In the identity-theft prosecution of a real estate developer named David Miller, prosecutors don’t contend he used any of the usual trademarks of that crime: that he used some device to steal credit card numbers; filed any federal tax returns in the names of dead people; faked drivers’ licenses to cash fraudulent checks.
They charged Miller with aggravated identity theft for his role in defrauding a bank on a personal loan. The crime? Telling the bank that a small group of investors had agreed to use a piece of property as collateral. On a bank document, Miller listed the names of the other investors. Prosecutors said he lacked permission to use their names.
Miller’s lawyers unsuccessfully challenged the charge in U.S. District Court for the Middle District of Tennessee, arguing that listing a handful of names didn’t amount to the “use” of a person’s identity consistent with Congress’ definition of identify theft. The conduct might have been wrong, the defense acknowledged, but it wasn’t identity theft because Miller hadn’t passed himself off as someone else.
That argument didn’t fly, and now Miller, convicted at trial last year, is taking the fight to the U.S. Court of Appeals for the Sixth Circuit. The case tests the reach of the Identity Theft Penalty Enhancement Act of 2004, which created the felony of aggravated identity theft for anyone who “knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person” in the advancement of another crime. The offense carries a mandatory minimum sentence of two years in prison.
Prosecutors in Nashville conceded that Miller didn’t transfer or possess another person’s identity. The central question is this: Did Miller “use” the identities of the other investors — people who were known to him — when he listed them on bank papers?
Miller’s attorney, Eli Richardson of Nashville-based Bass, Berry & Sims, argues that if the scope of the law isn’t “circumscribed by the courts, then prosecutors could succumb to the temptation to threaten charges in order to induce defendants to plead to minor predicate offenses.” A ruling for the government, he said, would give prosecutors “extremely broad use of a powerful tool.”
Richard Samp, chief counsel of the Washington Legal Foundation, a business advocacy group, called Miller’s crime “garden-variety fraud,” not identity theft. “Because fraud so often includes false statements about what others have done, the district court’s decision threatens to expand the scope of the identity-theft statute significantly — an expansion that would frequently result in prison sentences longer than Congress ever contemplated,” Samp said.
The litigation in the Sixth Circuit has just begun, and the court has set no hearing date. Miller is scheduled to begin his two-year prison sentence on January 22.
Impersonation generally is considered the hallmark of identity-theft cases. Earlier this month, the U.S. Court of Appeals for the Fourth Circuit upheld the aggravated identity-theft conviction of a man who recruited restaurant workers to steal credit card information from patrons, creating new cards with stolen numbers. In December, a former state employee in Alabama was sentenced to 50 months in prison for her role in a scheme that used stolen identities on federal tax returns.
Nevertheless, assistant U.S. attorney Sandra Moses wrote in court documents at the trial level in the Miller case that the words “impersonate” and “pretend to be another” don’t appear in the statute at issue. “Though impersonation is certainly conduct that falls within and is often addressed by [aggravated identity theft], the statute does not require it,” she said.
The case against Miller goes back to early 2007, when he began soliciting investors to purchase property near Franklin, Tenn., about 30 miles south of Nashville. Miller formed Fellowship Investors LLC (FI) to buy the land for $900,000 and then sell it when its value increased. The other investors contributed $675,000. Miller, according to the government, said he would contribute the remaining amount in the name of his company, David E. Miller Development Co.
According to prosecutors, Miller didn’t notify all of the other investors when he applied for a $337,500 loan from FirstBank Inc. in Franklin to finance the purchase of the 75 acres. Miller sought to use the investment property as collateral for the loan. The bank asked for a resolution from all Fellowship Investors members confirming that they knew about and approved the use of the land as collateral. Miller supplied a resolution that identified seven individual investors by name, saying that they had met and voted to approve the use of the property as collateral. Miller and another investor signed the document.
Miller was charged in a superseding indictment in October 2011 with, among other crimes, making a false statement to the bank and two counts of aggravated identity theft. Miller “falsely represented to First Bank that he had the authority to act on behalf of the FI investors to pledge the property as collateral when, in truth, he had not received the authority to pledge the property from the other members of the FI,” prosecutors alleged. (Miller has since repaid the loan, Richardson said.)
Miller’s trial lawyer, Glenn Funk, a solo practitioner in Nashville, urged a judge to dismiss the aggravated identity-theft charge, arguing that a person who “simply lies about the activities of other individuals” isn’t an identity thief. “The government may say a person ‘uses’ an individual’s name simply by claiming the individual did something the individual in fact did not do,” Funk argued in court papers. “But no one else would.”
In rejecting the defense arguments last year, U.S. District Senior Judge Marvin Aspen said that because Miller “implied that he was acting on behalf of someone else, the statute’s plain language reaches Miller’s conduct.”
Within the Sixth Circuit, little precedent addresses the meaning of “use” in the aggravated identity-theft statute. U.S. District Chief Judge Paul Maloney of Kalamazoo, Mich., ruled in 2010 that a person can commit identity theft “by using a person’s mere name, but one must still pass oneself off as that person or acting on behalf of that person.”
Aspen, noting Maloney’s ruling, said that using a person’s name “should be treated the same as using other forms of identification,” such as a Social Security number.
The U.S. Court of Appeals for the D.C. Circuit ruled in 2008 that Congress, in passing the law, “intended to single out thieves — in the traditional sense of the word — for enhanced punishment.” Aspen concluded that Congress “did speak in a clear and definitive way” when it drafted the law.
Marc Zwillinger of Washington’s ZwillGen PLLC, who specializes in privacy law, called Miller’s identity-theft conviction “novel and troubling.” That Miller used other people’s names and didn’t pretend to take on their identities, Zwillinger said, is not what the aggravated identity-theft law was meant to cover.
“This isn’t the type of conduct that adversely affected the individual in other aspects of their life (ability to get credit, open accounts, procure services),” Zwillinger said via email. “To me this is a classic example of giving a targeted statute a life beyond what it is intended to be used for.”
Mike Scarcella can be contacted at email@example.com.