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NJ Department of the TreasuryDivision of TaxationOffice of Criminal Investigation

Special Agent in Charge Charles Giblin

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Protecting the Revenue since 1973

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N.J.O.C.I.

State Law Enforcement Unit

OCI over 50 employees

4 offices across the State

Freehold, Hackensack,

Mercerville, Cherry Hill w/ DCJ

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N.J.O.C.I.

Enforcing nearly 50 taxes & 2C Criminal Code

Oversight of a number of industries:

Motor Fuels, Tobacco, Alcoholic Beverage relative to taxation of product

Division EOC / Homeland Security

Professional Responsibility cases

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Over the past years OCI has grown significantly in personnel & equipment…

Number of cases and prosecutions….Areas of responsibilities….Scope of investigations….Investigative relationships….

Unprecedented Growth

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1. Established in 1973 with the creation of the Special Agent title series.

2. First area of responsibility was rampant cigarette smuggling.

3. Late 80’s thru early 90’s was the Motor Fuels Era. Russian Organized Crime.

4. White collar crime task force of Forensic Auditors, Civil Investigators and Special Agents.

Who We Are & What We Do

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5. Re-organized June 2010 with law enforcement command.

6. Now four units: Special Investigations, Financial Investigations, Technical Enforcement Unit & Internal Security.

7. Special Agents work round the clock 24/7, all days of the week, subject to immediate recall.

8. SA’s Essential Employees / First Responders

Who We Are & What We Do

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Special Investigations Unit

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TRAINING All Special Agents must complete the Basic Course for

Investigators as required by the NJPTC @ NJDCJ Academy.

All non-sworn personnel must attend a “modified” BCI. Classroom, some practical's but not firearms, DT, PT. Must pass all written exams.

NJ OCI — Training

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TRAINING

We provide certified instructors to other academies for PT, firearms, wmd, haz mat, ems

NJ OCI — Training

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In-house we maintain certified NJPTC firearms, OC and baton instructors.

All non-

NJ OCI — Training continued. . .

Qualifications 4x year: handgun, patrol rifle, shotgun. 2X baton, OC.

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In Service Training

All SA’s must attend NJ TOP GUN we provide faculty and operational support

Selected SA’s attend NJ UNITFor U/C work

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Contraband Operations

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Examples of SIU Cases

Hijacked loads Distributors /Burglary

(stamping agents) Organized smugglers Export Diversion from

containers / ships Involving cigs,

tobacco & alcohol

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International connections

Manufactured in China: verification requires intimate knowledge of manufacturers standards, printing, configurations, product codes, sourcing, etc

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Surveillance Ops

Everything from electronics, pole cameras…GPS Tracking, using our own equipment and MAGLOCLEN

Interstate 95 Corridor initiative

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K-9 Tobacco Detection

Joint initiative with NJ State Fire Marshal

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NJ Treasury & Counterfeiting ?

It’s a long history…….

NJ Treasury note1761!Penalty: “to counterfeit

is death”!

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Counterfeiting

In fiscal year ‘15 over Half a million in $ value of counterfeit NJ stamps seized prior to application

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Terrorism Nexus

Joint “National Security” cases with DHS/HSINJOHSP, FBI

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Terrorism Nexus

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Motor Fuels

National Problem, but NJ’s rate is low & a source state New legislation reverted to 90’s format where tax paid

at the rack (the storage yard) Intell indicates former eastern bloc nationals ,moving

back into smuggling. Many current schemes are more thefts

and skimming. There have been

adulterated fuels. Counterfeit branding Treasurer has authorized new field enforcement unit

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Alcoholic Beverages

Untaxed liquor – smuggled from lower tax states

Counterfeit liquor – adulterated product very sophisticated operations to support

International connectionsCould be health concernNo tax stamps

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Other Tobacco Products

Ever increasing volume, No stamps. Most smuggled item!

counterfeit

Emergency Management

Special Agents are part of Treasury ERUAlert & WarningEOCs (State, Dept, Div)

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Internal affairs for T 3,000+/- employees

Control U/C accounts Audit C/I program Drug testing for SA’s Sovereign Citizens* Professional Responsibility (all

employees receive integrity training)

All background investigations

Internal Security Unit

*All Treasury personnel receiving “awareness” training.

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Joint Terrorism Task Force

Prosecutors Office

SIRF – Stolen Identity Refund Fraud

Trenton Tide, Newark Tide, Paterson Tide are all SA details with NJSP

Task Force Assignments

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Other programs

Special Agent / Intell Officer assigned to the NJ Regional Operations Intelligence Center aka the ROIC.

Goal to evaluate financial crimes

with tax implications as well as

contraband intell & response.

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Other programs

Special Agents provide “operational security” to Civil Compliance Investigators who are conducting civil seizures with high threat situations / locations.

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Other programs

Sovereign Citizens Monitor Div of Revenue: UCC filings against

LEO’s. Coordinate intell with:

NJOHSP / SARS FBI

NJSP

Judiciary

NJ Division of Criminal Justice

NJ Division of Law

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Municipal Court Superior Court Federal District Court Municipal Prosecutor NJ Division of Criminal Justice DAG 21 County Prosecutors Federal / US Attorneys Office

Prosecutions

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Forfeiture of $$ and vehicles….

We seize $$, vehicles, equipment, anything related to the criminal acts.

Not just under contraband cases but applicable to all our prosecutions.

Must be used for law enforcement purposes Controlled by NJ Office of the Attorney

General Revenue sharing with all joint Federal cases

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Financial Investigations Unit

Special Agents now assigned to work in FIU matters.

Forensic Auditors working traditional “white collar” tax offenses.

Priority-SIRF cases

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Some Sample Areas of Investigation Tax Fraud Mortgage Fraud Organized Crime Counterfeit Goods Human Trafficking Insurance and Medicare/Medicaid Fraud Official Corruption referrals

Financial Investigations

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Investigative Tools We Use:

FinCEN Lexis Nexus/Accurint NCIC/CJIS RCFL MAGLOCLEN SSA FBI LEO

Financial Investigations

NJ DOL; SOS Registrations Data Warehouse Division Database NWC3 Task Force Intell EPIC

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Considerations in Prosecuting Criminal Tax Cases continued. . .

All indictable cases brought by OCI are prosecuted either by the Attorney Generals Office (NJDCJ) or one of the 21 county prosecutors offices. Except: Cigarettes, Fuels, Alcohol cases.

We can use either the NJ Uniform Tax Code in particular the Post Amnesty Act (Title 54:52-1 et seq) that set forth a format for these offenses as well as the NJ Criminal Code. They are used in tandem frequently.

Financial Investigations

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Considerations in Prosecuting Criminal Tax Cases continued. . .

Unlike federal criminal tax statutes, New Jersey does not have a statute criminalizing the filing of false or fictitious claims against the State.

Theft by Deception (NJSA 2C:20-4) and Money Laundering (NJSA 2C:21-25b(2)(a) have been

charged in previous cases involving theft of State funds by means of filing fictitious tax

returns.

Financial Investigations

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Considerations in Prosecuting Criminal Tax Cases continued. . .

Fraudulent Return Cases: Unreported Income, Overstated Deductions/ expenses. Taxpayers’ signature is evidence of knowledge inferred. Declaration under Penalty of Perjury.

(gradient crime)

Financial Investigations

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Identity Theft –Refund Fraud Matters• Return Mills• Individual operators• Postal Employee Cooperation• Reloadable cards• IRS-CI, OCI, DCJ & NJSP Cyber Crimes initiative• Identified gangs involvement• Avoidance of filing with IRS but using stolen identities across

other states.• Our Special Frauds Unit uses Human Intell for review of refund

check runs.

Financial Investigations

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Identity Theft –Refund Fraud Matters

Financial Investigations

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Considerations in Prosecuting Criminal Tax Cases continued. . .

Sentencing is based upon the NJ Criminal Code (Title 2C)

Second or plural offenders subject to doubling of the criminal penalty!

Restitution includes all taxes evaded or avoided, full civil penalty and interest.

Financial Investigations

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Gradation of Theft Offenses under the NJ Criminal Code.

(Theft & Computer Criminal Activity Offenses NJSA 2C:20-2)

1st degree more than $500,000 $200,000 fine and/or up to 10-20 years

imprisonment. Incarceration is presumed.

2nd degree $75,000 to $500,000 $150,000 fine and/or up to 5-10 years

imprisonment

Financial Investigations

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Gradation of Theft Offenses under the NJ Criminal Code.

(Theft & Computer Criminal Activity Offenses NJSA 2C:20-2)

3rd degree more than $500 less than $75,000 $15,000 fine and/or up to 3-5 years imprisonment

4th degree….. in tax cases usually a downgrade

$10,000 fine and / or not to exceed 18thmonths

Financial Investigations

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Technical Enforcement Unit

Reviews Bad Checks and bad Electronic Fund Transfers (EFT’s) used to pay State taxes & fees.

Signs criminal complaints in Municipal & Superior Court. (act occurs in Office of The Director under NJSA 54:29A-72)

Target of enforcement are multiple offenders, non-compliant, multi-levels of internal controls, large $$ value

Top Debtor Program / Uncooperative with Civil units Change in law to reflect technology “bad” EFT’s (9/’14) Joint effort with Mercer County Prosecutors Office

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Narcotics Investigations

NJOAG has asked us to participate in support of narcotics financial cases thus we belong to County Narcotics Commanders Association and NJ NEOA.

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*Extra ordinary authority to enter business to examine books records, finances.

Illegal income is taxable & must be reported as income. However…… we have to look at the calendar. April 15th returns are due…just like everyone else. Extensions? .

Specialized Investigations

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When was the money made? Where is it maintained / kept? ? Reinvested in legit business? ? Freeze Accounts?? Who are the principals, real owners, etc. Not always who you think!

Joint criminal investigations necessary

Specialized Investigations

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Where is the money going…..?

Specialized Investigations

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BusinessLocations:we can sharelicense Information.

But not tax info unless joint investigations

Related Investigations

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Who we work with….

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Contacting Us…..

PO Box 284 Trenton, NJ 08695

Hqs: 609 588 5017 Mon-Fri0800 1630

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Thank You…