3.4. SR 08-15-2011REQUEST FOR ACTION
TO ITEM NUMBER
Ma or and Ci Council 3.4.
AGENDA SECTION MEETING DATE PREPARED BY
Consent Au ust 15, 2011 Bradle R. Rolfe, Chief of Police
ITEM DESCRIPTION REVIEWED By
Check Diversion Program, LLC, Worthless Check Diversion Robert Thistle, Interim City
Agreement. Administrator
REVIEWED BY
ACTION REQUESTED
We are requesting that the Council approve the Contractual Agreement between the police department
and the Check Diversion Program, LLC (CDP Services).
BACKGROUND/DISCUSSION
The police department, along with many other agencies in Minnesota and Wisconsin, have worked for
several years with a company called Financial Crimes Services (FCS). FCS works with area merchants to
recover funds when issued a worthless check. They enter into agreements with merchants to recover bad
check amounts when the check value or aggregated value does not exceed $500.00. The program then
offers an alternative to criminal prosecution for individuals who have issued worthless checks. The
company not only assists in the investigation of these cases, but also offers the offender financial training
options to assist them from continuing the practice of issuing worthless checks.
The department recently received notice that FCS will no longer be managing the check diversion
program. Anew company has been formed, Check Diversion Program ,LLC (CDP), which will replace
the services currently offered through FCS. We are informed that many of the key staff from FCS will be
now employed at CDP, to continue with professional service which FCS has provided.
This contract has been reviewed by my office, as well as the City Prosecutor and the City Civil Attorney.
We are recommending that the Council approve the agreement between the City and CDP.
FINANCIAL IMPACT
There is no negative financial impact to the City. The program is funded through penalties and other
charges assessed to the offender. This program does save staff time by freeing up detectives that might
normally have to investigate these cases where a nominal amount is lost.
ATTACHMENTS
^ Contractual Agreement between the City and the Check Diversion Program, LLC
Action Motion by Second by Vote
Follow Up
N:\Public Bodies\City Council\Council RCA\Agenda Packet\08-15-2011\CDP Memo.docx
CHECK DIVERSION PROGRAM, LLC
WORTHLESS CHECK DIVERSION AGREEMENT
1. Contractual Agreement:
This Agreement (hereinafter "Agreement") is made and entered into this 15th
day of August 2011, by and between the City of Elk River (hereinafter
"Jurisdiction"),apolitical subdivision of the State of Minnesota, and Check
Diversion Program, LLC (hereinafter "CDP Services") of 415 Main Street, Red
Wing, Minnesota, 55066.
2. Purpose:
The purpose. of this Agreement shall be to implement a Worthless Check
Diversion Program (hereinafter "Program"), pursuant to Minnesota State Statute
§628.69, a copy of which is attached hereto and made a part hereof, for the
Jurisdiction.
The program provides an alternative to criminal prosecution of individuals. who
issue worthless check(s) to citizens, merchants and businesses. Through the
Program, CDP Services will assist the Jurisdiction and its law enforcement
agency in processing worthless checks. CDP Services will also assist in the
criminal investigation and prosecution of individuals issuing worthless checks.
The Program will provide that the victim is paid full restitution from the offender
who has issued the worthless check, along with financial training for the offender
(offender defined in Section 4, B). Individuals who have written a worthless
check(s) may voluntarily participate or be court ordered to enroll in the Program.
By enrolling into the Program, offenders will be diverted (Minnesota State
Statute §62$.69) from criminal or civil prosecution, provided they make full
restitution, pay all service fees (see Section 4, D) and complete any required
training class. CDP Services will assist the Jurisdiction or designee and victims
of worthless checks in working with individuals writing these worthless checks
to obtain full restitution for victim(s) that are defined asnon-sufficient funds
(NSF) checks or account closed (AC) checks.
3. Contract Terms:
This Agreement shall be in force for a period of three (3) years from the date of
Agreement, as set forth above, and shall be automatically renewed for one year
terms, unless and until terminated as provided in Section 10 of this Agreement.
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4. Definitions:
A. Victim -the business or person who accepted a worthless check for
goods or services and suffered the financial loss.
B. Offender -the individual or participant who passed the worthless
check(s) and has enrolled in the Program either voluntarily or pursuant to Court
Order.
C. Restitution Recovery -Dollar recovery of face value (or written amount)
of a dishonored check(s), property damage, as well as administrative fees, civil
penalties, bank fees as appropriate and law enforcement costs.
D. Worthless Check Diversion Fees Defined
1) Financial Training Class Fee, 4-6 Hours $140.00
2) NSF Merchant Service Fee (Gifted to CDP Services, as Provided in Section 8, A) $ 30.00
3) Individual Requests a Payment Plan Beyond 30 Days (One-time Account Set-up Fee) $ 25.00
4) Late Payment Fees (Discretion Used and Not Accumulative Over $75.00) $ 25.00
5) Internal Electronic NSF Return Processing Fee (Returned Restitution Payment as NSF) $ 32.50
6) Creating a monthly payment book or pre-authorized debit payment book (Optional) $ 15.00
7) .Credit Card Payment Processing Fee ((Optional) $ 7.50
8) Electronic Check Processing Fee (Optional) $ 7.50
9) Rescheduling of Training Class Fee (Number of Times Permitted is Three Times) $ 20.00
10) Home Study CD or online training $ 20.00
ll) Mailing fees incurred by CDP services (US Postal Rates)
5. Jurisdiction Requirement:
The Jurisdiction, acting through its city prosecutor, retains the sole discretion and
authority (as defined in the "Financial Services Regulatory Relief Act of 2006, a copy of
which is attached hereto and made a part hereof) to decide which worthless check(s)
submissions shall be placed in the Program and which shall be retained for criminal
investigation and/or prosecution.
6. CDP Requirement:
CDP Services agrees to provide the following professional services to the Jurisdiction in
a timely and efficient manner, and in compliance with Minnesota State Statute §628.69:
A. Perform daily operations and management of all clerical and accounting functions
related to processing worthless check writers (NSF checks and account closed checks)
submitted by the Jurisdiction`s Program.
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B. Generate letters to worthless check writers and follow through with respect to
processing payments for restitution. Disburse recovered restitution funds to the Victims.
Restitution also includes payment of all administrative fees, and the payment of CDP
Services education training class fees. (See Section 4, D)
All offender payments shall be deposited into a designated bank trust account on behalf
of the Jurisdiction Victims. This account and all its funds are to be disbursed as set forth
in this Agreement.
C. Provide necessary correspondence and follow-up, if needed, by telephone and
responding to inquiries of Victims and Offenders.
D. Properly maintain all physical files, financial records, documentation, reports,
computer files, etc. for a period of no more than six (6) years.
E. Provide voluntary in person, online, or home study Offender financial
management education classes with meaningful information and lessons for Offenders
regarding criminal consequences of property crimes, as well as focus on personal
management of checking accounts and basic budgeting
F. Schedule Offender training classes and/or provide home study course.
G. Maintain records of Offenders making restitution, payment of fees, attendance
records of Offenders completing as well as failing to attend the training session.
H. Maintain records of payment to the Victims.
I. Provide reports to the Jurisdiction; annual Offender report, completed Offender
classes, and related reports as required by the Jurisdiction and law enforcement.
J. Offenders who fail to respond to the Program, refuse to voluntarily enroll into the
Program, or complete the Program as voluntarily agreed upon or as ordered by the Court
and/or who fail to make full restitution are considered to be non-compliant individuals.
These individual listings will also be made available to the Jurisdiction and its designees
for follow-up and for further review and appropriate action.
K. CDP Services on behalf of the Jurisdiction will provide reports as required by
Minnesota State Statue §628.69, Subd 7.
L. CDP to provide letters for Jurisdiction approval and sign off (Attachment B.)
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7. Victim recovery:
A. Restitution Recovery shall be disbursed to a Victim when recovery of restitution
is made from the individual responsible for the worthless check.
8. Check Diversion Program governed by (attachment A):
A. Minnesota Statutes, section 604.113.
B. Minnesota Statute 609.535
C. Minnesota Statute 628.69
D. Financial Services Regulatory Relief Act of 2006
9. Jurisdiction has no financial liability:
It is understood and agreed by and between the parties that CDP Services will bear all
financial liability for all aspects of its operations under this Agreement.
10. Termination of this agreement:
A. This Agreement may be terminated at any time, without cause, by either party
upon 30 days written notice to the authorized agent of the Jurisdiction or CDP Services.
B. This Agreement may be immediately terminated by the Jurisdiction at any time if
the Jurisdiction determines, in its sole discretion, that CDP Services, (see section 18 of
this Agreement) is acting, or has acted at any time during the term of this Agreement, in
direct and clear violation of state or federal law.
11. Amendments or Material Modification:
All amendments or modifications to this Agreement must be in writing and approved by
both parties. Email may be an acceptable means of communication.
(fill in mailing address)
Elk River Police Department
13077 Orono Parkway
Elk River, MN 55330
Check Diversion Program, LLC
415 Main Street
Red Wing, MN 55066
Att: Scott Adkisson
12. Jurisdiction Has No Obligation to Victims:
CDP Services and Victims who participate in the Program fully understand that the
Program is providing a public service and the Jurisdiction, the Elk River Police
Department and its City Prosecutor are held harmless and have no liability to make
recovery of any check(s) or obligation to take criminal action against Offender(s).
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13. Criminal Action:
The Jurisdiction, acting through its City Prosecutor, may choose to prosecute Offender(s)
at its sole discretion. In the case where an Offender fails to participate or complete
Agreements with CDP Services and Victim(s), the Jurisdiction shall determine
appropriate action to take with the Offender, including criminal prosecution or such other
action determined by the Jurisdiction.
14. Hold Harmless and Indemnification:
CDP Services and its subcontractors shall save and protect, hold harmless, indemnify and
defend the Jurisdiction, the Elk River Police Department, and the City Prosecutor,
including their officers and employees, against any and all claims, causes of action, suits,
liabilities, losses, charges, damages or costs and expenses arising from or allegedly
arising from, or resulting directly or indirectly from any professional errors and
omissions and/or negligent or willful acts or omissions of CDP Services, its employees
and agents, and assigns, in the performance of this Agreement.
15. CDP SERVICES as Independent Contractor:
A. Nothing contained in this Agreement is intended to or shall be construed in any
manner as creating or establishing the relationship of employer/employee between the
parties. CDP Services shall at all times remain as independent contractor with respect to
the services to be provided under this Agreement.
B. The Jurisdiction shall be exempt from payment of all unemployment insurance,
FICA, retirement, life and medical insurance and workers' compensation insurance for
any and all of CDP Services employees and agents. Payment of insurance premiums, tax
withholding, and all other benefits are strictly CDP Services responsibility.
16. Subcontractor:
CDP Services shall retain the right to subcontract any portion of the work to be
performed under this Agreement. CDP Services may specifically assign processing of
checks or payment processing operations (credit, check, debit electronic check, remote
deposit, wire transfers, check representment processors, invoicing or billing processors)
to increase efficiencies. In addition, CDP Services may assign this complete Agreement
to a new company, only upon the prior written approval of the Jurisdiction.
Notwithstanding any such assignment, CDP Services shall remain obligated to abide by
all of the terms and conditions of this Agreement and shall remain the party responsible
for holding harmless and indemnifying the Jurisdiction as set forth in paragraph 14. CDP
Services shall further be the sole responsible party for any and all expenses relating to an
assignment of this Agreement
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17. Data Practice:
CDP Services agrees to comply with the Minnesota Government Data Practices Act and
all other applicable state and federal laws relating to data privacy or confidentially.
CDP Services will immediately report to the Jurisdiction any request from third parties
for information relating to this Agreement. The Jurisdiction agrees to promptly respond
to inquiries from CDP Services concerning data request. CDP Services agrees to hold the
Jurisdiction, the Elk River Police Department, and the City Prosecutor, including their
officers, department head, and employees, harmless from any and all claims resulting
from CDP Service's unlawful disclosure or use of data protected under state and federal
laws.
18. Compliance with the Law:
CDP Services agrees to abide by the requirements and regulations of The American with
Disabilities Act of 1990 (ADA), the Minnesota Human Rights Act (Minn. Stat. C.363),
Title VII of the Civil Rights Act of 1964, and the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. §§ 1692-1692p. Violation of any of the above can lead to the
immediate termination of this Agreement by the Jurisdiction.
19. Entire Agreement:
This entire Agreement supersedes any and all other Agreements, either oral or written,
between the parties hereto with respect to the subject matter hereof, and contains all of
the Agreements between the parties with respect to said matter. Each party to this
Agreement acknowledges that no representations, inducements, promises, or Agreements,
oral or otherwise, have been made by either party which is not embodied herein, and that
no other Agreements, statements, or promises not contained within this Agreement shall
be valid or binding. All provisions contained within this Agreement shall be valid and
binding. The laws of Minnesota and the United States of America shall govern all
provisions within this Agreement.
20. Audits and Inspections:
The Jurisdiction, or other governmental agency exercising regulatory function over the
Program, while exercising reasonable, non-disruptive procedures, may inspect CDP
Service's records at anytime.
21. Insurance:
CDP Services and/or its subcontractors agree to provide and maintain, at its own cost and
at all times during its performance under this contract until completion of the work, such
liability insurance coverage as is set forth below, and to otherwise comply with the
provision that follow:
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A. Workers Compensation: Workers Compensation insurance in compliance with all
applicable statutes.
B. Auto Insurance (Owned and un-owned auto)
C. General Liability: "Commercial General Liability Insurance" (Insurance Service
Office policy form title), or equivalent policy form, providing coverage on an
"occurrence", rather than on a claims made basis, the policy for which shall include, but
not be limited to, coverage for bodily injury, property damage, personal injury, contractual
liability (applying to this contract), Independent Contractors, and Products-Completed
Operations Liability. Coverage for explosions, collapse and underground Hazards shall not
be included.
Such a policy shall name the Jurisdiction, the Elk River Police Department, and the City
Prosecutor as additional insureds hereunder, and shall apply on a primary basis with
respect to any similar insurance maintained by these entities.
Such Commercial General Liability insurance policy shall provide a combined single
limit in the amount of at least Two Million and 00/100 Dollars ($2,000,000.00) for Each
Occurrence, applying to liability for bodily injury and property damage, and a combined
single limit of at least the same amount applying to liability for Personal injury and
Advertising injury. Such minimum limits may be satisfied by the limit afforded under
Firm's Commercial General Liability Insurance Policy, or by such Policy in combination
with limits afforded by a Umbrella or Excess Liability Policy (or policies); provided, that
the coverage afforded under any such Umbrella or Excess Policy is at least in all material
respects as broad as that afforded by the underlying Commercial Liability Policy, and
further that the Jurisdiction is included as an additional Insured thereunder.
Such Commercial General Liability Policy and Umbrella or Excess Liability Policy (or
policies) .may provide aggregate limits for some or all of the coverage afforded
thereunder, so long as such aggregated limits are not at any time during which such
coverage is required to be maintained hereunder reduced to less than the required Each
Occurrence limit stated above, and further, that the Umbrella or Excess Liability provides
from the point that such aggregate limits in the underlying Commercial General Liability
Policy become reduced or exhausted. An Umbrella or Excess Liability Policy which
"drops down" to respond immediately over reduced underlying limits, or in place of
exhausted underlying limits, but subject to a deductible or "retention" amount, shall be
acceptable in this regard so long as such deductible or retention amount does not cause
the firm total deductibles or retention for Each Occurrence to exceed Ten Thousand and
00/100 Dollars ($10,000.00).
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D. Professional Liability: Professional or ("Errors & Omissions")
Liability Insurance in the amount of at least One Million and 00/100 Dollars
($1,000,000.00) for Each Occurrence (or "Wrongful Act" or equivalent) and if
applicable, Aggregate, covering CDP Services' Liability for negligent acts, errors, or
omissions in the performance of professional services in connection with this Agreement,
including coverage for actual or alleged violations of the Fair Debt Collection Practices
Act (FDCPA), 15 U.S.C. §§ 1692-1692p. CDP Services Professional Liability Insurance
may afford coverage on an occurrence basis or on a claims basis. It is however,
acknowledged and agreed by CDP Services that under claims-made coverage changes in
insurers or in insurance policy forms could result in the impairment of the liability
insurance protection intended for the Jurisdiction, the Elk River Police Department,
and/or the City Prosecutor hereunder. CDP Services therefore agrees that it will not seek
or voluntarily accept any such change in its Professional Liability Insurance coverage if
such impairment of the protection for the Jurisdiction, the Elk River Police Department,
and/or the City Prosecutor could result: and further, that it will exercise its right under
any Extended Reporting Period" ("tail coverage") or similar claims-made policy option if
necessary or appropriate to avoiding impairment of such protection.
Such a policy shall name the Jurisdiction, the Elk River Police Department, and the City
Prosecutor as additional insureds hereunder, and shall apply on a primary basis with
respect to any similar insurance maintained by the Jurisdiction.
A copy of all such insurance policies described above shall be delivered to the
Jurisdiction for its review and approval prior to CDP Service's initiation of the Program
on behalf of the Jurisdiction.
22. CDP Services further agrees that it -will, throughout the entire period of this
Agreement:
1. Advise the Jurisdiction on any intended or pending change in Professional
Liability insurance or in policy. forms, and provide the Jurisdiction with all pertinent
information that the Jurisdiction may reasonably request to determine compliance with
this paragraph.
2. Advise the Jurisdiction of any claims or threat of claims that might reasonably be
expected to reduce the amount of such insurance remains available for the protection of
the Jurisdiction.
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THEREFORE: IN WITNESS OF, the parties have executed the Agreement as of the data first
written above
Check Diversion Program, LLC, (CDP Services) City of Elk River
By
(Scott Adkisson ,President)
Attachment A Laws
Attachment B Template Series Letters (3)
By
Mayor
By
City Clerk
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