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Bad check fees seen as possible new revenue source

Whenever someone bounces a check in Wisconsin, state law allows local district attorneys to assess a surcharge to offenders who take part in a diversion program to avoid conviction.

But none do, despite ongoing budget concerns and studies which have shown many district attorneys’ offices to be dangerously understaffed.

District attorneys say it might be time to at least consider the possibility.

A 2006 law created a deferred prosecution option for bad check writers who agree to partake in the voluntary program as an alternative to criminal prosecution. Part of the law created Wis. Stat. 971.41, which in part, allows prosecutors to assess an undetermined fee that may “be directly paid to the district attorney’s office.”

In Wisconsin, the program is administered in 24 counties by Minnesota-based Financial Crimes Services (FCS), a non-profit private organization that works to prevent fraud and collect restitution for victims.

Last year, FCS received 27,440 referrals from Wisconsin counties. That’s a 12 percent increase from 2008-09, an increase FCS President Scott Adkisson attributes to more counties joining the program.

Check writers are responsible for 100 percent repayment of the value of the bad check, along with any additional costs, and FCS charges a $100 fee to attend a mandatory financial management class.

By all accounts, district attorneys said the program has succeeded in reducing the burden on courts and increased restitution for local merchants.

Adkisson said he views diversion options like the check fraud program as potential revenue streams for prosecutor offices. During the last two years, FCS collected approximately $700,000, excluding bank fees, and Adkisson estimated that Wisconsin could have recovered about $115,000 if counties assessed a $25 fee on the 4,600 offenders who paid during that time period.

“I’ve talked to a couple of district attorneys about it and I don’t know if they want to do it that way, but they might not have a choice,” he said. “The way the economy is and as we move into the 21st Century, it might be time to take a look outside the box as far as ways to refuel some of the funding lost.”

A 2008 audit by the Legislative Fiscal Bureau revealed a shortage of more than 100 prosecutor positions throughout the state.

Given the sizeable deficit facing the state, Wisconsin District Attorneys Association President Winn S. Collins isn’t optimistic that the next budget will solve the problem.

“Fiscally, I assume it’s going to be pretty tough,” he said.

While Collins hasn’t broached the idea of generating revenue through the check fraud program with state officials, he said that support from the State Prosecutor’s Office could sway local district attorneys to consider the concept since county prosecutors are paid by the state.

“I think there would be support if was embraced at the state level,” he said.

But Collins and others also expressed concern that using the check fraud program as a funding source isn’t the way to go.

Longtime Milwaukee County prosecutor Ronald S. Dague said regardless of what kind of revenue the program could generate, profiting off the cases runs contrary to the philosophy of the office.

He reviewed bids from several companies to administer the program, one of which indicated the county could make about “$15 to $20” per case.

But taking money on top of what the offender already pays in restitution presents the appearance of prosecutors exerting improper influence on the outcome, Dague said.

“In the end, it just didn’t pass the smell test,” he said.

Prosecutors also don’t want to compete with merchants for payment, said Collins, the district attorney in Green Lake County, a participant of the program.

Another concern is whether assessing the fees would even be worthwhile for local prosecutors.

Sheboygan County internally operates a check fraud diversion program through which the county collects either $35 or 20 percent of the check amount, whichever is greater, from each offender who completes the program.

During the last five years, the program generated more than $74,000 in revenue, all of which went to cover the salaries of the two people who run the program.

While the program helps offset administrative expenses, District Attorney Joseph R. DeCecco said it’s not designed to be a moneymaker for his office.

“I think it’s a chancy proposition to start charging people too much as part of the diversion program,” he said.

In addition, DeCecco said revenue is on the decline as people write fewer checks and larger merchants, such as Walmart, haven’t found as much use for the program.

Given the benefit to counties and that it costs taxpayers nothing, Dague argued that district attorneys shouldn’t push to make money from the program simply because it’s legal.

“Why should we profit off of something that benefits us, the victim and the defendant?” he said.

Jack Zemlicka can be reached at jack.zemlicka@wislawjournal.com.

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