Victim Blamed For Victimizing Victimizers in ATM Federal Appeal

December 18, 2017

Walking up to an ATM machine reminds me of the harrowing scene in the movie "Marathon Man," when Laurence Olivier asks Dustin Hoffman: "Is it safe?" From the second I place my bank card into the reader, I imagine all sorts of things that are unsafe about the transaction. There could be a skimmer on the ATM. Someone could be across the street with a telescope trying to steal my password. The machine may be broken and I will be charged for cash that I never got. My credit card may get stuck in the reader and I can't retrieve it. That guy standing at the other machine may pull out a gun and steal my money. Other than that, what's to worry about?

In today's Blog we present the fascinating case of two ATM programmers who rigged the machines to become very friendly piggy-banks. Not so much a Christmas layaway as a takeaway but, these days, it's about as uplifting a Christmas tale as your gonna get. 

Case In Point
In United States of America, Plaintiff/Appellee, v. Chris Folad and Khaled Fattah, Defendants/Appellants (Opinion, United States Court of Appeals for the Sixth Circuit, Nos. 17-5538/5544, 14-CR-00168 / December 11, 2017), the "Syllabus" opens with these intriguing observations:

Best we can tell, the crime at issue in this case and the issue prompted by it are unique. 

The crime: Individuals reprogrammed ATMs to dispense $20 bills for each $1 they were supposed to dispense. Requesting $40 at a compromised ATM thus would deliver forty $20 bills instead of two. All told, the artful technicians extracted from the ATMs more than $600,000 that did not belong to them. The ATMs were owned by a company that does business in Tennessee, infelicitously named SafeCash Systems. SafeCash investigated the crimes and found evidence that a former employee who serviced the machines, Chris Folad, and his friend, Khaled Fattah, engineered the scheme. They turned the information over to the government, prompting several criminal convictions, one-year sentences for Folad and Fattah, and a predictable restitution order.

The issue: After the scheme had ended and after SafeCash, the owner of the ATMs, had determined what had happened, SafeCash replaced seventeen of the relevant eighteen ATMs in response to a federal regulation requiring that they be accessible to individuals with sight impairments. That amounted to the destruction of potentially exculpatory evidence, Folad and Fattah claim, and thus violated their due process rights. For the reasons that follow, we affirm the convictions and sentences.

A Judicial Chuckle

I mean - wow - is that a dramatic opening to an appellate opinion? Is that an intriguing fact pattern?  On top of that, you can tell that the three judges were fascinated by facts in this case and clearly found it ironic that the victim was a company known as "SafeCash." A further bit of irony arose when the Defendants argued that SafeCash impaired their defenses because the firm replaced the very machines that the Defendants had tampered with and, in so doing, the victim allegedly victimized the victimizers by destroying potentially exculpatory evidence. Not exactly the old line about the kid who killed his mother and father and then asked for the court's mercy because he was an orphan but close enough.

Now You See It

After a three-day trial, a federal jury convicted Defendants Folad and Fattah and they were each sentenced to one-year in prison and a joint and several order to pay $616,246 restitution. On appeal, the Defendants argued that the district court should have dismissed the Indictment because SafeCash had violated their Due Process rights when the company destroyed exculpatory evidence (or potentially so) as a result of complying with new Americans with Disabilities Act regulations that required ATM operators to:

[E]nsure that visually impaired customers could access their machines and obligated them to refit their ATMs with headphone jacks. SafeCash determined that it was more cost effective to purchase new ATMs than to refit the old ones. By 2015, SafeCash had replaced seventeen of the eighteen ATMs involved in the fraud. The one ATM that SafeCash did not replace was a newer model that already complied with the regulations.

Page 3 of the 6Cir Opinion

Scrap Heap

In addressing the Defendants' Due Process argument, 6Cir noted that SafeCash is not a government actor and that the Due Process Clause of the Constitution is not applicable to the actions of such a private party. Further, even if the Defendants attempt to extrapolate the Fourth Amendment's search-and-seizure protection onto their appeal via an argument that a private party was instigated by a government actor to search a defendant, the 6Cir found that the evidence failed to present any government coercion, instigation, or encouragement of SafeCash's cited conduct. Finally, 6Cir found that the destroyed ATMs constituted, at best, only "potentially useful" evidence, which does not fall under the ambit of Due Process unless there is a showing that the destruction was undertaken in bad faith. Notwithstanding the Court's analysis of the Due Process aspects of the appeal, the judges also opined that the trial record showed that "the ATMs were more likely to confirm their guilt than to establish their innocence. . ."