Credit unions may want to brace for more instances like the gunpoint kidnapping of a credit union branch manager and the hostage-taking of her family, as well as a rise in the general level of violence being committed during armed robberies, according to two security experts.
Two mid-December events-the hostage scenario that was faced by Jeep Country FCU Branch Manager Kathy Scholl and her family (see story, right) and the assault by four individuals dressed in military fatigues and resulting murder of an armored car guard-aren't going away, either, said Roger Peters, managing director of RSM McGladrey.
"I do a fair amount of international work, and you see this more in other parts of the world, but criminals here are learning that the big money and the high payoffs are in kidnapping," Peters said. "It's becoming a big business, and I anticipate that we will see more of it here."
Also contributing: the entertainment industry. The robbery of Jeep Country FCU was eerily similar to the Bruce Willis/Billy Bob Thornton movie "Bandits." "The hostage scenario (like that experienced by Scholl) is something that surfaces for a few instances and then goes to sleep for a while before resurfacing," observed Randy Terpstra, security consultant with RSM McGladrey and also the deputy chief of police in Minnetrista, Minn. "Someone sees something like it on an old 'Dragnet' episode and thinks, 'Gee, I can do that.' I think we're going to see it a lot more as a reflection of the current economic conditions."
The Credit Union Journal asked several security experts what, if anything, credit unions can do.
"Awareness is a big part of this. A lot of robbers case their targets, and we believe the extortionist does, too," said Vince Wagner, product expert for the Credit Union Protection Division of CUNA Mutual Group, Madison, Wis., which provides insurance to cover such events.
"People need to be looking for things like, is there a strange car parked across the street from the credit union parking lot at closing time that's been there several days in a row that wasn't there before," Wagner continued. "We have all become painfully aware in the last few months that we all have to be a little more suspicious than in the past. We don't want to let it get to a level of paranoia, but people need to be aware that this can happen to them and be aware of their surroundings."
Peters and Terpstra agreed, but took it one step further: credit unions need to train people to recognize these patterns and inform key staff members that by virtue of their employment, they may be a target for kidnapping.
"We generally don't see a lot of training for staff to recognize these patterns, to understand the significance of seeing that same car in the rear view mirror three days in a row," said Peters.
"I believe that financial institutions, as part of their due diligence, need to be giving their employees the tools to protect themselves, even help them implement personal security programs. If a financial institution is placing a person and his or her family at risk, then that institution bears a responsibility to protect them at home," Terpstra added, suggesting that the CU's security officer may need to visit the homes of key personnel to evaluate the security there.
While JCFCU CEO Judy Buck expressed a desire to keep her employees as safe outside the office as in, she said she is stymied about how to do it. "I talked with our security company. We have a hold-up code and an ambush code. We talked about using one password for when everything is fine and one for when there's a problem," she explained. "But the thing is [Scholl] didn't want the police there. They had her family held hostage at gunpoint. She didn't want to do anything to jeopardize her family, and how can you blame her?"
JCFCU has done a lot to make it difficult to rob the credit union during the day-installing a chain link fence, hiring a full-time police officer, implementing policies so there is never anyone opening or closing by themselves.
"I'm very frustrated because you can't protect somebody in their own home," Buck related. "As far as what sort of security measures we can take here, it just seems like the solution isn't there. We could do some things with our safe, but our employees are terrified about what could happen if we do that. They're scared about what a robber will do if he gets angry when the employee can't give him what he wants. I don't want to put my employees in a situation like that."
While life safety issues should always come first, the typical "cooperate and give them what they want" approach doesn't work as well as is generally assumed, Terpstra suggested.
"An increasing number of people are using the tried-and-true principal of cooperating and they're still getting killed, even after giving the robber what he wants," he stated. "The level of violence that the bad actors are ready and willing to use is going up. Too many financial institutions look at armed robbery as the price of doing business. They say, 'We have insurance for it, we'll just give them what they want, and they'll go away.' But that is not always the case. More financial institutions are getting hit on a regular basis and the violence level is increasing."
Simply cooperating might not be the best answer, for example, in a case where there have been no witnesses, Peters advised. "When there are no witnesses, your chances of survival are significantly less. In a situation [like what happened at JCFCU], the CU employee may want to insist on being able to call the family from the facility before opening the vault," he said. "I think you've got a much better chance at surviving if you do something like that."
But the best defense is preventing such things from happening in the first place with better training, according to Peters.
"A lot of financial institutions don't train their staff to recognize some of the social engineering attempts to cull information, either," Peters offered. "I was with an employee when a call came in where the caller was asking when the branch was closed, what time people leave work and which people are officers in the organization-these are questions that, other than just knowing the branch's hours of operation, most people don't need to know and should send a red flag to the employee taking the call."
Staff Should Speak Up
Communicating such suspicious activity is imperative. Wagner suggested telling staff to inform management if they start to see suspicious people, cars or patterns. Management should keep a record of such reports and may need to alert law enforcement about it. "In fact, credit unions should talk to their law enforcement agencies even before anything like this happens to find out exactly how law enforcement wants them to handle such situations," he added.
"Our police department has a program with local banks where if a duress alarm goes off at a financial institution we know who is on duty at that facility, and we send squads to that person's home as well as to the facility itself," Terpstra commented. "The credit union security officer needs to be proactive and talk to law enforcement about such programs and cultivate that kind of relationship. We want to keep the families safe, too."
While the type of crime that occurred in northeast Ohio is unusual, Wagner said, CUNA Mutual's bond coverage does cover such claims.
"The threat of kidnapping and ransom has been around for as long as as financial institutions, so this is not new," said. "This is not a common occurrence, in fact, I can't remember when something like [what happened to Jeep Country] has happened before at a credit union. But the threat is not new, and we do have provisions for it. Some of these risks are insurable."
A more typical example of extortion would be if a credit union manager were kidnapped and the credit union is told it must come up with the money to get the manager back, Wagner explained. In a case like that, the CUNA Mutual bond pays for the losses and damages.
Another, slightly more "typical" extortion example would be if a credit union manager's loved one is kidnapped and the manager is told to take the money from the credit union in order to ransom the loved one. Losses and damages in a case like that would also be covered.
"Let's say the executive is held hostage for several weeks, part of that coverage would also pay the executive's salary for those weeks," Wagner noted. "We would also have funds available to cover post-robbery trauma counseling."
There is also new coverage available to help fund the cost to hire private investigative work to look into such an event or even private guard service for executives, in some cases, he noted. "Hopefully, a credit union never has to call on for this kind of coverage, but it's part of the basic bond," Wagner added. "There are also liability issues that can come into play if someone were to sue the credit union because of the outcome of an extortion."