The threat of tacking on charges of identity theft in federal indictments has become a dangerous weapon in the hands of federal prosecutors trying to force pleas to criminal conduct. Many offenses, which in the past would have been charged as fraud or theft cases, now come coupled with identity theft counts, which trigger harsh consecutive sentences, dramatically increasing actual time spent in federal prison.
It is estimated that some 16 million people in this country experience at least one identity theft incident each year. The average loss per victim is approximately $1500 per victim. The most common type of identity theft is the use of someone else’s credit card. There are 15 times more reports of credit card fraud than there are of other personal information fraud. It is estimated that some $50 billion in financial losses are attributed annually to personal identity theft.
Section 1028 of Title 18, United States Code, governs identity theft. Under this statute, the penalty for identity theft starts with a mandatory minimum term of two years or a 5-year mandatory minimum if the theft is connected to terrorism. As a general rule, these terms of imprisonment cannot be served concurrently with sentences for other offenses. This means they are “stacked” on top of the sentence for the other offenses changed.
The number of identity theft cases brought by the U.S. Justice Department reached its peak in 2007 and 2008, and have remained steady at between 800 to a 1000 cases between 2010 thru 2013. Most of these cases were resolved through plea bargains. An astounding 97% of all federal criminal cases are resolved through such negotiated plea agreements.
Federal prosecutors often use the threat of identity theft and aggravated identity theft (Section 1028A), which trigger mandatory minimum, consecutive sentences, to pressure defendants into pleading guilty.
This enhanced provision, known as the Identity Theft Penalty Enhancement Act, was signed into law by President George W. Bush in 2004. Essentially, it punishes an individual for using someone else’s identity to commit certain criminal acts.
Federal prosecutors also use the threat obtaining a superseding indictment, which would include identity theft counts, to secure guilty pleas in white collar cases. This often happens in health care, bank, and Social Security fraud cases.
This disturbing use of power has been blessed by most courts which have held that aggravated identity theft need not actually involve the theft of someone’s identity. However, in an en banc ruling, the Seventh Circuit Court of Appeals has ruled that aggravated identity theft indeed requires the misappropriation of someone else’s identity. While this remains a minority view, the court’s opinion is compelling, and with any luck it will bring some reasonableness to the policy of charging identity theft. Hopefully, this will set a judicial trend to curb the abuse by federal prosecutors who use the threat of ID theft in virtually every kind of fraud case to force defendants to accept plea bargains favorable to the Government.