Tuesday, January 27, 2015

By: Greg Wright, MBA, CFE, CFP, CLU, ChFC         

Drones, or unmanned aerial vehicles[i], are aircraft that can fly without an onboard human operator. Drones fly by remote control and can be as small as an insect and as large as a traditional airplane; they can be produced much more cheaply than traditional aircraft; and can keep operators hidden and out of harm’s way.

They are known by most Americans as being used overseas in tracking down and killing members of Al Qaeda. However, drones are being considered for use in fighting crime, disaster relief, immigration control, for environmental purposes, and by private investigators.   

Few drones are currently legally flown over U.S. soil; however, the Federal Aviation Administration (FAA) predicts that 30,000 drones will fly in our nation’s skies in less than 20 years.[ii]  When he saw his first drone at a spy gear trade show, Indiana private investigator, Tim Wilcox, immediately saw the potential benefits to one of his specialties – work comp fraud surveillance. 

Wilcox, an early adopter of technology, is no stranger to lithium battery powered, carbon fiber vehicles.  He was the first in Indianapolis to own a fast (and expensive) Testa Roadster.  Pictured to the right is a photograph of Wilcox next to his Testa taken at an altitude of 150 feet from his drone.    

He said that drone technology offered a solution to thorny surveillance such as dead-end streets, rural locations, restricted access and line-of-sight problems.  Wilcox said “what is often needed is a video recording that would satisfy the client and hold up in court.”  He bought the most capable drone available at that trade show and embarked on a three year technical research and training program to integrate drone use into his private investigation business. 

The first record of a drone was a simple method of launching a camera into the air attached to a kite and securing a long string to the shutter release.  Douglas Archibald, an Englishman, is credited with taking the first successful aerial photographs from a large kite in 1883.[iii]

In February 1863, during the Civil War, a U.S. inventor named Charles Perley patented a design for a hot-air balloon that could carry a basket filled with explosives attached to a timing mechanism. The timer would trip the balloon's hinged basket, and the explosives would drop out, igniting a fuse.
The first large-scale production of a drone in the U.S. was the product of Reginald Denny who opened a Los Angeles model plane shop that evolved into the "Radioplane Company". Denny believed that low-cost radio controlled aircraft would be useful for training anti-aircraft gunners, and in 1935 he displayed a prototype target drone to the US Army.
U.S. Army Photo
In 1940, the Army placed an order for 53 drones. This small order led to much bigger orders and throughout WWII, thousands were built in the Los Angeles area. It was at Denny’s factory in1944 that an Army photographer took a picture of a young woman assembler named Norma Jeane Dougherty, holding a drone prop. Norma Jeane, later changed her name to Marilyn Monroe.[iv]

The “Predator” drone (Wikipedia picture right) is perhaps the best recognized drone and was used extensively in Iraq and Afghanistan.  Armed with Hellfire missiles, it is credited with killing 1,000 people in Pakistan alone.  Drone technology has advanced to the point the U.S. has drones flying and landing on an aircraft carrier.

FAA rules only allow private citizens to operate drones or “flying model aircraft.”[v]  The FAA Policy Statement for drones is that “no person may operate a UAS (Unmanned Aircraft System) in the National Airspace System without specific authority”. [vi]   Further, the policy states, “The FAA recognizes that people and companies other than modelers might be flying UAS with the mistaken understanding that they are legally operating under the authority of AC 91-57 (Model Aircraft Operating Standards).  AC 91-57 only applies to modelers, and thus specifically excludes its use by people or companies for business purposes.”[vii]

According to the ABC News affiliate in Indianapolis[viii], documents released to them by the FAA show a surprising number of warnings and “cease and desist” letters issued to operators of drones for hire. 

Fraud investigators might wish to operate drones as a civil aircraft or as a hobbyist.  Realistically, for the time being, an option considered by some may be to operate under the “model aircraft” rules and try to stay under the FAA's radar.  Many people and organizations are doing just that today for many commercial applications. If the FAA learns about those operations, generally as a result of advertising, it may ask operators to “cease and desist.”  The FAA does not appear to have enforcement penalties specifically codified for drones; however, they do have regulations for “careless and reckless operations.”  Any air vehicle, including a lawn chair carried aloft on balloons, is subject to these provisions which could result in a $10,000 civil fine that would go through a judicial process, including negotiations and appeals.  I was unable to locate any record of a drone operator being fined by the FAA.

As we wait for the small drone rules to be issued, recognize that this rule could require that some of the larger drones used for commercial purposes be certified as airworthy by the FAA.  Or they could use some other standard as well the current one used to regulate “ultra-light” aircraft.  It looks like, according to experts, that rules will depend on drone physical size or weight.  It is estimated that drones under 4.4 pounds would be excluded from certification. 

It is impossible to put the genie back in the bottle once technology has been developed.   The Teal Group's 2013 market study estimates that worldwide drone spending will more than double from current $5.2 billion to $11.6 billion in ten years,[ix]  Most of those sales will be for military drones and over half bought by the U.S. government.

The Association for Unmanned Vehicle Systems International, a drone trade association, has over 7,000 individual and 2,000 company members, and is supported by major players including Northrop Grumman, General Atomics, Boeing, AAI Corp, and iRobot.  They see great potential in the civilian market where individual commercial drones can cost $1 million for sophisticated units, to toy drones with cameras selling for little more than the cost of a smart phone. 

On Feb. 14, 2012, President Obama signed the FAA Air Transportation Modernization and Safety Improvement Act of 2012 which will require the FAA to allow drones to be used for commercial purposes by Sept. 30, 2015.  The uses could include private investigation, selling real estate, dusting crops, monitoring security, etc.  Below is language reprinted from Section 321, Subtitle B (Unmanned Aircraft Systems) of the law:

COMPREHENSIVE PLAN.—Not later than 270 days after the date of enactment of this Act, the Secretary of Transportation, in consultation with representatives of the aviation industry, Federal agencies that employ unmanned aircraft systems technology in the national airspace system, and the unmanned aircraft systems industry, shall develop a comprehensive plan to safely accelerate the integration of civil unmanned aircraft systems into the national airspace system.[x]

If you have tried your hand at surveillance in a rural or small town, most likely you were quickly identified by the investigation target, his neighbors, and may have even faced a local law enforcement official demanding to know what the hell you were doing on his turf.  It is hard to hide a surveillance van in a small town, on a dead end street or farm road.  Wilcox’s fixed-wing drone is pictured to the right.

Licensed Private Investigators, Special Investigative Units and other professional security organizations could benefit from drones.  This includes large corporation campuses, universities, news reporting agencies, outdoor concerts, athletic events, county fairs, fire detection efforts, shopping centers security, and insurance fraud investigations.  The newer technologies include thermal imaging and low vision capacities to identify humans, heat or fire sources hidden inside buildings. 

Below are a few examples.
·         Surveillance and video documentation without physical trespass, in rural settings, on dead-end streets, or where access to bordering property is impractical.
·         Following vehicles.
·         Large corporate campuses with multi gates, fenced perimeters, and yard storage of valuable assets.
·         Complex manufacturing, petroleum, chemical production, or transportation centers.
·         University or school districts with large campus, traffic issues, athletic games, crisis incidents, etc.
·         Television news organizations that want a lower cost alternative to manned helicopter and a faster response time.

Given the current rapid development of drone technology and the recognized efficiency and safety opportunities, political pressure will influence drone regulations.

The FAA and the Department of Justice has developed a process for local and state law enforcement to operate drones weighing less than 25 pounds under an agreement called the "Common Strategy."[xi] Five law enforcement agencies[xii] are participating in this drone testing program including the Mesa County Colorado Sheriff Department.  Program Manager, Benjamin Miller, told me “We’ll accomplish 30 percent of our manned aviation mission for two percent of the cost.”  He said that his operating cost was $25 an hour compared to $200 up to $1,500 per hour for a manned aircraft.  He operates both a multirotor and a fixed wing drones.  Examples of their drone flights may be found on YouTube and the Mesa County Sheriff website.

Tim Wilcox’s firm, or “Three Eyes,” as it has been described by some pundits, is a half-century old licensed private investigative firm specializing in insurance fraud, legal support and technical surveillance countermeasures.  Following Wilcox’s purchase of a rotary drone at that “spy gear” show, he has continued developing the technology specifically for private investigators.  It has helped that his electronics expert, a graduate engineer, was already a remote control plane hobbyist.  They have formed a separate company, Recon Avionics Corporation to develop, research and produce drones.

Two years, thousands of man-hours and over $100,000 in equipment later, they have developed technology.  Here are a few issues they sorted through in their search to find a better surveillance drone:
·         Multirotor or hover drones are not practical for many surveillance situations.  They are too noisy and too slow.  They provide only about 15 minutes on target, travel at speeds only up to 20 MPH, and most require line-of-sight use.     Gasoline powered drones are too noisy.        

      The answer is a fixed wing drone that is electrically powered by batteries with the capacity of flying for about two hours on target, a 60 MPH top speed, slow speed and tight turning circle while over the target, GPS[xiii] guided, sonar avoidance systems, thermal imaging, and wide-angle and optically zoom capable gimbal mounted cameras.
·         Their drone has an on-screen display camera, and full telemetry including incline/decline, air speed, waypoint distance, vertical speed, etc.
·         Fixed wing drones have a time in the air advantage that is six to eight times greater than multirotor drones.  If you need more than two hours over the subject, a fixed-wing drone can return to the launch site and receive a replacement battery in less than five minutes. 

Wilcox’s setup allows an investigator to launch from a public location away from the suspected fraudster’s house and travel to a specific GPS[xiv] map coordinate that has been entered into the drone.  Once at the location, by flying slowly and silently in a tight circle about 150 feet off the ground, the investigator can visually identify the investigation subject and keep the high-mega pixel camera on the target.   The investigator can record the actual physical activities he observes from a remote location.  Since the recording was not obtained by trespassing on private property and the investigator documents a proper chain of custody, the surveillance should hold up in court. 

Investigator Tim Wilcox said, “We estimate work comp fraud to be at least one-third of paid claims and drones can help cut those losses.  Soon, surveillance investigators not familiar with this new drone technology might need to find another occupation.”

Wilcox and his staff demonstrated their drone technology at the September 2013 ACFE Central Indiana Chapter’s Professional Development Conference. 

Individuals can expect protection against warrantless government authorities entering their homes; however, the Fourth Amendment offers few limits on the activities of government or private surveillance in public places.  These include curtilage areas immediately outside the home, such as driveways, back yards and open fields.  State and local laws vary from jurisdiction to jurisdiction.  Private investigators need to be informed about local laws that may affect the use of drones. 

I want thank the technical contributions to this article provided by my friend and former neighbor, Gary Church, the President of Washington DC based Aviation Management Associates, Inc.   Gary’s consulting firm has helped over the last five years to bring drone rules into the National Airspace System.

Note:  This paper was originally published in a National Society of Insurance Fraud Investigators newsletter in 2013; however, I retained the right to republish.

[i] The FAA refers to "drones" as unmanned aircraft systems (UAS). The military uses the term remotely piloted aircraft (RPA). However, “drone” is a common term widely accepted by the news media and public.
[ii] http://www.fas.org/sgp/crs/natsec/R42701.pdf
[iii] Nova, Spies That Fly, PBS, http://www.pbs.org/wgbh/nova/spiesfly/uavs.html (text reference and picture), (July 24, 2013)
[iv]Wikipedia, “Radioplane OQ-2,” ( July 24, 2013), http://en.wikipedia.org/wiki/Radioplane_OQ-2
[v] Federal Aviation Administration, (June 8, 1981), Advisory Circular AC 91-57, Model Aircraft Operating Standards, http://www.uavm.com/images/ac91-57.pdf .
[vi] Federal Aviation Administration, (Feb. 6, 2007), 14 CFR Part 91, Unmanned Aircraft Operations in the National Airspace System, Pg. 5, http://www.faa.gov/about/initiatives/uas/reg/media/frnotice_uas.pdf .
[vii] Ibid
[viii] Stephen Dean, Indiana pilots call drones for hire a growing threat, http://www.theindychannel.com/news/call-6-investigators/indiana-pilots-call-drones-for-hire-a-growing-threat (July 24, 2013).
[ix] http://tealgroup.com/index.php/about-teal-group-corporation/press-releases/94-2013-uav-press-release
[x] United States Congress. Senate and House of Representatives, 2nd Session. H.R. 658, FAA Modernization and Reform Act of 2012, [signed into law Feb. 14, 2012], http://www.gpo.gov/fdsys/pkg/BILLS-112hr658enr/pdf/BILLS-112hr658enr.pdf
[xi] Memorandum of Understanding between the Federal Aviation Administration, Unmanned Aircraft Systems Integration Office and the U.S. Department of Justice, Office of Justice Programs, National Institute of Justice Concerning Operation of Unmanned Aircraft Systems by law Enforcement Agencies, (March 4, 2013), http://www.alea.org/assets/pressReleases/assets/1805/DOJ%20FAA%20MOU.pdf
[xii] The other four law enforcement agencies are Grand Forks County Sheriff, North Carolina; Canyon County Sheriff, Idaho; Arlington Texas Police Dept.; and Miami-Dade police Department.
[xiii] The Global Positioning System (GPS) is a space-based satellite navigation system that provides detailed latitude and longitude coordinates (location information) anywhere on the Earth where there is an unobstructed line of sight to four or more GPS satellites.
[xiv] Ibid