A query about credit cards and red flags

January 28, 2009|By LAURA VOZZELLA

The most riveting scene in Sheila Dixon's indictment reads like something by David Simon, not Robert Rohrbaugh.

It portrays then-City Council President Dixon riding around West Baltimore with $4,000 in cash and asking a city employee to launder it.

"Baltimore City employee #1" took the wad of $100 bills on May 6, 2004, deposited the money in his personal checking account, then wrote a $4,000 check to pay Dixon's American Express bill, the indictment states.

For all that alleged drama, the moment raises an arcane banking question that might be best directed to the likes of Paul Sarbanes: Do credit-card companies notice or care if somebody pays somebody else's bill?

I didn't reach the banking-wonk former senator, but I got AmEx public affairs manager Lisa Gonzalez to explain.

"We do consider the source of payment on a card member's account," she said. "We have controls in place that will monitor for fraud or illicit activity."

She said there are lots of laws, including anti-money-laundering aspects of the Patriot Act, that require credit-card companies to track that sort of thing. But she was vague about just how they do that in an age when check processing is automated and lots of spouses have different last names.

"We don't go into details about the controls," she said. "If you make these types of things public, it defeats the tracking."

Jeff Langer, an attorney with Chapman and Culter LLP, a Chicago firm focused on financial services, said it was unlikely such a payment would raise a red flag, especially if it occurs only once.

"If the payment is [at least] the minimum payment and if the check clears ... then who the payment is from is not irrelevant but is not important to the credit-card issuer," he said. "I don't think from an industry perspective that there's an overwhelming degree of concern."

Credit-card companies are much more focused on stopping people from fraudulently using someone else's card, he said. Apparently there aren't lots of people out there scheming to pay other people's bills.

Unless, perhaps, the cardholder is also an officeholder.

Rusnak home again?

Seems sort of quaint in the age of Madoff, but John Rusnak was a big deal in 2002, when it was revealed that the Allfirst currency trader lost $691 million and tried to cover it up. His crimes triggered the sale of the Baltimore-based bank, put 1,100 people out of work and earned Rusnak a 7 1/2 -year federal prison sentence.

And now Rusnak is out.

He was released Jan. 5, according to Federal Bureau of Prisons records.

In an interview from prison with The Baltimore Sun's Laura Smitherman in 2005, Rusnak said he planned to return to Baltimore upon his release.

"I am definitely staying in Baltimore," he said. "I'm going to return and keep my head high, but I'm not going to return the way I left. I'm doing my best to strip away the arrogance and conceit and return with humility and gratitude."

So is the humbled Rusnak back?

His lawyer, David Irwin, said he wasn't sure. He had last talked to Rusnak a few months ago, when Rusnak was in a Baltimore halfway house.

"He sounded well, and he was glad to be out of federal prison. And he's glad to be with his family," Irwin said.

Rat patrol at City Hall

The state prosecutor isn't the only one who's smelled a rat at Baltimore City Hall.

"For the longest time, I never left City Hall without seeing a rat," City Councilwoman Rochelle "Rikki" Spector remarked yesterday at an investigative hearing on rodent control covered by The Baltimore Sun's Annie Linskey.

"But I haven't seen one in a while - at least the four-legged kind," Spector said. "Was there a target on City Hall?"

Olivia Farrow, assistant commissioner for Environmental Health, confirmed that City Hall had been targeted, in a good way.

Pest control workers have been sweeping the area around the building once a month.

Connect the dots

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