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Secret Service takes lead fighting financial crimes

About once a month, more than three dozen area law enforcement and corporate investigators gather at Chef's Restaurant to compare notes.

The informal assembly, known as the Financial and Electronic Crimes Working Group, meets regularly to share information on crime trends and ongoing investigations that multiple agencies may unknowingly be involved with. They also receive special training on how to detect and prevent a variety of financial or electronic crimes.

The investigators come from an array of local, state and federal agencies in Western New York, Pennsylvania, and even Canada. They also come from area banks, thrifts, credit unions, utilities and telecommunications companies, among others.

"It's extremely helpful. It opens up the lines of communication between the public and the private sector," said Chris Henderson, administrative vice president and corporate security manager for M&T Bank Corp., which sends a representative.

But what may be more unusual to many is who spearheads the meetings: The Buffalo field office of the U.S. Secret Service -- the federal agency better known for its role in protecting the president, other senior members of the government and visiting dignitaries.

It's not as glamorous, visible, or dangerous a task as guarding dignitaries and being willing to take a bullet in the line of duty. But investigating and fighting financial crimes, and protecting the nation's financial infrastructure, is a big part of the agency's dual mission -- and its original reason for being.

"When you mention the Secret Service to John Q. Public, they think dark sunglasses and armed limosines, but there's another side to it," said Michael C. Bryant, special agent in charge of the Buffalo office, who oversees Secret Service special agents, investigations and three smaller offices in the 49 counties of New York state north of Poughkeepsie. "I don't think the average person knows, but the bad guys know we're out there."

Originally established 140 years ago to fight counterfeiting of paper currency, the Secret Service today investigates a wide variety of financial and technology crimes, ranging from its basic "funny money" mission to sophisticated identity theft scams, hacking attacks on companies, and e-mail viruses, "worms," and other harmful computer programs that can harm the financial system.

The agency has an Electronic Crimes Special Agent Program that uses computer forensics to pursue criminals, even seizing their PCs when appropriate. Trained agents, including at least one here, use advanced laboratories and software to recover files and track what a suspect has done either on the computer or on the Internet.

That's not to say the Secret Service has exclusive jurisdiction. But because of its expertise, the Secret Service is often asked to assist other agencies or financial institutions, not only if a counterfeit $20 bill is found but whenever technology -- even a cell phone or personal digital assistant -- is used to perpetrate a financial crime. Even counterfeiting today can be a computer crime, since fake bills and checks can be produced on an inkjet printer.

"If the Buffalo Police Department is at the 7-Eleven and they've got a couple of guys with counterfeit $20s, guess who they're calling?" said Bryant, adding that the Buffalo area typically gets about $1,000 a week in counterfeit currency.

"We pick up the phone and talk to the Secret Service, if not daily, then once a week," M&T's Henderson said. "We have a direct line over to our friends at the Secret Service."

Together with the FBI, the agency today is even on the lookout for Internet "phishing" or fund-raising scams using Hurricane Katrina as part of the bait, although Bryant said he hasn't seen any locally as yet.

"We would deal with it if we saw it, but that's not something that's come across my desk," he said.

The Secret Service's roots go back to 1865, at the end of the Civil War, when one-third to one-half of the paper currency in circulation was phony. Just hours before he was assassinated at Ford's Theater, President Lincoln signed legislation establishing the service as an arm of the U.S. Treasury Department to stop counterfeiting.

A core group of about 10 agents were assigned to the new force, working with local authorities nationwide to track and arrest the largest perpetrators over the course of the next year.

Fighting financial crime remained the Secret Service's only mission for 35 years, until President McKinley was assassinated -- in Buffalo -- in 1901. At that point, the protective mission was added, giving the agency its dual purpose. And in March 2003, the Secret Service moved from the Treasury Department to the new Department of Homeland Security.

Today, the Secret Service has about 3,300 special agents -- small compared to the 12,400 agents in the FBI. It has 65 field offices throughout the country and abroad, including in Canada, Rome, Paris, London and Germany. It also has resident offices below that, including ones in Rochester, Syracuse and Albany that report to Bryant.

The agency prefers taking a low profile, and doesn't like to discuss its capabilities or how it does its work. Bryant even declined to reveal how many agents he has under his purview. Locally, the field office in the City Centre building on Main Street isn't even listed in the building's lobby directory.

The only hint comes when you arrive on the third floor and see the agency's shield logo on the glass doors, along with a sign that warns that you are subject to search. And inside the small waiting area, a videocamera watches your every move.

Most of the Secret Service's attention here is concentrated on financial and electronic crimes, which is where the local working group led by senior special agent Kim Baglio comes in.

As part of the USA Patriot Act, Congress directed the Secret Service to develop a national network of electronic crime task forces, based on a successful model in New York City. The goal is to prevent, detect, and investigate such crimes, which could include potential terrorist attacks against infrastructure and the financial system.

Participants exchange information about new trends or frauds to be alert for, such as so-called Nigerian scams or recent growth in counterfeit corporate paychecks. They also update each other on current cases that might affect more than one agency or jurisdiction and be part of a larger crime.

"A lot of agencies find we're doing overlapping investigations and don't know about it," said Baglio, an ex-Marine Midland Bank investigator.

And they provide each other with training so that colleagues know what to watch out for.

Besides the financial institutions, utilities, local law enforcement and local offices of federal agencies, the group attracts authorities from Rochester, Syracuse and Erie, Pa., as well as from the Toronto Metropolitan Police and Niagara Regional Police.

"It's definitely been beneficial for everyone," said Deb Daugherty, senior financial crimes investigator for KeyBank in Buffalo. "It's a good way for the financial institutions to educate law enforcement on the different schemes that are affecting our customers. It helps them understand what kind of crime is being committed and what can lead to a prosecution on their end."

Similar working groups also exist in Rochester and Syracuse, but they meet every other month. A group is also being formed in Albany.

"White-collar crime isn't something that just takes place in Erie County," M&T's Henderson said. "There shouldn't be any restrictions when it comes to solving white-collar crimes. The criminals are organized. I think the investigators should be just as organized."

e-mail: jepstein@buffnews.com

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