Big Brother on the Border

Insurance Agents with Badges Accused of Civil Rights Violations

By Bill Conroy
Special to The Narco News Bulletin

June 5, 2004

Imagine that you’re a Hispanic or African American working-class Joe who has just finished opening up an envelope from your insurance company. Inside is a reimbursement check to cover the cost of repairing your vehicle, which was damaged by a hit-and-run driver.

Then, you hear a knock on the door. Through the window, you spy two police officers.

The next thing you know, you’re in handcuffs being whisked down to the police station in a squad car. Upon arriving, you are met by a plain-clothes man who escorts you, with the police officers, to an interrogation room.

Once in the room, the plain-clothes man identifies himself as a special agent with something called the NICB (the National Insurance Crime Bureau). He flashes a badge.

The NICB agent, along with a police department detective who enters the room eating a sandwich, begin to grill you about the auto accident.

After a series of questions, the detective informs you that you are being charged with insurance fraud, a crime that can land you in prison for several years.

It seems the NICB agent has made a case against the body shop you hired to work on your car. In the course of his investigation—after obtaining insurance-claims information related to your vehicle—he concluded that you conspired with the body shop to defraud your insurance carrier.

The problem, in this case, is that you did nothing wrong. You were simply trying to get your car repaired in the wake of an accident that wasn’t even your fault.

But the NICB agent isn’t hearing any of that. You’ve been strapped onto a conveyor belt and are now headed toward a buzzsaw called the U.S. Justice System.

To top it off, you find out later that the so-called NICB agent who investigated you is not a law enforcement officer as you had assumed. He is actually a private citizen who is employed by the NICB, which is an insurance-industry funded investigative group. So what was he doing interrogating you at the police station when he is the individual who filed the criminal complaint against you in the first place?

The badge the so-called NICB agent waved in front of your face, you also discover, was issued to him as part of a Special Texas Rangers commission. The Texas Department of Public Safety grants those commissions utilizing an obscure state law that dates back to the early 20th Century. That law was originally designed to give ranchers and oil-field operators the ability to hire private security guards as “Special Rangers” to protect their property.

Does all this sound like a scary scenario? Well, the case described above is based on real events that have been brought to light by a Hispanic civil rights group — the League of United Latin American Citizens (LULAC).

LULAC alleges that up to 20 people in El Paso – 18 of them minorities—have been run through a similar wringer by the NICB over the past several years. The civil rights group recently filed complaints with both the El Paso Police Department and the Texas Department of Public Safety accusing the NICB of engaging in racial profiling and alleging that its El Paso “agent” has misrepresented himself as a law-enforcement officer.

Officials with the NICB have stressed previously that they do not target anyone on the basis of race or ethnic background; rather, they say, the insurance crime bureau adheres strictly to the law and targets only suspected criminals in an effort to protect the public against fraud.

The controversy surrounding NICB’s activities in El Paso, however, is far from an isolated event. In fact, civil-rights activists allege that the NICB has a track record of exploiting its law-enforcement connections—particularly its close ties to the FBI —to advance the interests of the insurance industry.

Four years ago, LULAC even adopted a national resolution accusing the FBI of engaging in racial profiling as part of its joint operations with the NICB.

“… The FBI has engaged in racial profiling and targeting of minority owned businesses and professionals…,” the 2000 LULAC resolution states. “… The FBI has been found to have engaged in sharing evidence it seized with the NICB and other insurance companies, and … the FBI continues to engage in joint operations with the NICB for the benefit of the insurance industry.”

A Special Ranger

LULAC’s recent written complaints to the Texas Department of Public Safety (DPS) and the El Paso Police Department center on the activities of NICB’s El Paso agent, an individual named Ray H. Niblett. The complaints allege that Niblett has misused his Special Texas Ranger commission to present himself as a law enforcement officer, to improperly access law enforcement records, to interrogate suspects against whom he has brought criminal complaints, and to engage in racial discrimination by targeting minorities.

From LULAC’s complaint to DPS:

We have received complaints regarding NICB employee, Mr. Ray H. Niblett, and we have uncovered a number of questionable activities that we would like to bring to your attention. One of the most serious findings is that it appears that Mr. Niblett has made it a pattern and practice to pass himself off as a law enforcement officer.

… These issues regarding Mr. Niblett’s (Special Texas Ranger) commission would have never come to LULAC’s attention, but for the complaint about Mr. Niblett regarding his targeting of minorities. LULAC has reviewed police reports (obtained through the Open Records Act) regarding cases Mr. Niblett has brought to the El Paso Police Department for prosecution. Out of the 20 cases in the past three years, 18 of the people pursued were minorities. Seven of the individuals were black (30 percent), which reflects an enormous variance from the black population in El Paso. More than half of the cases brought by Mr. Niblett were ultimately declined by the District Attorney’s office for lack of evidence of crime.

When contacted by Narco News, Niblett declined to comment, referring questions to NICB’s headquarters in the Chicago suburb of Palos Hills. Judy Fitzgerald, media spokesman for the NICB, failed to return phone calls to Narco News seeking comment for this story.

However, DPS spokeswoman Tela Mange confirms that her agency did receive LULAC’s complaint. When asked how that complaint is being handled by DPS, Mange replied:

“The complaint is being investigated by the NICB. We referred it to the NICB for follow-up.”

Mange was unable to explain why DPS had referred LULAC’s complaint to a private industry group, the very same group against whom LULAC’s complaint is directed.

Mange added that, “We will discuss with them (NICB) what they found at the conclusion of their investigation.”

Richard Wiles, chief of the El Paso Police Department, also confirmed that he had received LULAC’s complaint. He stressed that his department does not tolerate discrimination or in anyway engage in racial profiling.

However, he conceded that Niblett’s unique relationship with law enforcement has led to some “perception problems” for the police department.

“The reason it gets complicated is that Mr. Niblett does not work for the police department,” Wiles said. “He works for the NICB, but because he has a Special Texas Ranger’s commission, he is a certified peace officer (and) ... has authority to protect himself and his employer’s interests.”

Wiles explained that Niblett brings cases to the police department in one of two ways: “He comes at the front end of a case and tells us he thinks a crime has occurred, or he conducts his own investigation and then turns it over to us.”

Wiles stressed, though, that once Niblett turns over a case to the police department, “we treat it like any other complaint.”

Wiles added:

“We would never tolerate one of our employees, or allow a citizen like Mr. Niblett, to use the department to conduct racial profiling. When we get a case, we look at it in terms of potential criminal activity.”

The Smell Test

Not everyone appears to be pleased with the current relationship between the El Paso Police Department and the NICB, though. Vivian Rojas, an El Paso City Council Representative, states the following in a May 13 letter to Chief Wiles:

... I was very disappointed that the Police Department apparently has no department-wide policy for dealing with NICB employees that want to use the Police Department to further the interests of private industry.

You stated during our conversations, that since Mr. Niblett was a peace officer, the police could share case information with him. I believe there is a need to check with legal counsel on that issue. I think the question is not only is he a “peace officer,” but whether he used the information for a law enforcement purpose (as opposed to private use, such as for NICB). Since Mr. Niblett does not work for a law enforcement agency, but only for private industry, we know that he may not be using the confidential police information for legitimate law enforcement purposes, but only for the private company that employs him. I can see a great potential for abuse if a private company is allowed access to confidential police records. That this is potentially a criminal violation should cause great concern.

It seems that Mr. Niblett’s status is confusing, as he has a “peace officer” commission. I agree with your sentiments that a private company employee should not be granted such status. However, I also reviewed LULAC’s letter to the Department of Public Safety regarding this issue. As I understand it, Mr. Niblett’s peace officer commission is extremely restricted; he is not a regular law enforcement officer. While he has authority to protect his property, and that of his employer, I believe he does not have full law enforcement authority. It appears that the Special Ranger commission he holds as several restrictions.

You told me you believed NICB was a conglomeration of insurance companies. I researched NICB on the Internet and found that this is not correct. It is an independent, “not-for-profit” company. Mr. Niblett is therefore acting outside his authority in attempting to protect the property of the insurance companies who do not employ him.

… I believe very strongly that the Police Department is there to serve the people of our community, not to serve private companies….

LULAC does not plan to stop with letters of complaint to DPS and the El Paso Police Department. The civil rights group is contemplating litigation if its concerns about NICB are not addressed.

“LULAC is also considering bringing a class-action civil rights lawsuit seeking damages for those people who have suffered the abuse of the NICB while acting under the color of law wrongfully delegated to them,” states a recent press release issued by LULAC.

Big Brother

The NICB’s relationship with law enforcement extends well beyond local and state agencies like the El Paso Police Department and DPS to include federal agencies like the Department of Homeland Security and the FBI.

NICB employs a staff of some 300 people—most of whom are former law enforcement officials. It recorded 2003 revenues in excess of $30 million—funds raised primarily from dues paid by member insurance companies.

In addition, the president and chief executive officer of NICB, Robert Bryant, is a former deputy director of the FBI. NICB’s chief operating officer, Eugene Glenn, also is a former FBI employee whose 26-year career with the bureau included serving as special agent in charge of the Salt Lake City field office.

NICB is hooked into high-tech economy in a major way, as well. NICB special agents employ sophisticated computer-based investigative tactics that involve accessing and sharing data with government agencies.

NICB works closely with an insurance-industry-controlled group called the Insurance Services Office Inc., or ISO, which operates a mega-database that it makes available to NICB as well as to government law-enforcement agencies.

The ISO’s database includes hundreds of millions of records on private citizens—including on insurance claims, medical records, motor vehicle reports, police reports and drivers license numbers. These records are used, in part, to target individuals for alleged insurance-fraud investigations.

However, the potential exists for the ISO’s immense computer database of detailed records on private individuals to be abused to advance special interests, such as those of the insurance industry that ultimately controls the database. The close ties that the NICB has with law enforcement, particularly the FBI, only augment those concerns.

FBI and NICB officials have stressed, however, that their relationship is structured in strict accordance with the law and is focused on fighting crime.

A. Robert Walsh, a legislative counsel with the FBI’s Office of Public and Congressional Affairs, described that relationship as follows in an Aug. 7, 2000, letter to U.S. Rep. Charles A. Gonzalez, D-San Antonio:

The NICB is a not-for-profit organization which is funded by approximately 1,000 property and casualty insurance companies. The NICB serves as a conduit between the insurance companies and law enforcement agencies to “facilitate the identification, detection and prosecution of insurance criminals.” The NICB accumulates and analyzes insurance-claims data from insurance companies it works with to identify and forecast fraud and theft activity and trends. This information is shared with the law enforcement community.

The data gathered by the NICB is maintained as part of the ISO database. Operating that database itself is a big business.

The New Jersey-based ISO is 85 percent-owned by insurance companies, with the balance of the company controlled by its employees, according to Hoover’s, an online business-information service. ISO recorded revenues of $485 million in 2003 and employed about 2,600 people.

The NICB’s ties to the FBI are further illustrated by the fact that Michael Kirkpatrick, assistant director in charge of the FBI’s Criminal Justice Information Services Division, serves as a member of the NICB’s advisory board, according to the group’s 2003 annual report. Kirkpatrick’s FBI division oversees the National Crime Information Center (NCIC), which is a computerized index of criminal justice information that includes criminal record histories.

It’s not clear if the NICB is accessing that FBI database, but it is clear that the NICB, through the ISO, makes its questionable insurance-claims database available to the FBI.

The insurance industry, through groups like the NICB and ISO, has essentially become a private sector FBI with immense power to target individuals for investigations that it conducts jointly with local, state and federal law enforcement. But unlike government law enforcement, the NICB and ISO are private-sector groups that are not accountable to the public.

The Big Brother reach of groups like the NICB takes on an even more ominous tone if, in fact, the group does use its power to target individuals on the basis of race, as LULAC alleges, or even for political reasons, as some targets of past NICB investigations have alleged.

Political Target?

One attorney whose Texas law office was raided as part of a joint FBI/NICB insurance sting in the mid -1990s claims that he was, in fact, a political target.

FBI agents raided the San Antonio law office of attorney Nick Milam on May 24, 1995. They confiscated boxes of case files and several computers from his office.

The raid was part of a nationwide FBI/NICB insurance-fraud crackdown, dubbed Operation Sudden Impact.

The FBI issued a press release trumpeting the operation. As a result, news of the FBI raid of Milam’s law office made headlines in nearly every major media outlet in San Antonio at the time. In the wake of the publicity, Milam’s law practice was ruined and his reputation destroyed, he claims.

Milam has never been charged with a crime or even questioned by the FBI in relation to the raid of his law office.

In January 2002, after returning home from a family vacation, Milam says he discovered a holiday gift, of sorts, delivered by the FBI via Federal Express. That gift was six large boxes containing the case records and computers confiscated by San Antonio FBI agents some seven years earlier during the raid of his office.

A letter included with the boxes stated the following:

“The attached material obtained from you in connection with an investigative activity of the Federal Bureau of Investigation (FBI) is of no further value to this agency or the Department of Justice. The FBI is prohibited from destroying this material, therefore, it is being returned to you for whatever disposition you deem appropriate.”

Supervisory Special Agent Monte E. Smith signed the letter.

The boxes returned to Milam by the FBI contained several dozen case files, including tax, product liability, contract and personal injury cases—not all of them related to auto accidents. Operation Sudden Impact was a national investigation centered on alleged auto accident-related insurance fraud.

Adding yet another twist to his case, Milam asserts in a legal filing he made in 1995 in Travis County District Court in Texas that the search warrant issued for the raid of his law office on May 24, 1995, was authorized improperly.

Milam says, to date, he has been unable to obtain the affidavit supporting the search warrant, despite the fact that he employed a criminal defense attorney to help him hunt it down. (An affidavit is a sworn statement from the investigative agency establishing the probable cause for the search warrant.)

Information about the affidavit surfaced recently, however, as part of a Freedom of Information Act (FOIA) request directed to the FBI. The FOIA documents released by the bureau included part of the affidavit for the search warrant issued against Milam. According to the FOIA records, some 27 pages of the affidavit – the section outlining the rational for the search – remain sealed by the court.

The unsealed portion of the affidavit that was provided included a list of case files subject to seizure as part of the search-warrant raid. A comparison of the case files on that list to those returned to Milam by the FBI in 2002 reveals that at least eight of the files seized were not included in the affidavit – an apparent violation of the terms of the search warrant.

Milam’s explanation for the mystery is simple: he was a political target. Consequently, the raid of his office was little more than a slam and grab operation meant to discredit him.

“They did it (raided my office) for the public effect it would have on my reputation. They (the FBI) knew what that effect would be,” he claims. “It shows that the FBI is still being used to engage in political intimidation.”

Milam, in particular, points to the events occurring in his life just prior to the raid of his office that, he believes, set the stage for a political backlash against him.

Around the time his office was raided in 1995, Milam was making a bid for a judicial post on the Democratic ticket. However, a controversy erupted over the signatures used to get his name listed on the ballot.

His Republican opponent protested, claiming fraud. A civil suit was filed over the matter and the Bexar County District Attorney’s Office and the Texas Rangers opened investigations as well, according to Milam and news reports at the time.

The Democrats accused the Republicans of playing dirty politics. At the end of the day, Milam’s name was taken off the judicial ballot due to the controversy. However, no charges were ever brought against him.

It also didn’t help that Milam’s wife at the time, Danielle, had a high political profile in the community, serving as co-chairwoman of the mayor’s Water Quality Task Force and as a member of the board of directors of the San Antonio Water System. She is an avid environmentalist who was credited with helping to forge new regulations protecting the Edwards Aquifer – the primary source of drinking water in San Antonio.

Milam alleges that the national Operation Sudden Impact conducted by the FBI and NICB provided a perfect cover for the political whipping dished out to him through the highly publicized raid of his law office.

“The national raid (Operation Sudden Impact) was a pretext for the local Republican Party to demonstrate that its power went form the insurance industry to the Bexar County District Attorney’s Office, to the U.S. Attorney’s Office and included the FBI and local law enforcement …,” Milam alleges.

(FOIA documents and newspaper archive research point to a pattern of racial profiling also being employed in Operation Sudden Impact, with minorities being targeted at a rate of nearly 8 to 1 compared to Anglos.)

However, according to the letter drafted by the FBI’s Walsh, the relationship between the FBI and NICB is above-board and in strict accordance with clearly defined legal principals.

From Walsh’s letter to Congressman Gonzalez:

Although the extent of the NICB’s involvement in the individual FBI investigations varies, the NICB has commonly provided personnel, insurance industry expertise, and liaison contact with the victim insurance companies. In these cooperative investigations, the FBI always maintains the responsibility of leading, directing and administering the criminal investigation.

Memorandums of Understanding (MOUs) are commonly utilized between the FBI and NICB in order to delineate the specific responsibilities of all parties in long-term cooperative efforts. The MOUs require the review and approval of the Contracts Review Unit at FBI Headquarters prior to their signing by NICB and FBI representatives. The FBI’s control of the criminal investigations is always reflected in the MOUs.

NICB’s degree of involvement in the individual investigations varies widely from providing data analysis support to providing investigators to work with the FBI on the investigation on a full-time basis. The NICB agents are commonly used as valuable resources in assisting the FBI in auto accident investigations….

NICB agents are not law enforcement officers and are not authorized to execute arrest or search warrants. FBI policy does not allow the use of the NICB agents or employees to conduct these or other “law enforcement” functions.

Milam takes little comfort in the FBI’s assurance of fair play. In a recent email he sent to Narco News from overseas, where he now teaches journalism and English, Milam states:

“It has long been clear to me that the NICB is a modern-day Pinkerton service, or private army of the insurance industry. Such private armies have arisen as part of the policy of the privatization of government fanatically propelled by the Republican Party, the captured political institution of big industry. … These very same private armies are currently fighting in Iraq and performing such services as are illegal for U.S. soldiers to engage in under the Geneva Convention.”

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