all
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checks to a 5-year-8-month term in State prison. Court-imposed
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restitution in these cases represents an additional $713,300.
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The remaining 15 percent (7,262) of the checks submitted to
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the NSF Check Unit were referred to the appropriate law
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enforcement agency for investigation or returned to the victim
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merchants because either: 1) The check did not meet the
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criteria for the NSF Check Program, 2) the NSF Check Unit was
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unable to obtain voluntary restitution from the NSF check
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writer, or 3) criminal charges could not be initiated because
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the criminal intent to defraud could not be proven beyond a
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reasonable doubt.
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COSTS VS. REVENUE
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Due to the lack of resources, the Ventura County Board of
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Supervisors approved the creation of the NSF Check Program on
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the condition that the program would be self-supporting through
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fees obtained from those NSF check writers who elected to
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participate in the diversion program. On the average, the NSF
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Check Unit collects $14,300 in fees each month, while its
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monthly operating expenses have averaged $12,600.
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Like any new business, the operating expenses during the
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program's first year exceeded the revenue collected. However,
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the 5-year average indicates that the revenue received from the
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restitution/diversion fees surpassed the programs operating
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expenses by 13.2 percent. This surplus allows the district
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attorney's office to donate over $100,000 to the Ventura County
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general fund to help supplement other county programs.
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BENEFITS TO LAW ENFORCEMENT
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The NSF Check Program has largely eliminated the NSF check
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problem for law enforcement in Ventura County. Because the
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district attorney has county-wide jurisdiction, all NSF and
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account-closed checks can be collected, combined, investigated,
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and prosecuted by one agency. Police and sheriff's personnel no
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longer have the burden of spending valuable hours deciding which
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checks are worthy of criminal investigation, determining if
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other agencies have similar NSF checks from the same person, and
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deciding which agency should conduct the investigation. Now,
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local law enforcement can devote additional resources to other
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white-collar crimes, such as check and credit card forgeries and
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computer frauds. Only felony NSF check cases are referred to
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local law enforcement agencies for followup investigation.
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The NSF Check Program has also saved deputy district
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attorneys countless hours of court and case review/preparation
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time. If restitution had not been obtained, thousands of
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additional court cases, both criminal and civil, would have been
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processed through the criminal justice system. The additional
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expenses associated with the filings of these cases would have
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amounted to hundreds of thousands of dollars.
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PUBLIC INFORMATION
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A continuous public information campaign was initiated for
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the NSF Check Program with a twofold purpose: 1) To inform the
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business community of the existence of the NSF Check Program,
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and 2) to capitalize on the deterrent effect of the NSF Check
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Program by making potential NSF check writers aware of the
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consequences of writing a bad check. To help meet these goals,
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the NSF Check Unit developed a handbook for businesses, which
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includes information on the following topics:
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* NSF Check Program guidelines
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* Safeguards against taking a bad check
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* Steps to follow when accepting checks
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* How to identify forged/counterfeit checks
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* What to do with a bad check
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* NSF check report, and
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* Suggested Ventura County check policy.
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The NSF Check Unit also designed NSF check warning signs
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and distributed them to local merchants. These warning signs
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alert customers to the fact that passing a bad check with the
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intent to defraud is a crime. The customer is also put on
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notice that the business reports NSF check writers to the
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district attorney's office. Merchants who have posted these
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warning signs in their front windows or next to their cash
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registers have reported a marked decrease in the number of NSF
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checks received from their clientele.
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In addition, district attorney staff members routinely
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address business and community groups in an effort to inform
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them about the benefits of participating in the NSF Check
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Program. Regular press releases and annual reports are also
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distributed to increase citizen awareness and to deter potential
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NSF check writers. Copies of the NSF handbook, NSF check
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warning signs, and NSF check reports are also available at all
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Chamber of Commerce offices and local law enforcement stations.
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NSF CHECK ROUNDUP
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In a continuing effort to deter potential NSF check
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writers, the Ventura County District Attorney's Bureau of
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Investigation conducted a NSF check round-up in March 1990.
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Over a 2-day period, 15 teams of district attorney investigators
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made a concerted effort to execute a substantial portion of the
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outstanding felony and misdemeanor NSF check warrants. At the
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conclusion of the roundup, 29 suspects had been arrested or had
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surrendered to the court. The publicity surrounding the NSF
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check roundup also had a positive impact on the number of checks
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cleared in subsequent months by NSF check writers submitting
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voluntary restitution to the NSF Check Unit.
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CONCLUSION
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The success achieved by the Ventura County District
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Attorney's NSF Check Restitution and Prosecution Unit has far
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exceeded its original goals. The business community has shown
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overwhelming support, and the proactive stance has allowed a
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timely financial recovery for many victims, as well as educating
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the public on these crimes. Because local law enforcement has
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been relieved of the task of investigating NSF checks,
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detectives have been able to reallocate more of their
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investigative resources to check and credit card forgeries and
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other types of white-collar crimes.
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However, the most innovative and impressive part of the NSF
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Check Program is the fact that it is completely self-supporting
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and operates at no cost to local taxpayers or participating
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victim merchants. This factor makes the Ventura County NSF
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Check Program one of the few criminal justice programs that is
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cost-effective and revenue offset. The large dollar amount of
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restitution returned to victim merchants, coupled with the fact
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that the entire program is financed by the NSF check writers,
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makes this a truly innovative government program that should be
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encouraged and supported, especially in this time of shrinking
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resources.
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FOOTNOTE
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(1) The creation of this program was made possible by the
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passage in 1985 of Senate Bill 1108, which created California
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Penal Code Sections 1001.60 - 1001.67.
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