SPEAKERS CONTENTS INSERTS
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UNITED STATES SECRET SERVICE
SUBCOMMITTEE ON CRIME
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
JUNE 24, 1999
Serial No. 6
Printed for the use of the Committee on the Judiciary
Page 2 PREV PAGE TOP OF DOCFor sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
JOE SCARBOROUGH, Florida
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JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Subcommittee on Crime
BILL McCOLLUM, Florida, Chairman
STEVE CHABOT, Ohio
BOB BARR, Georgia
Page 4 PREV PAGE TOP OF DOCGEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
CHARLES T. CANADY, Florida
ASA HUTCHINSON, Arkansas
ROBERT C. SCOTT, Virginia
MARTIN T. MEEHAN, Massachusetts
STEVEN R. ROTHMAN, New Jersey
ANTHONY D. WEINER, New York
SHEILA JACKSON LEE, Texas
GLENN R. SCHMITT, Chief Counsel
DANIEL J. BRYANT, Chief Counsel
RICK FILKINS, Counsel
BOBBY VASSAR, Minority Counsel
C O N T E N T S
June 24, 1999
McCollum, Hon. Bill, a Representative in Congress from the State of Florida, and chairman, Subcommittee on Crime
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Foley, Kevin T., Assistant Director, Office of Investigations
Riggs, Barbara S., Assistant Director, Office of Protective Research
Spriggs, Carlton Danny, Assistant Director, Office of Protective Operations
Stafford, Brian, Director, United States Secret Service
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Foley, Kevin T., Assistant Director, Office of Investigations: Prepared statement
Stafford, Brian, Director, United States Secret Service: Prepared statement
UNITED STATES SECRET SERVICE
THURSDAY, JUNE 24, 1999
House of Representatives,
Page 6 PREV PAGE TOP OF DOCSubcommittee on Crime
Committee on the Judiciary,
The subcommittee met, pursuant to call, at 9:35 a.m., in Room 2141, Rayburn House Office Building, Hon. Bill McCollum [chairman of the subcommittee] Presiding.
Present: Representatives Bill McCollum, Steve Chabot, Lamar Smith, Robert C. Scott, Martin T. Meehan and Sheila Jackson Lee.
Staff Present: Glenn R. Schmitt, Chief Counsel; Daniel J. Bryant, Chief Counsel; Veronica Eligan, Staff Assistant; and Bobby Vassar, Minority Counsel.
OPENING STATEMENT OF CHAIRMAN McCOLLUM
Mr. MCCOLLUM. The Subcommittee on Crime will come to order.
Today the Subcommittee on Crime holds its first oversight hearing ever on the United States Secret Service. Its 4,900 employees are a key component in our Nation's law enforcement system. Most people know that the Secret Service is the agency charged with the protection of the President, the Vice President, and their families, as well as former Presidents, their spouses and widows, but the Secret Service also is the lead law enforcement agency for the investigation of financial crimes involving the counterfeiting of U.S. Currencies, fraud involving access devices such as credit cards, wireless telephone fraud, and identity fraud and theft.
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The protective mission of the Service is a familiar one to all of us. All of us are accustomed to seeing the Secret Service agents protect the President, the Vice President, and their spouses. We all remember television footage of Secret Service agents placing their bodies between President Reagan and his would-be assassin in 1981.
In addition to protecting these persons, the Service protects 12 other people on a full-time basis. Additionally, the Service protects foreign heads of state and heads of government when they visit the country. Last fiscal year the Service provided protection for 471 foreign dignitaries. In all that year, the Service planned and was responsible for providing protection at over 5,000 events.
The Service also provides security in and around the White House and the Vice President's residence and for foreign embassies and consulates in the United States. Much of this is done by the officers of the uniformed division of the Secret Service. These officers are also a visible presence at public events where the President or Vice President is in attendance.
While the protective operations of the Service are well-known, most people are largely unaware of the criminal investigative mission of the Service. In fact, however, the Service was first established to investigate financial crimes and was the first Federal law enforcement agency created. Last fiscal year, the Service intercepted over $110 million in counterfeit currency before it could corrupt our money system. And as I have mentioned, the Service is also the key law enforcement agency investigating such growing crimes as credit card theft and fraud and wireless telephone fraud.
Page 8 PREV PAGE TOP OF DOC I am pleased that the Service has worked closely with the subcommittee to craft new legislation in these areas to help fight this type of crime. Last year Congress passed the Wireless Telephone Protection Act, which prohibits the possession of devices used to clone wireless telecommunication equipment. Also last year Congress passed the Identity Theft and Assumption Deterrence Act, which made it a crime to use or sell to another personal identifying information such as a Social Security card number and credit card number for the purpose of committing or facilitating the commission of a crime.
I look forward to hearing today how the Service is beginning to use these new tools in its work, and I hope we can discuss ways in which Congress can act to further the Service in carrying out its mission. I am particularly pleased that the new Director of the Service, Brian Stafford, is testifying today, and we welcome you, Mr. Stafford. His background is an impressive one, and I am sure that he will provide outstanding leadership to the Service in the years to come.
I welcome all of you who are here today with him, and I look forward to your presentations.
Mr. Scott, you are recognized.
Mr. SCOTT. Thank you, Mr. Chairman, and I am pleased to join you in convening this oversight hearing on the Secret Service. We are all aware of the prominent role the Secret Service plays in protecting the President, Vice President and their families. This hearing will give us an opportunity to learn more about the Secret Service's other areas of responsibility, including investigating the counterfeiting of currency and securities; fraud, and forgery of U.S. Checks, bonds, and other obligations; fraud related to false identification documents and devices; and financial institution fraud.
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In addition, I expect we will learn more about the growing areas of concern, such as the counterfeiting of currency and possibly credit card fraud. I am aware that computer technology has made counterfeiting much more attractive to the criminal element, and I look forward to this morning's demonstration related to counterfeiting so that we can better understand the extent of the problem. I also welcome comment from the Secret Service on anything we can do to help address emerging criminal trends. Clearly, the earlier we can address the problem, the more likely we will be able to keep it in check, and I hope that we will be able to do just that at this oversight hearing and through future discussions with the Secret Service.
Finally, this hearing is timely because Mr. Stafford, the new Director, is in the process of taking a fresh look at how Secret Service meets its responsibilities. And I join you, Mr. Chairman, in welcoming him here to the committee.
I understand that Mr. Stafford and his staff are presently in the process of making key decisions on how to best focus the Service's limited resources to meet its mission. I expect by the end of this hearing we will have a clear picture of where that process is, and hopefully we can all agree that it is on the right track.
Mr. Chairman, I look forward to working with you on this important oversight responsibility, and I thank you.
Mr. MCCOLLUM. Thank you very much Mr. Scott.
And again, we want to welcome the panel. I would like to introduce them more formally, and then we will hear from you.
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Brian L. Stafford is the 20th Director of the United States Secret Service. Mr. Stafford assumed this post on March 4, 1999, and continues the tradition of Secret Service Directors being drawn from the ranks of career special agents. Mr. Stafford began his career with the Service in 1971, and has served in a variety of assignments including serving as a special agent in charge of the presidential Protective Division, the division that protects the President and the First Family. Mr. Stafford received his bachelor's degree from Mount Union College in Alliance, Ohio.
Joining Director Stafford is Kevin T. Foley. He is the Assistant Director for the Office of Investigations. Mr. Foley began his law enforcement career in 1975 as a special agent in the Drug Enforcement Administration and joined the Secret Service in 1979. He has held positions in the New York and Charlotte field offices and in several divisions at the Secret Service headquarters, including the Presidential Protective Division. He has earned the Federal Law Enforcement Officer of the Year award and the Director's lifesaving award. Mr. Foley earned a bachelor's degree in 1973 from Villanova University and a master's degree in forensic science from George Washington University in 1994, and reminded me this morning that he had been assigned in Florida at one point not too long ago.
We also welcome Barbara S. Riggs, the Assistant Director for the Office of Protective Research at the Secret Service. Ms. Riggs began her Secret Service career in 1975 and has worked in the Los Angeles field office, Intelligence Division, and the Presidential Protective Division. In addition to her assignments within the Service, she has also served as special assistant to the Secretary of the Treasury. Ms. Riggs received her bachelor's degree from Cornell University in 1974.
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Carlton Danny Spriggs is the Assistant Director for the Office of Protective Operations, a position he assumed in March of this year. Mr. Spriggs began his law enforcement career as a police officer in Albuquerque, New Mexico, and joined the Secret Service in 1976. He has worked in the Washington, D.C. field office, and the White Plains resident office, and several within headquarters, including the Presidential and Vice Presidential Protective Divisions and on the counterassault team. He received the Department of Treasury's special agent's award for his service during the assassination attempt on President Ronald Reagan in 1981. Mr. Spriggs received his bachelor's degree from the University of New Mexico in 1974.
Well, we again want to welcome you this morning, Director Stafford. It is, as you know, and as I said in the opening statement, the first time that we have done our oversight responsibilities in a long, long time at least, maybe ever. And that is really something this Crime Subcommittee should be doing because there is no question the Secret Service has a law enforcement component that is a very strong part of its mission. So I welcome you for your statement today, and I understand that you are going to divide a presentation up following that among those who are with you, and we look forward to whatever you present to us, and then getting a chance later to ask you questions. So please proceed.
STATEMENT OF BRIAN STAFFORD, DIRECTOR, UNITED STATES SECRET SERVICE
Mr. STAFFORD. Thank you, Mr. Chairman and members of the subcommittee. I am pleased to be here today, and to be afforded the opportunity to testify before the committee on issues that will assist the Secret Service in both its protective and investigative mandates.
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I have submitted a more comprehensive statement for the record and with the Chairman's permission I have a shorter statement that I would now like to read.
As you stated earlier, the Secret Service is one of the oldest Federal law enforcement organizations. Having been created in 1865 to suppress counterfeit currency, we now have very important dual missions. Our original investigative mission of suppressing counterfeiters during a period in our history when one-half of our money in circulation was counterfeit has expanded into areas of financial and electronic crimes in response to the needs of the American people and the mandates by Congress.
Likewise, our protective responsibilities have expanded in scope beyond the President and Vice President to include other individuals and positions as well as national special security events.
The Secret Service has been protecting our Nation's leaders and planning security at major events for almost 100 years. Based on the premise that major, well-publicized events may pose an attractive terrorist target, the President has designated specific responsibilities for certain national events to the Secret Service, the Federal Bureau of Investigation, and the Federal Emergency Management Agency. To bring the full force of the U.S. Government to bear at these events, the President issued a directive last year which recognizes these agencies' unique areas of expertise and responsibility.
The Secret Service was recognized for our long history of involvement with major events and designated as the lead agency for the planning, the coordination and implementation of the overall security plan for events determined to be national special security events.
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The initiative to amend title 18, section 492 is sought as a technical change to bring the forfeiture of paraphernalia used in the production of counterfeit currency in line with all other forms of property forfeitable under customs laws. This proposal provides for the administrative, civil judicial and criminal forfeiture of all counterfeit paraphernalia. The Secret Service seeks this change because under current statutory authority, the Code allows only a civil judicial approach to the forfeiture of such property. Returning the computers and printers being used to produce counterfeit currency to the criminal is sending the wrong message. The best deterrent to the type of crime is seizing the equipment that facilitated the criminal activity.
This change in the law is necessary not just to assist the Secret Service in our investigations, but because all counterfeiting damages the United States by diminishing the confidence people place in our currency.
The initiative to amend title 18, section 879 is another technical change. This change will let the Secret Service conduct threat assessments in connection with the immediate family of major Presidential and Vice Presidential candidates. In addition, it authorizes threat investigations of other protectees covered by title 18, section 3056. The change also clarifies the Secret Service's authority to investigate threats made against former Presidents after their Secret Service protection lapses.
Mr. Chairman, traditionally law enforcement has been reactive to violent incidents, and police are normally summoned to respond after violence occurs. With the incidence of crimes involving targeted violence on the rise, police agencies are now being asked to be more proactive and to intervene before the violence takes place. The ideas and approaches contained in our exceptional case study project, the only recent operational law enforcement study of targeted violence concerning assassination and attempted assassination of public officials, has been noted as potentially useful in investigating and assessing cases of other targeted violence to include domestic stalking, workplace and school violence. This research is being conducted through our National Threat Assessment Center initiative.
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The proposal on administrative summons authority will apply only when such material is relevant to the investigation of a threat to the life or safety of the President or other persons protected by the Secret Service. This authorization is sought in an effort to enhance the protective function of the Secret Service. In order to meet its critical missions, the special agents of the Secret Service must be reasonably empowered to retrieve, evaluate and utilize data in an expeditious manner. Given the nature of our mission, time is of the essence.
In conclusion, I wish to thank the committee for its long history of support you have shown the men and women of this agency to ensure that they have the tools to do their job. Mr. Chairman, this concludes my statement.
Mr. MCCOLLUM. Thank you very much, Mr. Stafford. I understand that others of you have presentations as well, and we look forward to that.
[The prepared statement of Mr. Stafford follows:]
PREPARED STATEMENT OF BRIAN STAFFORD, DIRECTOR, UNITED STATES SECRET SERVICE
Mr. Chairman and members of the subcommittee, I am pleased to be here today, and to be afforded the opportunity to testify before you.
With me today, Mr. Chairman, are Kevin T. Foley, Assistant Director for Investigations; Barbara S. Riggs, Assistant Director for Protective Research; and D. Carlton Spriggs, Assistant Director for Protective Operations.
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I will now highlight the activities the Secret Service is undertaking in three areas of our responsibility-protection, protective research, and investigations.
The Secret Service's protective operations program provides security for the President, the Vice President and their families, as well as for former Presidents and other dignitaries and designated individuals. This program also provides security for the White House complex, the Vice President's residence, and foreign missions within the Washington, D.C., area.
This past year was an extremely productive and demanding year for the Secret Service. The total number of stops for all protectees was 9.2% higher than the number estimated. Although permanent protectee travel was slightly under that which was estimated, protection of foreign dignitaries was significantly higher.
President Clinton and Vice President Gore continued to maintain extensive foreign travel schedules during FY 1998. The President made 44 foreign stops, and the Vice President made 28 foreign stops last fiscal year.
The Secret Service has been protecting our nation's leaders for almost 100 years. We have been planning, coordinating, and implementing security at major events since the turn of the century. Based on the premise that major, well-publicized events may pose an enhanced terrorist target, the President designated specific responsibilities for certain national events to the U.S. Secret Service, the Federal Bureau of Investigation (FBI), and the Federal Emergency Management Agency (FEMA). To reduce vulnerabilities of the public at these events, the President issued a directive last year which recognizes these agencies' unique areas of expertise, and designates certain functions to each agency based on such expertise.
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The Service's Office of Protective Operations has successfully coordinated a number of major protective events within the past few years. The Service provided individual protection for the 53rd annual United Nations General Assembly and the 20th United Nations Special Session on the World Drug Problem, as well as individual protection and event security at the 17th Congress of the World Energy Council. This session of the World Energy Council was held in Houston, Texas, and was the first event for which the Secret Service assumed lead agency responsibilities for security in accordance with Presidential Decision Directive #62. This Presidential Decision Directive names the Service as the lead agency for security design, planning, and implementation at events designated as national special security events.
In addition to the usual protective workload, this year the Service has also been involved with the large protective effort surrounding the visit to this country by Pope John Paul II. In addition, the just completed summit meeting of the North Atlantic Treaty Organization, held in Washington, D.C., during the month of April was a tremendous success. This event was designated as a national special security event in accordance with Presidential Decision Directive #62. The Secret Service's role as the lead agency for the design, planning, and implementation of the overall security plan, in concert with our coordination with the FBI and FEMA, proves once again that using the expertise of the individual federal agencies working together is a recipe for success.
All of the above mentioned events took significant planning, deployment of resources, and coordination with federal, state, and local law enforcement to be successful. In spite of the tremendous protective workload associated with the heavy travel schedules of our individual protectees, the Service was able to complete the necessary preparatory efforts required to ensure that the security plan for each event was successfully implemented.
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Protective intelligence is a critical part of the Secret Service's protective mission. The Intelligence Division develops threat assessments in support of protectee visits to domestic and foreign settings; provides warning indicators for specific and generalized threat environments; maintains liaison with the mental health, law enforcement, and intelligence communities; and conducts operational studies that are needed to stay at the forefront of the effort to predict the likelihood of danger.
Mr. Chairman and members of the committee, we are pleased that you have recognized the importance of the Secret Service's National Threat Assessment Center. Traditionally, law enforcement has been reactive to violent incidents. In the past, police were asked to respond after violence occurred. With the incidence of crimes involving targeted violence on the rise, police agencies are being asked to intervene before the violence occurs.
An essential ingredient to protection is the art of threat assessment, or protective intelligence. Threat assessment is the process of assessing information about the interests, motives, intentions, and capabilities against a person or group of people.
Gauging the potential threat to, and vulnerability of, a targeted individual is key to preventing violence. Currently, there is little formal guidance available to law enforcement about how to conduct these ''threat assessment'' investigations.
Page 18 PREV PAGE TOP OF DOC In 1992, the Secret Service began the Exceptional Case Study Project (ECSP). Since that time, we have examined the thinking and behavior of all 83 persons known to have attacked, or came close to attacking, a prominent public official or public figure in the United States in the last 50 years. This study is the only recent major operational law enforcement study of targeted violence (assassination and attempted assassination of public officials and figures). The ideas and approaches contained in the study have been noted as potentially useful in investigating and assessing cases of targeted violence, to include domestic stalking, and workplace and school violence.
The information developed by the Exceptional Case Study Project (ECSP) has increased the Service's understanding of violence directed toward persons of prominent public status, and has benefited the Service's risk assessment procedures, physical protection techniques, and training methodologies. The findings of the ECSP and subsequent interest by the law enforcement and criminal justice communities led to the creation of the Secret Service National Threat Assessment Center.
The center develops threat investigations and assessment protocols, and assists state and local law enforcement agencies in the prevention of stalking and violence in both the workplace and schools. Through the National Threat Assessment Center, the Service's goal is to provide leadership and direction to the criminal justice community in its efforts to prevent targeted violence.
The technical security program of the Secret Service continues to develop measures to ensure the safety of the President, and other protectees, against weapons of mass destruction. Specifically, in response to the threat of chemical weapons, the Secret Service has developed a plan that incorporates detection, countermeasures, and survivability. The detection aspect is supported by baseline technology that will detect the presence of a chemical agent and activate an alarm. Countermeasures technology will not eliminate the threat from weapons of mass destruction, but will mitigate the effects. Survivability is accomplished through the transfer of protectees to areas equipped with special protective systems.
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In this program area, the Service has developed partnerships with the Massachusetts Institute of Technology's Lincoln Laboratories, the Lawrence Livermore Laboratory, the United States Army's Technical Escort Unit at the Aberdeen Proving Grounds, and the National Medical Research Institute.
During FY 2000, additional chemical/biological teams will be trained to support the Service's protective responsibilities. These teams will require protective clothing, life support equipment, medical antidote kits, and chemical/biological field sampling and analysis equipment. The Service will also provide each special agent and security specialist assigned to the field with the protective equipment necessary to counter chemical nerve agents and biological toxins.
The Secret Service is one of the oldest federal law enforcement organizations. Having been created in 1865 to suppress counterfeit currency, we now have important dual missions. Our traditional investigative mission of suppressing counterfeiters has expanded into areas of financial and electronic crimes in response to the needs of the American people and mandates by Congress. The Secret Service completed 27,429 criminal cases during FY 1998. This is a remarkable achievement given the heavier than anticipated protective workload.
The Secret Service is also responsible for domestic and international investigations involving financial systems crimes to include: bank fraud; access device crimes; telemarketing crimes; telecommunication crimes (cellular and hard wire); cyber crimes (attacks on critical infrastructures, desk top publishing and network intrusions); automated payment system and teller machine crimes; crimes involving government entitlements; crimes involving identity takeovers; crimes involving counterfeit and fictitious financial instruments, obligations and securities; criminal activity in the area of money laundering as it relates to certain specified unlawful activities; and the seizure and subsequent forfeiture of assets used to facilitate certain criminal activities, as well as the proceeds of those criminal activities.
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The Secret Service has long recognized the need to approach high-tech crime on a global basis. Through participation in the high-tech subcommittee of the G-8 and the drafting of the President's International Crime Control Strategy, the Secret Service has sought to bring actual cases based on investigative history to the forefront. At this time, the Secret Service recognizes that traditional methods of law enforcement practices in the international environment need to be changed. Through solid partnerships developed by our international field offices, including joint training initiatives with law enforcement and industry, significant high-tech investigations have been brought to successful conclusions by working beyond geographic boundaries.
As discussed last year, the U.S. dollar continues to be the currency of choice worldwide. Approximately $480 billion of genuine U.S. currency is in circulation worldwide and nearly 60% of that is in foreign markets. As the General Accounting Office and the Federal Reserve Board have testified, foreigners have a tendency to hold U.S. currency, primarily because of their confidence in the dollar and as a hedge against inflation affecting their own currency.
Competition for market share will be affected with the introduction of the ''Euro.'' This represents a healthy challenge to U.S. currency remaining the currency of choice worldwide. The U.S. Secret Service will be tasked with increasing investigative efforts to combat the counterfeiting of the U.S. dollar, both domestically and internationally, in order to maintain confidence in the U.S. dollar.
The methods counterfeiters use to produce counterfeit currency have dramatically changed over the last few years. In FY 1995, counterfeit U.S. currency produced by advanced reprographic technology accounted for only 0.5% of the total amount passed in the United States. This percentage increased to 44% in FY 1998.
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As the Service expected, there has been an increase of 30% in the amount of counterfeit currency passed from FY 1997 to FY 1998. During the same time frame, the number of plant suppressions increased from 435 to 616, and the number of arrests increased from 2,178 to 2,926. This increase is directly attributable to counterfeit currency manufactured with inkjet and advanced reprographic technology.
The Service's strategy to combat this problem remains the three-fold approach adopted in FY 1997. The first part of this approach involves legislative proposals. In FY 1998, Treasury Secretary Rubin asked the Justice Department to join with the Treasury Department in working with the Sentencing Guideline Commission to review and enhance the guideline ranges for imprisonment in counterfeiting cases.
Attorney General Reno has been very supportive of our efforts to heighten the awareness of prosecutors to the significance of successful counterfeit prosecutions as a deterrent to potential counterfeiters.
The second part of the approach, initiated in October 1998, involves finding technological solutions to deter reprographically-generated counterfeit currency. Approximately 100 representatives from private industry (laser printer manufacturers, computer manufacturers, and desktop software publishers) gathered at John Hopkins University with the Secret Service, the Bureau of Engraving and Printing, the Federal Reserve and senior Treasury officials to discuss technological solutions.
The third part of the approach made great strides in FY 1998 when Secret Service agents participated in more than 1,400 educational and training seminars around the globe. These seminars were held to discuss counterfeit currency issues as well as to highlight the design changes and security features in the newly-designed 1996 series Federal Reserve Notes. Furthermore, the Secret Service participated in 20 national seminars co-hosted with Federal Reserve Banks throughout the United States presenting these issues to the banking industry and merchants.
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The Secret Service is increasing its efforts to train and equip its personnel to address high-tech crime in all areas of its jurisdiction. The Electronic Crimes Special Agent Program (ECSAP), consisting of 70 highly-trained special agents qualified as experts in the forensic examination of electronic evidence, is the key component to this effort.
The Electronic Crimes Special Agent Program (ECSAP) has evolved to be an essential component of the investigative and protective missions of the Secret Service. With the extensive use of computers by the criminal element in all areas where the Secret Service has an investigative and protective interest, the demand by the field for ECSAP support has predictably and dramatically increased.
In accordance with Presidential Decision Directive #63, the Secret Service has provided personnel to staff the National Infrastructure Protection Center (NIPC) and Critical Infrastructure Assurance Office (CIAO). These two entities were designed for the facilitation of an inter-departmental approach to protection of the nation's critical infrastructures. The Secret Service brings unique capabilities and experience to this initiative with highly-qualified investigators having significant high-tech experience, and with established partnerships in the computer, financial, and telecommunications industries.
When Attorney General Janet Reno announced a Nigerian Criminal Enterprise Initiative, she acknowledged the investigative expertise and historical commitment of the Secret Service in this area. In FY 1998, the Secret Service was the lead agency in 28 domestic task forces involving 54 law enforcement agencies throughout the United States.
Page 23 PREV PAGE TOP OF DOC The task forces' goals are to identify individuals, organized groups and/or assets from fraud schemes intended to victimize individuals, banks, credit card issuers, or other financial institutions.
In one ongoing investigation involving fictitious instruments and bogus investment offerings, a seizure of approximately $4 million was made in the United States, and bank accounts totaling almost $11 million were identified overseas. This investigation accelerated the efforts of the Department of Justice to finalize a Mutual Legal Assistance Treaty (MLAT) with its counterparts in New Zealand. This agreement enables both nations to recover proceeds of transnational criminal activity. As a result, the accounts were frozen by authorities in New Zealand pending forfeiture proceedings in both countries.
The Secret Service is acutely aware of the need for law enforcement to have a vision of the future as it relates to the transnational nature of financial crimes. Presidential Decision Directives #42, #62 and #63, along with the International Crime Control Strategy, have laid the foundation to implement this vision.
Under the Law Enforcement Sub-Group of the G-8, a number of projects were developed which have a direct impact on the jurisdictional authority of the Secret Service. High- tech crime, access device fraud and West African fraud were recognized as having a detrimental effect on the economies of the G-8 member nations. The Secret Service is the head of the U.S. delegations in both the access device fraud group and the West African fraud group.
In response to these groups' initial findings, the Secret Service implemented a number of overseas initiatives to address these and other forms of transnational criminal activity. Three of these initiatives are recurring, and include temporary duty assignments of Secret Service Agents to the City of London Police Department, the German BKA, and Lagos, Nigeria.
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The banking industry has identified ''skimming'' (the replication of electronically transmitted magnetic stripe data to allow or enable valid authorization to occur) as the most significant financial problem facing the credit card industry today and for the near future. The Secret Service has taken the lead in the development of a database that will give credit card issuers and other members of the financial services industry the ability to provide time sensitive investigative leads to a central location.
In conclusion, I wish to thank this Committee for its long history of support, not just in our mission, but in the support you have shown to the men and women of this agency to ensure that they have the tools to do their job.
Mr. Chairman, this concludes my statement. I would be pleased to answer any questions that you or other members of the subcommittee may have.
Mr. MCCOLLUM. Mr. Foley, I think you are next. Please get that in a comfortable position, but as you may have noticed, it doesn't pick up as a distance very well at all. Pull it up close. Thank you.
STATEMENT OF KEVIN T. FOLEY, ASSISTANT DIRECTOR, OFFICE OF INVESTIGATIONS
Mr. FOLEY. Good morning, Mr. Chairman and members of the committee. I want to thank you for the opportunity to testify before you today. With me this morning is Special Agent Steven Sepulveda, to our right, from our Financial Crimes Division, and Counterfeit Specialist Lorelei Pagano, who will assist me with my presentation today.
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I would like to begin with providing you a brief history of the Secret Service's investigative mission. The Secret Service's investigative role has always been to protect the integrity and public's confidence in our currency through proactive and aggressive counterfeit investigations. As times and technologies change, so, too, must the Secret Service. Today, in addition to our counterfeit responsibilities, we investigate a number of other violations such as access device fraud, bank fraud, counterfeit and fictitious financial obligations, and telecommunication and computer fraud. Each of these crimes has a detrimental effect on the country's financial systems.
United States payment systems, powered by the development of impressive new technologies, continue to merge internationally into one borderless web. Electronic banking, local payment systems, smart cards and digital currencies are becoming a target-rich environment for transnational criminal organized groups. Today there exists a misconception that individuals using this technology to manufacture counterfeit currency and commit other financial crimes are computer-literate, white-collar criminals. More prevalent is the involvement of organized criminal groups, repeat offenders, and individuals involved in narcotics distribution, weapons use, and inherently violent crimes.
This new technology is not only utilized in the counterfeiting of currency, but also to produce numerous other counterfeit and fictitious financial instruments, credit cards and false identification. And because of these technological advances, the Secret Service has seen increased fraud losses in all areas of our jurisdiction.
A new method of counterfeiting credit and debit cards utilizing these technological advances is called skimming. Skimming refers to the theft of the account information on the magnetic stripe of the transaction card and has been identified as the biggest growing problem facing the financial industry today.
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I would like to take this time to show you a short video within the presentation on the monitors that demonstrates the ease with which criminals can steal the information off the magnetic stripe on your card.
In this video we see three people sitting down for lunch. The victim uses its credit card to pay the bill, and as the waiter brings the card to the register, he slips a skimming device out of his pocket, skims or swipes the account information off the magnetic card, returns the device to his pocket, and then he goes on to complete the legitimate transaction. The waiter then returns the card to the victim, who won't realize that his account information has been compromised until he sees charges he didn't make appear on his monthly statement.
Mr. Chairman, that entire episode took about 15 seconds, and that clip was in slow motion, so it demonstrates how quickly that crime can occur. And although this was just a demonstration, the skimming device used in this video was seized by agents conducting a criminal investigation in the New York field office. I am going to pass this skimmer around now, and I hope this will give you some indication of just how compact and easily concealed it is and how far this technology has come.
An examination of this device determined it could hold a minimum of 200 account numbers, and a conservative estimate of the potential fraud loss for this gadget is in excess of $1.5 million per week.
Unfortunately there is no geographic area immune from schemes involving this type of fraud. Within the last 6 months, our offices have conducted skimming investigations in New York, Florida, Maryland, Ohio, California, North Carolina, Arizona, Pennsylvania, and the list goes on and on.
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Routinely, we see account information skimmed in the United States used at foreign locations within 24 hours after the compromise. As organized criminal groups continue to engage in more profitable criminal endeavors, the need to hide these illicit profits becomes greater. Now with the advent of smart cards, electronic trades, global payment systems and the ability to conduct international transactions instantly, there has been a worldwide concern for money laundering. With advances in the technology of monetary systems, the ease of concealing illicit financial transactions will significantly increase.
It is conceivable to picture a major money launderer taking advantage of these evolving payment systems by carrying large sums of money across borders via smart cards. These cards with their ability to store and transfer information including monetary value from one card to another could have far-reaching effects on law enforcement's efforts to combat money laundering. A single card located in the wallet of a money launderer would be virtually impossible for law enforcement to detect and could replace the paper trail left by today's criminals.
Much of law enforcement's efforts today are centered on the tracking of illicit money flow and the identification of deposits and cash transfers. The Secret Service believes that no money laundering strategy would be complete without first attacking the specified unlawful activity, or SUA, that generated the illicit proceeds from crimes, such as access device fraud, bank fraud and a host of other related activities, and we feel this can best be accomplished by developing partnerships with both the police and the international banking industry.
The Secret Service is committed to continuing its efforts to train and equip our agents to address high-tech crimes in all areas within our investigative responsibilities. Our Electronic Crimes Special Agent Program, or ECSAP as it is known, has evolved into an essential component of the investigative and protective missions of the Secret Service. With the dramatic increase of computer usage by criminal groups, the demand by our field offices for ECSAP support has predictably and dramatically increased. And as the availability of low-cost, high-tech computer equipment increases every day, and the Internet grows at a rate of approximately 100 percent annually, it is reasonable to anticipate that the criminal element will utilize these tools at the same levels.
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Agents assigned to this program are trained to examine a variety of electronic evidence seized in today's criminal investigations, to include computers, skimmers, telecommunications devices, electronic organizers, scanners and any other related cloning equipment that is used in a wide variety of criminal activities. And because of our technical expertise and long-standing relationship with the telecommunications industry, we have had the opportunity to participate in a wide range of criminal investigations involving the use of wireless telecommunication instruments. As a result, we have been able to successfully assist State and local law enforcement agencies in numerous tracking operations ranging from a police killing in Chicago to the kidnapping of two young children in south Florida.
Mr. Chairman, while we are proud of this technical expertise, our success in the investigation of these and other crimes is due in significant measure to the work of this committee in passing legislation which has enhanced title 18, section 1029, fraud in connection with access devices, and title 18, section 1028, fraud in connection with identification documents and information. This new legislation has given us the additional tools needed to effectively investigate financial crimes.
We recognize that even though the trend in international commerce appears to be moving toward electronic payment systems, the U.S. dollar for a variety of reasons remains the currency of choice worldwide. Today approximately 480 billion of genuine U.S. currency is in circulation worldwide, with the majority of that currency utilized in foreign markets. In 1998, according to the U.S. Treasury Department, the foreign demand for U.S. currency generated 25.4 billion in interest earnings to the United States. And as demand for genuine U.S. currency has increased, the dollar has become more vulnerable to worldwide counterfeiting. During our investigations, we have seen an increase in the amount of counterfeit U.S. currency passed, the number of manufacturing plants suppressed, and the individuals arrested for counterfeit activity. We believe this increase is directly attributable to the ease with which currency can be counterfeited using personal computers and advanced reprographics.
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I would like to take this opportunity to have our counterfeit specialist, Ms. Pagano, give you a short demonstration which will illustrate the ease with which a person possessing very little computer knowledge can counterfeit U.S. currency.
Mr. MCCOLLUM. Please proceed.
Ms. PAGANO. Yesterday's counterfeiters used to be skilled photographers, plate makers, and pressmen with expensive equipment used during the counterfeiting process. Today's counterfeiters have a vast array of low-cost technology available to create their counterfeit notes.
In place of the photographic negatives that were used in the past, counterfeiters today have digital cameras, scanners, stored images as well as the Internet in order to bring in the information to the computer for their counterfeiting operation.
In order to use a desktop scanner, all that is needed is a genuine note placed on the glass, and then the image is then acquired and opened up into very powerful software packages that not only enhance the quality of the counterfeit, but also allows the counterfeiter to make manipulations of those images to suit his purpose. And what I would like to do is demonstrate some of the power of these software packages using our new currency as an example.
Some of the prominent features of our new currency and the security features that we have added are the watermark in the paper and also the security thread. The counterfeiters are now noticing that the public is looking for those features, so now they will have to simulate those watermarks to make their counterfeits more deceptive. How a counterfeiter would simulate the watermark would be to just capture the image of the portrait and then move it to the back of the note, perform some manipulations such as scaling to make it the correct size, place it in position, flipping the image so that it faces the correct way, adjusting the contrast and brightness to make it look more like a watermark, and then making it more transparent, again making it more deceptive.
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The same type of simulation could be used for the security thread, typing in the graphics of the thread, U.S.A. 100, that can then be printed on the back so that now the thread is simulated on the back, again increasing the transparency, again to make it more deceptive so you have simulated the security features that are the most common ones looked at by the general public.
The counterfeiter may also want to decrease the ability to detect his counterfeit by changing the serial numbers, again something that is relatively common to be examined by a general layperson. So just using different numbers from the note, he can capture that 12, pull it down, pop in over the end of the serial number, and thenwithout even acquiring different images, changing that counterfeit so he can print it out and have a brand new counterfeit note.
At this point all the counterfeiter would have to do would be to print the image, and the last step would be to cut that note out and pass it. Thank you.
Mr. MCCOLLUM. You are welcome, that is a very interesting presentation.
Mr. SCOTT. Could we see a copy of what you printed out?
Mr. MCCOLLUM. Mr. Foley, you may resume. You are going on over here. Whoever has it next, you have the ball.
Page 31 PREV PAGE TOP OF DOC Mr. FOLEY. I will continue, but we wanted to make sure that the screen was ginned up.
With the emergence of advanced reprographics as we see here being used in the production of counterfeit currency, the percentage of counterfeit-generated notes has increased dramatically. And although many of these notes are inferior in quality to offset-printed counterfeit, as the statistics on the screen indicate, the quality of these notes are deceptive enough to fool the public.
As you can see, reading the graph from left to right, in 1995 computer-generated counterfeit currency represented .5 percent, or one-half of 1 percent of total counterfeit currency passed in the United States. This figure grew to 43 percent in 1998. Since roughly 88 percent of the 141 million in counterfeit U.S. Currency reported to the Secret Service this year is of foreign origin, we can expect this trend towards counterfeiting through advanced reprographics in the foreign arena to become more problematic.
As a recent indication, the Spanish National Police arrested three suspects and seized in excess of 8 million in counterfeit currency, more than half of which was produced by computers and ink jet printers.
Computers and scanners and printers have become a part of our everyday existence. As society continues to embrace and utilize these tools to create a better life, so, too, will the criminal element use these same tools to manufacture not only counterfeit currency, but every manner of fictitious identification and financial instruments. Changes in the laws dealing with the counterfeiting of currency and other financial instruments are needed to address these growing trends.
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Mr. Chairman, and members of the committee, the Secret Service's statutory authority under title 18, section 492, dates back to 1938 when counterfeiting was accomplished by sophisticated large offset printing operations located in stationary manufacturing plants. Such operations involved a significant financial investment and skilled operators. I think the statute never envisioned or contemplated the explosion of low-cost, high-tech, highly mobile computer printing equipment, which is readily available, user-friendly, and relatively inexpensive, which is exactly what we are encountering today.
At present the United States can judicially and administratively forfeit assets relating to a variety of crimes pursuant to title 21, section 881 and title 18, sections 981, 982 and 1963. However, no statutory authority permits the forfeiture of personal property facilitating counterfeiting violations, except title 18, section 492, which does not authorize administrative forfeitures. As the committee knows, civil forfeiture can consume years of judicial effort, draining valuable prosecutorial and court resources. Convincing U.S. attorneys to utilize their limited resources to judicially forfeit low-cost, high-tech equipment is exceedingly difficult. Moreover, although most judicial districts do not publicize thresholds relative to the value of seized property that the courts will entertain, most, if not all, judicial forfeitures are ultimately evaluated on a cost benefit basis. In such instances the case agent is placed in the dubious position of returning the equipment to an offender despite the fact that the equipment was used in the commission of a crime. This inability to administratively forfeit counterfeiting paraphernalia creates a frustrating gap in the enforcement of Federal laws against counterfeiting.
By this legislative initiative we do not seek an expansion of our seizing authority or enlargement of our statutory scheme. We do, however, seek to repair the statute's failure to provide administrative forfeiture authority so we will have a mechanism to forfeit low-cost, high-tech equipment and material which may not ever be presented as a judicial forfeiture, and that truly sends the wrong message to those who violate the law and attempt to undermine the integrity of our currency.
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The Secret Service realizes the enormous responsibility associated with seizing a citizen's property. We need to ensure that our actions are just and fair. In our effort to address criminal behavior, we must also afford the accused the right to be heard and the opportunity to defend their legitimate interest in seized property. That is understood. The Secret Service firmly endorses the Department of Treasury's Code of Conduct for asset forfeiture, which states in part: Law enforcement is the principal objective of forfeiture. Potential revenue must not be allowed to jeopardize the effective investigation or prosecution of criminal offenses, officer safety, the integrity of ongoing investigations or the due process rights of citizens.
To protect the rights of all interested parties, to include victims, innocent owners and defendants, and to ensure fairness, the Secret Service relies upon a system of checks and balances. This process, while providing multiple layers of review, also enables all affected parties to seek relief through established guidelines, and each of these steps helps to reinforce the concept that equity and fairness are paramount in the process.
The Secret Service recognizes the need to remain proactive, innovative, and nonparochial in the enforcement of our investigative responsibilities. As crime becomes more complex and international in scope, we need to develop a comprehensive approach to combating these crimes.
Mr. Chairman, we believe a unique opportunity exists to pass legislation which would enable law enforcement to effectively and fairly dismantle criminal groups whose intention is to take advantage of gaps in existing laws for profit and material gain. With your help we can continue our success in creating an environment in which today's criminals feel they have no place to hide.
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Mr. Chairman, that concludes my statement, I would be pleased to answer any questions you or any other member of the committee may have.
Mr. MCCOLLUM. Thank you, Mr. Foley.
[The prepared statement of Mr. Foley follows:]
PREPARED STATEMENT OF KEVIN T. FOLEY, ASSISTANT DIRECTOR, OFFICE OF INVESTIGATIONS
Good afternoon Mr. Chairman, and members of the committee, I would like to thank you for the opportunity to testify before you today. With me this afternoon are Special Agent Steven Sepulveda, from our Financial Crimes Division and Counterfeit Specialist Lorelei Pagano from our Counterfeit Division, who will assist me with my presentation. I'd like to begin by providing you with a brief history of the Secret Service's investigative mission.
The Secret Service's investigative role has always been to protect the integrity and public's confidence in our currency through proactive and aggressive counterfeit investigations.
But as times and technology changes, so too must the Secret Service. Today, in addition to our counterfeit responsibilities, we investigate a number of other violations such as; access device fraud, bank fraud, counterfeit and fictitious financial obligations,
Page 35 PREV PAGE TOP OF DOCand telecommunication and computer fraud. Each of these crimes has a detrimental effect on the country's financial systems.
United States payments systems, powered by the development of impressive new technologies, continue to merge internationally into one borderless web. Electronic banking, global payments systems, smart cards and digital currencies, are fast becoming a target rich environment for transnational organized criminal groups.
Today there exists a misconception that individuals using this technology to manufacture counterfeit currency and commit other financial crimes are computer literate, white-collar criminals. More prevalent is the involvement of organized criminal groups, repeat offenders, and individuals involved in narcotics distribution, weapons use, and inherently violent crimes.
This new technology is not only utilized in the counterfeiting of currency, but also to produce numerous other counterfeit and fictitious financial instruments, credit cards and false identification. Because of these technological advances, this Secret Service has seen increased fraud losses in all areas of our jurisdiction.
A new method of counterfeiting credit, and debit cards utilizing these technological advances is called ''Skimming.'' Skimming refers to theft of the account information on the magnetic stripe of a transaction card and has been identified as the biggest growing problem facing the financial industry today.
I would like to take this time to show you a short video that demonstrates the ease with which criminals can steal the information off the magnetic stripe on your credit card.
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In this video, we see three people sitting down for lunch. The victim uses his credit card to pay the bill. As the waiter brings the card to the register, he slips a skimming device out of his pocket, skims the account information off the magnetic stripe, returns the device to his pocket and goes on to complete the legitimate transaction. The waiter then returns the card to the victim, who won't realize his account information has been compromised, until he sees charges he didn't make, appear on his monthly statement,
[I hope this video was able to show you just how quickly and easily this crime can occur.]
Although this was just a demonstration, the skimming device used in this video was seized by agents conducting a criminal investigation in the New York Field Office. I'll pass the skimmer around now, [hold it up] and I hope this will give you some indication of just how compact and easily concealed it is and just how far this technology has come. An examination of this device determined it could hold a minimum of two hundred account numbers. A conservative estimate of the potential fraud loss for this gadget is in excess of $1.5 million per week.
Unfortunately, there is no geographic area immune from schemes involving this type of fraud. Within the last six months, our offices have conducted skimming investigations in New York, Florida, Maryland, Ohio, California, North California, Arizona, Pennsylvania and the list goes on and on!
Routinely, we see account information skimmed in the United States used at foreign locations within twenty-four hours of the compromise. As organized groups continue to engage in more profitable criminal endeavors, the need to hide these illicit profits become greater.
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Now with the advent of smart cards, electronic-trades, global payment systems, and the ability to conduct international transactions instantly, there has become a worldwide concern for money laundering. With advances in the technology of these monetary systems, the ease of concealing illicit financial transactions will significantly increase.
It is conceivable to picture a major money launderer taking advantage of these evolving payment systems by carrying large sums of money across borders via smart cards. These cards, with their ability to store and transfer information including monetary value, from one card to another, could have far reaching effects on law enforcement's efforts to combat money laundering. A single card located in the wallet of a money launderer would be virtually impossible for law enforcement to detect, and could replace the paper trail left by today's criminals.
Much of law enforcement's efforts today center on the tracking of illicit money flow and the identification of deposits and cash transfers. The Secret Service believes that no money laundering strategy would be complete without first attacking the specified unlawful activity or (SUA) that generated the illicit proceeds, such as access device fraud, bank fraud, and a host of other related criminal activity, and we feel this can best be accomplished by developing partnerships with both the police and international banking communities.
The Secret Service is committed to continuing its efforts to train and equip our agents to address high-tech crime in all areas within our investigative responsibilities. Our Electronic Crimes Special Agent Program, commonly referred to as (ECSAP), has evolved into an essential component of the investigative and protective missions of the Secret Service. With the dramatic increase of computer usage by criminal groups, the demand by our field offices for ECSAP support has predictably and dramatically increased. As the availability of low cost, high tech computer equipment increases every day, and the Internet continues to grow at a rate of over 100% annually, it is reasonable to anticipate that the criminal element will utilize these tools at the same levels.
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Agents assigned to this program are trained to examine a variety of electronic evidence seized in today's criminal investigations, to include: computers, skimmers, telecommunications devices, electronic organizers, scanners and any other related cloning equipment that is used in a myriad of criminal activities.
And, because of our technical expertise,, and long standing relationship with the telecommunications industry, we've had the opportunity to participate in a wide range of criminal investigations involving the use of wireless telecommunication instruments. As a result, we have been able to successfully assist state and local law enforcement agencies in numerous tracking operations ranging from a police killing in Chicago to the kidnapping of two young children in South Florida.
Mr. Chairman, while we are proud of this technical expertise, our success in the investigation of these crimes is due in significant measure to the work of this committee in passing legislation which has enhanced Title 18 United States Code, Section 1029, (Access Device Fraud) and Title 18 United States Code, Section 1028 (False identification documents and information). This new legislation has given us the additional tools needed to effectively investigate financial crimes.
We recognize that even though the trend in international commerce appears to be moving towards electronic payment systems, the U.S. dollar, for a variety of reasons, remains the currency of choice worldwide. Today approximately $480 billion of genuine U.S. currency is in circulation worldwide, with the majority of that currency utilized in foreign markets. In 1998, according to the U.S. Treasury Department, the foreign demand for U.S. currency generated $25.4 billion in interest earnings to the United States. As the demand for genuine U.S. currency has increased, the dollar has become more vulnerable to worldwide counterfeiting,
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During our investigations, we have seen an increase in the amount of counterfeit U.S. currency passed, the number of manufacturing plants suppressed, and the individuals arrested for counterfeit activity. We believe this increase is directly attributable to the ease with which currency can be counterfeited using personal computers and advanced reprographics.
I would like to take this opportunity to have our Counterfeit Specialist, Ms. Pagano, give you a short demonstration which will illustrate the ease with which a person possessing very little computer knowledge can counterfeit U.S. currency.
With the emergence of advanced reprographics being used in the production of counterfeit currency, the percentage of computer generated notes has increased dramatically. And, although many of these notes are inferior in quality to offset printed counterfeit, as the statistics shown on the screen indicate, the quality of these notes are deceptive enough to fool the public.
As you can see [reading the graph from left to right], in 1995, computer generated counterfeit currency represented only point five percent (.5%) or about one half of one percent of the total counterfeit currency passed in the United States. This figure grew to 43% in 1998.
Since roughly 88% of the $141 million in counterfeit U.S. currency reported to the Secret Service this year is of foreign origin, we can expect this trend toward counterfeiting through advanced reprographics in the foreign arena to become more problematic.
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As a recent indication, the Spanish National Police arrested three suspects, and seized in excess of $8 million in counterfeit currency, more than half of which was produced by computers and inkjet printers.
Computers, scanners, and printers have become a part of our everyday life. As society continues to embrace and utilize these tools to create a better life, so too will the criminal element use these same tools to manufacture not only counterfeit currency but every manner of fictitious identification and financial instruments. Changes in the laws dealing with the counterfeiting of currency and other financial instruments are needed to address these growing trends.
Mr. Chairman and members of the committee, the Secret Service's current Statutory authority under Title 18 USC 492, dates back to 1938 when counterfeiting was accomplished by means of sophisticated, large offset printing operations located in stationary plants. Such operations required a significant financial investment and skilled operators. I think the statute simply never envisioned the explosion of low cost, high tech, highly mobile computing and printing equipment which is readily available, user friendly, and relatively inexpensivewhich is exactly what we're encountering today.
At present, the United States can judicially and administratively forfeit assets relating to a variety of crimes pursuant to Title 21 USC 881, Title 18 USC 981, and 1963. However, no statutory authority permits the forfeiture of personal property facilitating counterfeiting violations except 18 USC 492, which does not authorize administrative forfeitures.
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As the Committee knows, civil forfeiture can consume years of judicial effort, draining valuable prosecutorial and court resources. Convincing US Attorneys to utilize their limited resources to judicially forfeit low cost, high tech equipment is exceedingly difficult, if not impossible.
More over, although most judicial districts do not publicize thresholds relative to the value of seized property that the courts will entertain, all judicial forfeitures are ultimately evaluated on a cost benefit analysis. In such instances, the case agent is placed in the dubious position of returning the equipment to an offender, despite the fact that the equipment can be immediately utilized to produce more counterfeit. This inability to administratively forfeit counterfeiting paraphernalia creates a frustrating gap in the enforcement of federal laws against counterfeiting.
By this legislative initiative, we do not seek an expansion of our seizing authority, or an enlargement of our statutory scheme. We do, however, seek to repair the statute's failure to provide administrative forfeiture authority so we will have a mechanism to forfeit low cost, high tech equipment and material which typically will not ever be presented as a judicial forfeiture. And that truly sends the wrong message to those who violate the law and attempt to undermine the integrity of our currency.
Mr. Chairman and members of the committee, the Secret Service realizes the enormous responsibility associated with seizing a citizen's property. We need to ensure that our actions are just, and the accused the right to be heard, and the opportunity to defend their legitimate interest in seized propertythat is understood.
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The Secret Service firmly endorses the Department of Treasury's Code of Conduct for asset forfeiture, Which states, in part: ''Law enforcement is the principal objective of forfeiture. Potential revenue must not be allowed to jeopardize the effective investigation and prosecution of criminal offenses, officer safety, the integrity of ongoing investigations, or the due process rights of citizens.''
To protect the rights of all interested parties, to include victims, innocent owners, and defendants, and to ensure fairness, the Secret Service relies upon a system of checks and balances. This process, while providing multiple layers of review, also enables all effected parties to seek relief through established guidelines. Each of these steps helps to reinforce the concept that equity and fairness are paramount in the process.
The Secret Service recognizes the need to remain proactive, innovative and non-parochial in the enforcement of our investigative responsibilities. As crime becomes more complex and international in scope, we need to develop a comprehensive approach to combating these crimes.
Mr. Chairman, we believe a unique opportunity exists to pass legislation which would enable law enforcement to effectively and fairly identity and dismantle criminal groups who take advantage of gaps in existing laws for profit and material gain. With your help, we can continue our success in creating an environment in which today's criminals feel they have no safe place to hide.
Mr. Chairman, this concludes my statement. I would be pleased to answer any questions that you or any other member of the subcommittee may have. Thank you.
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Mr. MCCOLLUM. Mrs. Riggs?
STATEMENT OF BARBARA S. RIGGS, ASSISTANT DIRECTOR, OFFICE OF PROTECTIVE RESEARCH
Ms. RIGGS. Mr. Chairman, members of the committee, thank you for providing me the opportunity to address the committee on crime. I serve as the Assistant Director of the Office of Protective Research, the component of the Secret Service that coordinates protective intelligence investigations and promotes the research, development, and implementation of countermeasures and technologies used to support our protective and investigative missions.
I am honored to be here today to discuss three initiatives that will enhance the Secret Service's ability to perform its protective mission. The first of these initiatives is the issuance of administrative subpoenas. I want to thank the committee for favorably considering legislation that will permit the Secret Service to issue administrative subpoenas to obtain critical and time-sensitive information necessary to identify, locate, and apprehend individuals who may pose a threat to the President or Vice President of the United States or other protectees of the Secret Service.
Protective intelligence cases receive the highest priority in our agency because the window of opportunity to interdict a would-be assailant can literally be hours. It can be difficult to obtain immediate judicial review during periods other than regular business hours, particularly on holidays weekends and late evening and early morning. The proposed legislation would permit the Secret Service to issue limited and targeted administrative subpoenas to persons or entities possessing records. Subpoenas would only be issued when the Director or designee believes that there is an imminent threat to the life or safety of the President, Vice President or other protectees.
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The second initiative relates to proposed changes to threat investigations conducted to pursuant to title 18 United States Code section 879. That statute currently addresses threat investigations involving former Presidents and their immediate families. The immediate family of the President, Vice President, President-elect and Vice President-elect. It also includes major Presidential and Vice Presidential candidates, but not their families.
The proposed legislation seeks to modify coverage of the statute in two ways. First, the legislation would permit the Secret Service to conduct investigations regarding threats directed at the immediate family members of our major Presidential and Vice Presidential candidates.
Second, the Secret Service would be authorized to conduct threat investigations directed at any other protectees receiving protection pursuant to 18 United States Code 3056.
The Secret Service should be authorized to conduct threat investigations in order to provide the most comprehensive protection to any of our protectees. Moreover, we believe that threats directed at family member of major candidates reflect an indirect and possibly inappropriate interest in that candidate.
The third initiative I would like to discuss is the National Threat Assessment Center, which will provide a unified national focus on targeted violence in the United States. The Secret Service is requesting congressional authorization for the National Threat Assessment Center whose functions will include information sharing on threat assessment methodology with Federal, State and local law enforcement organizations, educational and consultative assistance to organizations with responsibilities to investigate and prevent targeted violence crimes, research related to targeted violence, standardization of Federal threat assessment and protective violence information regarding public officials, and information systems integration concerning protection of public officials.
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The Secret Service accepts this responsibility and enthusiastically embraces this challenge as an opportunity to serve others. The Service has been protecting our Nation's leaders for nearly 100 years, and, with the knowledge and experience gained, we are in a unique position to provide leadership and guidance to other Federal agencies, State and local law enforcement organizations, and those who strive to reduce violence in the workplace, schools and homes.
The Secret Service understands that threat assessment is a key to preventing violence. Traditionally law enforcement has been reactive to violent incidents. In the past police were asked to respond after violence occurred and to arrest and assist in the prosecution of suspects. With the incidence of crimes involving targeted violence on the rise, law enforcement recognizes the importance of being more proactive, specifically to investigate and intervene before violence occurs.
Over the last several years, the Secret Service has worked with other Federal agencies and with State and local law enforcement organizations to help prevent targeted violence. With the support of the National Institute of Justice, the Secret Service conducted the exceptional case study project, the first operational study of violence directed at public officials and public figures. Two publications resulted from this study, both issued by the National Institute of Justice.
One publication, a guide to State and local law enforcement on threat assessment investigations, was distributed to several thousand law enforcement organizations in the last 2 years. The second publication is currently being used by the Office of Personnel Management as a model for the Federal agencies on how to address issues of workplace violence.
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Recently, we have started to work with law enforcement organizations in Dover, New Hampshire, and Chicago, Illinois, to share our threat assessment methodology with them as they tackle issues of stalking and domestic violence. The Secret Service has also initiated an operational threat assessment analysis of schoolplace violence, which utilizes the behavioral research methodology of the exceptional case study project. The goal is to aid law enforcement and school officials in their efforts to prevent schoolplace violence. The Secret Service anticipates coordinating with school officials and other Federal authorities who have an interest in this area.
The Secret Service is committed to the National Threat Assessment Center and looks forward to working with other law enforcement organizations in the hope that airing our threat assessment methodology may help prevent future acts of targeted violence. We appreciate your interest and your support.
Because the National Threat Assessment Center is a product of the exceptional case study project, I would now present a brief video on the key findings of this study.
Ms. RIGGS. Mr. Chairman, that concludes my remarks. I would add that we have copies of the guide that I referred to in my presentation as a product of this exceptional case study. This is a guide that has been distributed to thousands of law enforcement agencies around the country, and we have copies for the Members available. Thank you.
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Mr. MCCOLLUM. Thank you very much, Mrs. Riggs.
Mr. Spriggs, your testimony is welcomed.
STATEMENT OF CARLTON DANNY SPRIGGS, ASSISTANT DIRECTOR, OFFICE OF PROTECTIVE OPERATIONS
Mr. SPRIGGS. Thank you, Mr. Chairman.
Mr. Chairman, as you have noted, I am the Assistant Director of the Office of Protective Operations. Mr. Chairman, and members of the subcommittee, I am pleased to be here today to be afforded the opportunity to testify before the committee on matters pertaining to the protective mission of the Secret Service.
Since 1901, the Secret Service by virtue of its protective mission has planned, coordinated, and implemented security measures at major events. On a continual basis the dedicated men and women of the Secret Service provide a secure and safe environment for our Nation's leaders and visiting heads of state at summits, national political conventions, presidential inaugurals and scores of national and international events each year.
Based on the premise that major, well-publicized events may pose an attractive terrorist target, the President has designated specific responsibilities for certain national events to the Secret Service, the Federal Bureau of Investigation and the Federal Emergency Management Agency.
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The thrust of the initiative is to reduce the vulnerabilities facing the public with respect to weapons of mass destruction. The collective Federal expertise has been recognized as a valid and formidable asset that can be used effectively to detect, deter, and mitigate chemical, biological and nuclear threats. Consequently it is only fitting for the Secret Service to manage the front-end coordination and implementation of the overall security plan for major events. It is our protective hallmark to seek to prevent rather than cure.
To date, two large events have been designated as national special security events: The World Energy Congress in Houston, Texas, in September 1998, and the North Atlantic Treaty Organization's 50th Anniversary Summit in April of this year here in Washington, D.C.
In recent months the Secret Service has also coordinated security efforts at other major events, such as the visit of Pope John Paul II to St. Louis, Missouri. Additionally Secret Service personnel are actively engaged in security planning for this September's United Nations's General Assembly session in New York City, and the World Trade Organization's third ministerial conference scheduled for Seattle, Washington, in November and December.
Several significant events are planned for next year, including OPSAIL2000, the largest gathering of ships in history. OPSAIL2000 activities are scheduled for eight east coast ports. Celebrations during the week of July 4th, 2000, in New York harbor will see OPSAIL2000 commingled with an international naval review where the President is expected to participate in a review of over 45 U.S. and foreign naval vessels. As a backdrop to all of this, next year will also bring a Presidential campaign and two national political conventions in Philadelphia and Los Angeles.
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The Secret Service is also committed to participating in the security planning for the 2002 Winter Olympics in Salt Lake City. Secret Service personnel have been dedicated on a full-time basis to that effort and are working side by side with Federal, State and local law enforcement agencies in Utah.
Security and safety measures at all such events must reflect the increased vulnerabilities associated with terrorism. To that end, the Secret Service is committed to working in partnership with other agencies to protect event participants and the public.
The Secret Service accomplishes its mission each and every day through a coordinated effort with State and local law enforcement agencies throughout the United States. This cooperative partnership has serviced the Secret Service well and has proven an effective means to meet not only our Federal needs, but also concerns of the State and local agencies with whom we work. The World Energy Congress, the papal visit to St. Louis and the NATO 50th anniversary required such coordinated law enforcement efforts.
The comprehensive approach to reduced vulnerabilities at major events has resulted in better cooperation between all agencies and departments. As a direct result, the level of security and safety of those participating in such national events to include the public has also increased.
Mr. Chairman, the initiative to amend title 18, section 3056, seeks to reflect those enhanced protective responsibilities. At this time this concludes my statement, Mr. Chairman. I will be happy to answer any questions that you may have regarding this.
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Mr. MCCOLLUM. Thank you very much, Mr. Spriggs, and I thank all of the panel.
We are going to go now to the 5-minute questioning rule that we normally follow in these hearings, and I will yield myself 5 minutes.
First of all, I would like to comment that I know, as Director Stafford is aware, we are working with you to prepare some legislation that would indeed address the problems that you talked about today. And I hope to see some draft form of that next week, and certainly your input is going to be critical because we want to do the right thing.
I recognize in particular the problem that was addressed earlier about the asset forfeiture issue, which is a very sensitive issue. In fact, we have a major piece of legislation on the floor today that concerns asset forfeiture, but we come to your peculiar thing, and as I understand it, if you get one of those little cheap copiers down there, the U.S. attorney Mr. Foley is just not going to deal with it. It is just too cheap or too inexpensive. Director Stafford, one of you may want to talk about it, but that is the real problem, isn't it, that we don't havethe cost of some of this stuff is so low that getting an actual judicial forfeiture, getting a U.S. attorney to do it, is the problem?
Mr. STAFFORD. That is correct, Mr. Chairman. As you know, most districts don't have thresholds, but there is a fiscal responsibility that all U.S. attorneys have, and they do have to take a look at how feasible it is to seize this sort of equipment, which normally is in the neighborhood of about $2,000. So to civil judicially seize it, it is timely and expensive, and oftentimes we are not able to do it. Therefore, as Kevin Foley mentioned earlier, many times we end up returning the very equipment that was used to do the counterfeiting to the defendant.
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Mr. MCCOLLUM. I could imagine that a lot of times that person has already been convicted, maybe sentenced, and may be back out on the street again after serving time perhaps.
Mr. STAFFORD. That is correct.
Mr. MCCOLLUM. I think we need to find a remedy for that, and I would think that regardless of your views about the current situation with regard to asset forfeiture generally and some of the abuses that have been presented to us, this is one where obviously a remedy is needed to protect the public.
Let me comment on also the enormous pride that we have in the work that your officers do every day. I don't think we have said that to you and had occasion to before. But I can speak, I am sure, for every member of this subcommittee that we understand and respect the lives that are put on the line to protect our public officials and the long hours that are put in by many people who are not in this room today in your Service not only in that regard, but in the regard to the fraud effort and the effort at anticounterfeiting and all of the effort that goes on in the forensics. So I want to be sure that we have said that to you and said it very clearly.
I am curious; maybe, Ms. Riggs, you could answer this. In this study that you have done, that you have given us, it would appear that the person who attempts to assassinate is oftenor the tape said is rational. They actually like the President. Are there any common characteristics that are out there that compel a person to want to assassinate a notorious public figure like the President of the United States? Is there anything that saysis it just notoriety, or is there a variety of different things you find in these potential or would-be assassins?
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Ms. RIGGS. Well, sir, what the study did show is that there is no profile, and that is one of the myths that was really debunked by this study. There is no profile. There are a variety of motives, whether it is notoriety, fame, a personal grievance, a political ideology. It is donethe assailants range from the age of late teenager to 83. Somales, women. So there was no profile. And I think that is one of the important findings the study did show.
Mr. MCCOLLUM. And so when local law enforcement tries to help you, and you try to collect data on would-be assassins, it is really hard to do, and that is why the book is out there, but you still have been able to find some methodology to try to do that, to catalog potential assailants, haven't you?
Ms. RIGGS. Correct. What we advocate and what we have in our protective intelligence program, when we look at the subjects that we are investigating, we look at their behavior and what their actions have been. And there is a path leading up to the act that they commit, and they organize and they plan. And even though an individual may suffer from mental illness, what we have seen suspectsoftentimes they havethey are able to plan and be well organized.
So what we did find was that although many of the subjects did suffer symptoms of mental illness, they also had the capacity to plan and organize.
Mr. MCCOLLUM. Thank you very much.
Page 53 PREV PAGE TOP OF DOC Mr. Scott, you are recognized for 5 minutes.
Mr. SCOTT. Thank you, Mr. Chairman.
I guess this will kind of be ''to whom it may concern.'' On the skimming of credit cards, there is more information than you pick up by skimming than just the number and expiration date, the things that you can see. Is that information that you skim sufficient to create a new card that would work in an ATM? Is that the reason you need that extra information?
Mr. FOLEY. Yes, it is, Mr. Scott. All of the information that is contained on the magnetic stripe on the back of that credit card is transferred into that device and then through a computer, and a set of cables is downloaded and uploaded on a new magnetic card. It is one-stop shopping, and you are ready to go.
Mr. SCOTT. And that would be sufficient to recreate a card that would work in an ATM?
Mr. FOLEY. It would. And you could also create a card to use at a commercial establishment if you counterfeited and replicated the number on the credit card and embossed the account number on the front. That mag stripe on the back is all that is necessary.
Mr. SCOTT. Many people are concerned about Internet transactions. Can you give us some sense of how fearful people should be, if at all, about banking on the Internet and having funds stolen through Internet transactions?
Page 54 PREV PAGE TOP OF DOC Mr. FOLEY. I think the Internet is obviously the new frontier, but essentially you are putting private and personal information out into the public domain. I believe that all individuals should exercise caution. I know that the financial institutions and those that do business online are working very closely with law enforcement to ensure that they protect a persons's information. The use of encryption and other means and methods to ensure that it is notthere are not vulnerabilities that we can't, one, predict and, two, preventions are well under way. But you do have to be cautious. I would like it to mail a postcard. You don't know who sees it along the way, and you should be aware that other sets of eyes may have the ability to look at what you have sent across the Net.
Mr. SCOTT. Have you had situations where the information was stolen and individual bank accounts were invaded?
Mr. FOLEY. We have had situations where credit card numbers have been stolen. We have had situations where information onInternet service provider information has been hacked into, taken, moved, and extortion threats have been leveled at Internet service providers, any variety and number of cases of that nature, yes.
Mr. SCOTT. And what have you been able to do about it?
Mr. FOLEY. Well, again, we work very closely with the Internet service providers and with the financial institutions. I think they recognize that while this emerging technology is tremendously beneficial, that there are also opportunists who will attempt to extort or to compromise these systems, and with the Internet service providers, the financial institutions, the credit card companies, we work together to try to identify what we call systemic weaknesses in those systems, fix those systems and then ultimately make that a safe environment for people to do business.
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Mr. SCOTT. You had mentioned a need to deal with small-level forfeitures. The problem with forfeiture procedures is that they are used for people that are, in fact, innocent as well as guilty. That looks like the printer I just bought last week. I can't see the brand name, but it looks like the one I bought. If you had evidence that a neighbor of mine was actually counterfeiting, and the people came to the wrong door and took my computer and printer, what procedure would be used for me to get it back?
Mr. FOLEY. Congressman, hopefully, we wouldn't be the ones coming to the wrong door. Secondly
Mr. SCOTT. But sometimes you do, and we have a bill on the floor today that deals with that. Because would I have to post a bond and then go and have the burden of proof to prove that I was not, in fact, counterfeiting and have to prove a negative, and otherwise be unable to get my property back? If I couldn't afford to post a bond to get the property back, I just lose it? Is that the deal?
Mr. FOLEY. First of all, Congressman, for us to take that apparatus, that equipment, we would have to have probable cause, and a warrant should be issued, and that protection should enure. If, in fact, it is taken, and taken accidentally, and I think that is the best way to put it, one, we would return it. You wouldn't have to go through any process because that was a mistake, and that mistake would be corrected. But secondly, if we took it, and let's say that the process began, there is an entire system of checks and balances that go to the benefit of innocent owners.
Page 56 PREV PAGE TOP OF DOC Mr. SCOTT. I am sorry?
Mr. FOLEY. A system of checks and balances in the forfeiture program that ensure that innocent owners' rights are protected and their due process is protected. The system is that a warrant is issued, it is seized, and then a forfeiture process begins. In the Secret Service we take a second look at the probable cause to establish that the crime was committed and that property was used in that crime, and in your case it wouldn't get to that level because no crime was committed, it was taken accidentally. But if it moved forward, you are then given personal notice, and anyone who has an interest in the property is given notice. We publish in newspapers. You have a right to file a cost bond to throw it into Federal court, which stops the administrative process, or you can file an in forma pauperis application if you don't have the funds to do that, and it moves over to Federal court as well.
Mr. SCOTT. I don't mean to be critical, but I think I am hearing if I wasn't guilty, it wouldn't have been taken.
Mr. FOLEY. That is correct. And if it is an accident, and I think that is how this was portrayed, if it is an accident, Mr. Scott, we wouldn't be at your door, and we wouldn't take your property.
Mr. SCOTT. That is not a very comforting standard. Thank you.
Mr. MCCOLLUM. Thank you Mr. Scott.
Mr. Chabot, you are recognized for 5 minutes.
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Mr. CHABOT. Thank you.
If a high Federal official or a spouse thereof decided to, while they were under your protection, run for office himself or herself, I would assume that your efforts and the costs thereof would increase to some extent. Would somebody like to handle that? What would be involved?
Mr. STAFFORD. I am not sure I understand your question, Congressman. As far as the funding for that effort?
Mr. CHABOT. Yes. What effect would it have if perhaps they decided to go to another State if they resided in Washington, D.C., now and run for office, and they are under your protection right nowand I would assume that if they were serious about being successful in that effort, they might want to get out and be involved in crowds and talk to a lot of people, diverse cross-section of people, as many as possible. How would that increase your involvement? Would there be an increased cost and additional personnel involved?
Mr. STAFFORD. Not necessarily increased personnel, but obviously, I mean, our budgets are driven by our protectees, whether it be the President, Vice President, First Lady, their families or others that we are mandated to protect. That is why it is so difficult for us to project our budget. Right now, for example, we are looking at a 2001 budget. We don't even know who the President will be nor how active that person will be. So the activity of our protectees is definitely a budgetary issue for us to deal with.
Page 58 PREV PAGE TOP OF DOC Mr. CHABOT. Okay. Thank you.
People with emotional and mental problems or disorders, or whatever the proper terminology is nowadays, in the past oftentimes would be institutionalized, and over time that has changed fairly dramatically, and many now are out, sometimes receiving very good care, sometimes not. Some are now homeless, not necessarily receiving the appropriate medications that they might have received when they were institutionalized.
Would one of you discuss how that affects your responsibilities when you are protecting either the President or other officials when you are considering what people out there might be threats? Ms. Riggs?
Ms. RIGGS. Yes. Well, the individuals that come to our attention that we do investigate, many of them suffer symptoms of mental illness. That is one of the factors that we take into consideration as we are evaluating whether person poses a threat to our protectee or not.
We believe that our protective intelligence program is unique in the Federal Government in that we seek to prevent a violent act, being committed against one of our protectees, and we try to intervene. And oftentimes, first of all, we have to identify who those individuals are. We have to evaluate whether they pose a danger and then manage the case.
Oftentimes that means that we actually work with the mental health community to get that person assistance. We have a very strong relationship with the mental health community in our protective intelligence program, which is unique in the sense that we have a forum with them where we discuss, they assist us in making evaluations. We have nine consultants around the country, psychiatrists and psychologists, who are on call to the agents to help them in evaluating subjects who do exhibit mental health symptoms. So we work very strongly with the mental health community in that regard. I hope that answers your question.
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Mr. CHABOT. Thank you.
Mr. Stafford, if I could just come back to you just for a moment because my time is running out. Relative to my first question and the costs and the budget impacts that it has on the Secret Service, essentially those are tax dollars that fund your department, and therefore, if there is an additional impact, additional risks involved should someone decide to run for office himself or herself, that would be picked up by the taxpayer; is that correct?
Mr. STAFFORD. That is correct.
Mr. CHABOT. Thank you. No further questions, thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you.
Mr. Meehan, you are recognized for 5 minutes.
Mr. MEEHAN. Thank you, Mr. Chairman. And I would like to express my gratitude to the director and assistant directors for appearing before us today and providing us with testimony. I think it is important that we hold oversight hearings like this one to hear about the successes of the offices in the Secret Service, and also I think it is important that we hear about your concerns and suggestions for changes in the Service.
The officers of the Service, both uniformed and the investigative operations, are to be commended for the fine work that they do and admired for the risks that they take in defense of our own public safety.
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According to an article in Monday's New York Times, the Secret Service is working on developing a profile of a school shooter by looking at patterns of motive and behavior. I applaud the Secret Service's involvement in addressing this aspect of the problem of school shootings and juvenile gun violence, and I was wondering if you could update us on the progress of this project and exactly what the Service is doing to create this profile and when you expect to reach some conclusions.
Mr. STAFFORD. I will start off and then defer to Ms. Riggs. But there really isn't a profile that we have found, at least through our research on the exceptional case study project, which, as we mentioned earlier, is researchwe have gone back to 1949 and looked at 83 assassins or near assassins, and that was one of the myths that we discovered. There really is no profile. Some of the things that we discovered in our research, however, we think may transfer well to workplace violence, stalking, and possibly to school violence.
I don't know that the Secret Service, nor anybody else, can make any sense of the senseless things we have seen recently in our schools, but we would like to do everything we possibly can, and if there are things in this research that we can develop and continue to develop through our National Threat Assessment Center, we want to participate in that and offer that to law enforcement, public safety, and school officials.
Mr. MEEHAN. Okay. Do you want to comment, Ms. Riggs?
Ms. RIGGS. I was just going to mention that we have identified approximately 14 cases that we are going to be looking at that wouldthis is a rare occurrence, so there is not a large pool to draw from, fortunately, but there are about 14 cases that we have identified that we have already spoken to one individual and plan to try and obtain personal interviews with the others that we can.
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Next week we are meeting with a group of school officials that would include principals, school administrators, counselors, to help themto have them help us develop our approach to this issue. But we want to take the model that we used in the exceptional case study and apply that to this type of targeted violence. And what we have found as we were presenting the findings of our exceptional case study to the external community, the National Sheriffs Association, the National Governors Security Association, the U.S. Marshals, otherthe Texas Rangers, they have told us our methodologythey want us to share that with them on how to approach a threat assessment.So we want to bring in the people who have the principal responsibility for the frontline welfare of that group, and that is what we are planning on doing next week.
A time line, I can't give you a time line at this time because it is an ongoing work at the moment, and it depends on how quickly we can interview the individuals.
Mr. MEEHAN. Great, thank you.
During the course of the impeachment proceedings last year, one of the issues that arose during the independent counsel's investigation was whether or not the Secret Service officers should be protected from testifying in the case. As we all know, eventually they testified before the independent counsel. Now that we have had a little bit of time to begin to put that unfortunate experience in perspective, can you comment on the idea of a protective function privilege and who that privilege should protect?
Mr. STAFFORD. Well, Congressman, it is a complex issue, as you point out. We lost that battle in the district court and in the Supreme Court. We still feel very strongly about it. We feel we should have some protective function privilege. We need the trust and the confidence of our protectees. Without that, we can't do our job. So it is very important to us to pursue that, to pursue it legislatively, and we haven't changed our opinion on that issue at all.
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Mr. MEEHAN. Thank you.
Mr. MCCOLLUM. Thank you, Mr. Meehan.
Mr. Smith, you are recognized for 5 minutes.
Mr. SMITH. Thank you, Mr. Chairman.
Mr. Stafford and Mr. Foley, let me follow up on some questions that were asked earlier about counterfeit currency. According to Mr. Foley, I believe in your testimony, you mentioned that the amount of counterfeit currency had increased 30 percent. I don't know over what period of time that was. Presumably it was the last couple of years. Why do you think that occurred? And now we have heard testimony about how easy it is to print it on printers that we could have bought ourselves. But it seems to me with that large of an increase, that is a clear threat to the integrity of our currency system, so I guess I am asking you three questions: One, what is the extent of the problem, that 30 percent; two, is it as serious as it appears; three, why is it occurring; and I guess four, what can we do about it?
Mr. FOLEY. To answer your first question, the 30 percent increase was over the last fiscal year. We have gone from 30 million to approximately 40 million in 1 year, which we consider to be a serious problem. And I agree it is a threat and it undermines or could potentially undermine our currency if we don't get ahead of the problem.
I attribute the increase to, again, the evolution of technology, the implementation of these high-tech, high-quality counterfeiting implements that we showed you today. The scanners, printers, and output devices have given people an opportunity to use these implements. Forty-three percent of the households in the United States now have computers. Internet access is up to about 45 percent. You just have more people with more opportunity, and they are exercising this opportunity to print counterfeit. In the past it was the old offset printing
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Mr. SMITH. Is there any countervailing technology that we can use to stop that or at least reduce it?
Mr. FOLEY. Well, in October of 1998, we went to the reprographics industry. We have established a dialogue with them to try to come up with technological fixes in the implementation of recognition devices and tracking and tracing devices. We have made, I think, great strides in that area, and truly I think a technological fix, in addition to public education to recognize the new user-friendly features in our 1996 currency, will go a long way to, I think, to stop the problem.
But one point I wanted to make, sir, we are seeing that there is earlier detection. The new currency has definitelywith the incorporation of the new security features, has made it easier for people on the retail level to recognize it as evidenced by increased arrests, increased plant suppressions. We are recognizing it on the front end, and therefore we have higher seizures.
Mr. SMITH. Right. On the basis of that, would you expect that 30 percent figure to go down over the next couple of years?
Mr. FOLEY. Our hope is that it will level off. We have seenand I think through cooperation with the U.S. Attorney's Office, through public education, again through the efforts of our aggressive zero tolerance, when it comes to counterfeit currency, we have seen the figures level at about 40 percent. Our concern is, though, that with the proliferation of these high-tech instruments, that more opportunity exists.
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Mr. SMITH. So leveling off is probably the best we can hope for, from your perspective. Are there any laws that we need to consider changing that would make your job easier?
Mr. FOLEY. We have approached the Sentencing Commission, sir, with a proposal to increase the base level for possession of, passing and manufacture. That is pending. Ultimately our appearance here today is to seek enhancement to 18 USC section 492 to be able to forfeit administratively the instruments of these crimes are what we are seeking.
Mr. SMITH. And that is something that we can consider. Thank you, Mr. Foley.
Ms. Riggs and Mr. Spriggs, my time is almost up. Let me ask you a quick question or make an observation. I notice in the booklet that we were given the statement is made that there is no one descriptive or demographic profile. In fact, there is not even several descriptive or demographic profiles, and yet after the first line where it says their ages range from 16 to 73, I see a whole series of what looks like to be similar profiles: They often had histories of mobility and transience, two-thirds were described as socially isolated, most had histories of weapons use, most had histories of explosive angry behavior, many had histories of serious depression or despair, and almost all had histories of grievances and resentments, many directed against a public official or figure.
Wouldn't that argue, in fact, for just the opposite, that we could compile a profile that would have some benefits?
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Ms. RIGGS. Well, sir, what we have learned isor what we advocate and have incorporated into our program is not to look at the cases and look for certain types of characteristics, but to look at their behavior and actions and to make the assessment based on that. Don't go in with any preconceived ideas. And that isin fact, we have retooled our whole approach to how we have looked at protective intelligence investigations based on the findings of this study so that our investigators are not going in with preconceived ideas of what to look for, but to keep it open and look at the behavior and their actions.
Mr. SMITH. Okay. I will take your word on no preconceived ideas, and that is always good, but on the other hand, when you have six ''mosts''and also it seems that you ought to have something to work with that ought not to be so lightly dismissed. But thank you for your answer.
Thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you, Mr. Smith.
Ms. Jackson Lee, you are recognized for 5 minutes.
Ms. JACKSON LEE. I thank the Chairman very much. And I think this is an important oversight hearing to provide us with the insight that we may need to provide resources to the Secret Service.
Allow me to add my appreciation as well for the numbers of duties that you do uncounted, particularly those who serve our foreign embassies, and I have had opportunity to meet many of them as I have traveled on behalf of this Congress; and certainly the work that you do for the protectees, which I think all Americans recognize the importance of.
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With that in mind, I am certainly going to ask my Chairman that we seriously consider the issue of privilege as it relates to the Secret Service statutorily. I know there was some consideration of this issue. I think my colleague mentioned that the crisis that we faced last session is behind us, and maybe we can, in a deliberative manner, focus on the reality of the point that I think was attempted to be made in court is that there needs to be absolute and ultimate expansive confidence between the protector and the protectee. So I hope we can get some additional insight from you on that.
As I look atthis may not fool me, but I am looking at some of the other dollars that I was quite surprised that this was a counterfeit. I guess I am still not getting used to this money, so I might be fooled and maybe many others. But I am a little bit more used to this, and this looks pretty realistic, and I think it is important to emphasize that point.
Does the Secret Service engage in support systems for retail or States? How do wehow do we translate down to the normal tradecommerce and trade in the United States to detect these particular counterfeit documents?
Mr. FOLEY. Congresswoman, we have an extensive and I would call it a robust public education campaign. We have provided 1,500 seminars last year to financial institutions, banks, and commercial establishments. We have a litany of literature that we release to financial institutions through the Department of Treasury, and public affairs, with the release of new currency at each stage, we advise the public, we advise commercial establishments of the user-friendly features, how to recognize those features and authenticate the currency, and finally, in the event that they are unfortunate enough to encounter a note, exactly what process to follow to notify the authorities.
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Ms. JACKSON LEE. What percentage of our commerce has
counterfeit? Have you all been able to note that?
Mr. FOLEY. In terms of the universe, we have $480 billion in circulation worldwide today. Less than one-half of 1 percent of that is estimated to be counterfeit. Our samplings as they move throughout the Reserve bank is a good sampling, so it is very accurate, and those figures have been endorsed by the GAO and the IG in terms of how we determine that universe.
So again, it is a problem that we have contained, but with the introduction of this new technology, we are concerned that it is going to become
Ms. JACKSON LEE. So one of your priorities is that it is something that you are going to continue to monitor?
Mr. FOLEY. Absolutely.
Ms. JACKSON LEE. Do you work with State comptroller offices or audit offices of the respective States, or do you work with local police entities in addition to the banks?
Mr. FOLEY. We work with the local police entities in addition to the banks. And again, in each State and in each field office, it is the responsibility of the agent in charge to ensure that the community is aware of, through public education campaigns and through media opportunities, exactly what the problem is in that district and what the currencythe new features of the currency are.
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Ms. JACKSON LEE. You feel that you have adequate resources to keep this informational chain going forth? Because one of the things I was thinking of as I see some of the storekeepers in my district and community seem to have some certain skills in looking at dollars in terms ofI note that they turn them over. I am not sure they know what they are looking at, but then they take it. So I am wondering do we have local resources to have local informational sessions for businesses in our community?
Mr. STAFFORD. We do, Congresswoman. As Assistant Director Foley pointed out, we have local field offices, 44 domestically specifically, and we mandate that there is an ongoing education process coming forward from those field offices. Again, with the dual roles that the Secret Service has, both protection and investigation, there is a balancing act that we have to perform. And we have been addressing that balancing act for 100 years. So we do a very good job on both sides of the house.
Ms. JACKSON LEE. I see my light is almost gone. I will get this question out, and hopefully you will be able to answer. You just have gotten here, and I would appreciate and welcome your comment on the rights of your uniformed officers to meet and confer. And in particular, the report that I understand that has been produced on the restructuring, I would like to see a copy of it. Would you be able to provide me a copy of the restructuring report and your view on the meet and confer opportunities for your uniformed officers?
Mr. STAFFORD. Sure, we can provide that for the record.
[The information is on file with the subcommittee.]
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Mr. STAFFORD. And would you like me to respond to the restructuring?
Ms. JACKSON LEE. If you could quickly comment on the meet and confer, I would appreciate it. The other services do have it.
Mr. STAFFORD. The restructuring, the Uniformed Division was really only a part of the restructuring of the Office of Protective Operations. That office is headed up by Mr. Spriggs. We looked at the 13 divisions within that organization, Uniformed Division just being one, and we did a lot of restructuring to include the Uniformed Division. So it was done in a three-pronged effort. We had focus groups from the Uniformed Division, from the agents and from our own management and organization group. We received recommendations from all three and took some of those recommendations from all three focus groups. The entire effort was put forward for operational reasons. We felt that we could do things more efficiently operationally. We felt that there were some quality of life issues with the Uniformed Division and with the agents that we could improve upon by this restructuring. And there was also some fiscal concerns and some duplicity of effort that we thought we could amend.
Ms. JACKSON LEE. I thank the Chairman for his indulgence, and I would only offer an opportunity for Mr. Stafford and Mr. Spriggs, I am sorry I was not able to hear your answer, to meet with me in my office. Thank you.
Mr. MCCOLLUM. Certainly we are going to go to the second round, we only have the one panel today, with your indulgence. But there are a number of questions that I know several of us want to ask. Mr. Scott and I are curious, maybe Ms. Pagano can tell us, what is the big briefcase full of money? Is that all fake money? Where did it come from? What is it? You have a big display, and nobody ever commented on it. What is that?
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Ms. PAGANO. The counterfeit currency in the suitcase is an offset case, and I believe it was Oklahoma City and about $2.1 million.
Mr. MCCOLLUM. And that is what is laying on the table, too, there in addition?
Ms. PAGANO. No. These are counterfeits that were produced in a similar manner as to what I produced earlier today. So this is more of what we are now seeing. Before we used to see large seizures of offset because it was far faster to produce large volumes by the offset printing process. Yet now we have more people producing smaller amount of the computer-generated or digital imaging counterfeits.
Mr. MCCOLLUM. I just saw the bills that you produced up here a minute ago when you did that demonstration for us, and even though they have watermarks and all of that, et cetera, they look like play money in many ways. Is much of this being produced nowif somebody just used common sense and looked at these billssee, this doesn't really look real as opposed to that high-quality paper that we see somebody still goes to the trouble of making.
Ms. PAGANO. It is a double-edged sword. We are fortunate that the U.S. public has a lot of confidence in our currency. We don't want people to be fearful of taking U.S. currency. But at the same time it is difficult to implore somebody to take a quick glance, look at the security features, when they have never been a victim of that crime.
Page 71 PREV PAGE TOP OF DOC Mr. MCCOLLUM. What I was getting at, this is for public consumption. I don't know if it is true. What you produced is fuzzy. The paper didn't feel right somehow. It just didn't seem likeit was not quite like play money, but it was not reallyif you just glanced at it and forget the watermark and forget all the detail, it just didn't look like and feel like money. And is that generally speaking what you see in a lot of these cheaper, more simply produced counterfeit bills today, or are we seeing stuff produced in this way that is very good quality and really even an expert would have trouble detecting it unless they put it through the special infrared lights or ultraviolet?
Ms. PAGANO. The note that you saw that I printed today is not atypical. It is certainly within the range that we see. If you want to examine some of the counterfeits that we brought, you should see that you should be able to easily detect that as being counterfeit.
Mr. MCCOLLUM. That is what I wanted to get at. There are still high-quality bills that are produced out there that are not necessarily what is going to be counterfeited and seen.
I wanted to ask a question about Social Security card fraud. Do you investigate that? Don't you? Is that not part of it, Mr. Foley, or not?
Mr. FOLEY. We do, sir. As a component of a larger program of financial crimes, Social Security numbers oftentimes are used to legitimize illegitimate transactions and
Page 72 PREV PAGE TOP OF DOC Mr. MCCOLLUM. How common is it to have a fraudulent Social Security card?
Mr. FOLEY. In terms of the use of a Social Security number more so than a card, it isagain, it is a component of many of the financial crimes that we investigate. And therefore, I would say we see that in most of the financial crimes that we encounter.
Mr. MCCOLLUM. The reason I ask the question is maybe not as much up your alley, but some of us serve on the Immigration Subcommittee thatand over the years they have had problems being able to get employer sanctions to work where it is illegal to knowingly hire an illegal alien because one of the principal identifiers that you use to get a job is a Social Security card, and they have told us over at the INS that the cards are very easily counterfeited, and they don't have the same quality paper and the watermarks, the things in them, that a $100 bill does. But that is not part of the Social Security fraud that you are seeing?
Mr. FOLEY. No, sir. We again encounter the Social Security number as a method of identity theft that leads to a larger financial crime.
Mr. MCCOLLUM. All right. Let me ask what goes on at a forensic center. You have got the display that you gave us on the screen. If I were to walk into a typical forensic center of the Secret Service's around the country, what would people be doing? What tasks are being performed in a forensic center?
Mr. FOLEY. Well, we have the Forensic Services Division in Washington, D.C., which is where the majority of our examinations, forensic examinations, are conducted, and we do everything from ink to paper to plastic examination, fingerprint examination. We have laboratories for chemical analysis of certain papers, plastic. We are involved in financial crimes. That is ultimately what that Forensic Services Division would do.
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In terms of computer forensics, if you leave Washington and go to the field office, under the auspices of our ECSAP program, they do computer forensics. We have agents in those laboratories in each of our 44 field offices that have significant training in how to enter, obtain evidence, follow protocols when they get into computer hard drives and software and things of that nature. In terms of forensic examination of high-tech, that is the role that the ECSAP agencies play in the field offices around the country.
Mr. MCCOLLUM. Sounds like they put a lot of work in when they do that.
I wanted to ask Mr. Spriggs something relative to the number of Presidential stops and the trips that have happened. I have the impression they have increased significantly in the last few years over a comparative period maybe 20 years ago. Is that true, and does that cause the divisions you work with more man hours or not?
Mr. SPRIGGS. Mr. Chairman, that is absolutely correct. Over the last 6 1/2, almost 7 years now, we have experienced an increased amount of travel not only by the President, but by the First Lady, the Vice President, as well as other protectees as far as the number of heads of state that we have had visit the continental United States. So it goes without question that this task challenges us from a manpower as well as a resource standpoint.
Mr. MCCOLLUM. So if you look at the number of people you protect right now, I think it is 16 on a full-time basis, is that number up from what it was, or is that a new high number for full time? Am I correct that you presently, the Secret Service, have a full-time protection on 16 people? Maybe that number is wrong. But I have the impression that was a pretty high number compared to the historical numbers, too, and that was an accurate number, but I don't know why I had that. That is what staff has given me anyway.
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Mr. SPRIGGS. It is inaccurate from the standpoint as far as having 16 permanent full-time protective details. It is more along the line of 13. However, we do have some people that we are currently protecting under Executive Order, and those are not necessarily permanent protective details.
Mr. MCCOLLUM. Okay. All right. And that is new to have the Executive Order asking to you protect more people?
Mr. SPRIGGS. Yes.
Mr. MCCOLLUM. Is that at a record all-time high, the number of people you currently have to protect, either full time or by Executive Order?
Mr. SPRIGGS. That is over recent years, over the last 10 years, yes, that is the highest that we have ever been.
Mr. MCCOLLUM. And all of this, again, stretching your resources is my point.
Mr. SPRIGGS. Yes, it does. It challenges us, to say the least. However, we have been able to manage that based on some of the things that the Director has pointed out in reference to utilization of judicious use of manpower as well as other resources.
Mr. MCCOLLUM. Can anybodyand I am going to let Mr. Scott have a liberal amount of time here as we wrap up. Mr. Stafford, if you could, or maybe Mr. Spriggs, what portion of an agent's time is spent doing protective operations as opposed to criminal investigations, or does somebody just spend their whole career doing one or the other in one of the divisions? How does that career path work?
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Mr. STAFFORD. Again, Mr. Chairman, we feel that those dual roles that we have of protection and investigations really complement each other. That is why we do physical protection better than anybody else in the world because of our investigative background. Our agents spend a minimum of 4 years in a field office primarily in an investigative capacity before they eventually go to a permanent protective division. We don't leave them in those divisions an extended period of time before we take them out of the divisions and move them back into an investigative capacity. So the two roles complement each other extremely well. That pendulum will swing for us depending on, again, who the protectees are, the numbers of the protectees, and, of course, how much they are traveling as far as how much time the agents spend between the two roles.
Mr. MCCOLLUM. One last question. A few years ago, and it was reported widely, I think, recently again a year or two ago by one of the news media organizations, that there was a super-hundred dollar bill floating around in the Middle East and Europe. Is there any evidence of that? Is that still true that there are some people who are capable of producing in foreign countries a quality bill that is far superior to anything put out on one of these machines over here on paper that is high stock, perhaps with an engraving process that is comparable to what the U.S. Treasury would actually produce, or is that a common thing, maybe not just in one instance, but a one-time super-hundred dollar bill.
Mr. FOLEY. That is exactly the case, Congressman. It was referred to as the supernote. There were several high quality hundred dollar notes in circulation overseas. There was some attempt to relate it to state sponsorship. We can't verify any of that. We can say that in some cases there were some North Korean diplomats involved in the distribution of it. But in terms of state sponsorship, we can't verify that that happened.
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Mr. MCCOLLUM. But it is possible that there was state sponsorship, you just can't verify it. I sit on the Intelligence Committee. I am not saying any secrets, but I hear that a lot, and sometimes we know because you cannot confirm or deny.
Mr. FOLEY. I cannot speculate as to whether it is accurate or not. We can't confirm or deny. We do not have any direct link or indication that there is state sponsorship.
Mr. MCCOLLUM. But the point is, and I don't want to overexaggerate this, from time to time you have seen some very, very high-quality hundred dollar bills from overseas that clearly have been circulated, whether it is state-sponsored or not, that are higher quality than anything we are seeing sitting over there.
Mr. FOLEY. That is true, but beyond that we have also seen where they have been detected at the cash-handler level. So while they may be depicted as being very deceptive, we found that they have been detected long before they got to the Federal Reserve, and they have been detected in certain portions of the world where you wouldn't believe that they would have a familiarity with U.S. currency. Ultimately the cash handlers up front noticed that they were counterfeit and notified the authorities, so I guess the point is that it is good, but it is not that good.
Mr. MCCOLLUM. Well, the bottom line, too, is that even if it gets past there, the experts, Federal Reserve or most bankers, banks that actually see this stuff, there are ways to look at these bills and determine if they are counterfeit that maybe the casual observer is not going to observe, but counterfeit isn't that good that they can produce a bill that is actually not detectable by our experts. They are not that good, right?
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Mr. FOLEY. That is correct.
Mr. MCCOLLUM. Thank you.
Mr. SCOTT. Thank you, Mr. Chairman.
Ms. Riggs, you mentioned the study of youth violence. Are you coordinating that study with the National Institutes of Health and National Academy of Sciences?
Ms. RIGGS. Not at this time. We are going to be discussing the initiative with the Department of Education, and I also might add that at the conference or the group that we are convening next week, it is National Institute of Justice is also going with us.
Mr. SCOTT. I think it would be helpful to coordinate all of the studies so that everybody doesn't find themselves studying the same thing and going over the same information; that you share the information the National Institutes of Health and National Academy of Science are both doinginvolved in studies, and I think we can benefit.
Mr. Foley, you mentioned the base level for possession of counterfeit bills. What is the present sentencing guidelines for possession, printing and distribution? I assume they are different.
Page 78 PREV PAGE TOP OF DOC Mr. FOLEY. They are, Mr. Scott, and I don't have what the level equates out to in terms of actual time. Base level is 9 for passing and possession, base level 15 for manufacture in terms of the sentencing guidelines. And I can provide that to you at a later date in terms of the levels.
Mr. SCOTT. Is there a crime just for simple possession?
Mr. FOLEY. Possession with intent to distribute.
Mr. SCOTT. But not just possession?
Mr. FOLEY. No, sir, not just possession.
Mr. SCOTT. Mr. Stafford, you mentioned the management changes that have been made. Can you give us a little more information about what the status of those changes are and how they have been received by your employees, whether or not you have gotten any complaints, and how you have responded to those complaints of employees about the management changes?
Mr. STAFFORD. The changes were implemented approximately 9 months to a year ago. There have been some issues concerning the change. Change is oftentimes not our friend, but in this particular situation, as I stated earlier, it was much needed. In the Office of Protective Operations, we have one mission, and yet we seem to be going in a couple of different directions relative to command and control. We needed to operationally change that. We needed a much more linear command and control not only at the White House, but at the Naval Observatory, at the Treasury Department and at the foreign missions branch. We now have that.
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It is working extremely well. It is being received in a very positive way by most of our employees, but we continue to look at it and continue to monitor that reaction.
Mr. SCOTT. I don't have any other questions, Mr. Chairman. I did want to point out a concern I had about a prior question when a prominent Justice Department official once said that if in response to people's civil rights and criminal activities, that if you were not guilty, you wouldn't have been arrested, and therefore you didn't need your civil liberties. I am a little concerned about the response that if you weren't guilty, the property wouldn't have been taken. I think some of us are a little more comfortable with the traditional way of doing business. If the government wants to take your property, they have a burden of proof of proving that the property should have been taken and that due process will require that to take place.
We have legislation on the floor today to deal with government taking property and putting all the burden on people, sometimes an impossible burden, coming up with posting a bond to get your property back before anybody has been to court.
I know it is a little inconvenient to have to prove your case, but like I said, some of us anyway are a little more comfortable with the government having to prove its case before they can take your property.
With that, Mr. Chairman, I appreciate the hearing and look forward to working with the Secret Service.
Page 80 PREV PAGE TOP OF DOC Mr. MCCOLLUM. Thank you very much, Mr. Scott. I will comment on your comment that I share your concern, and I think that some legislation will pass today, albeit we might differ on some of the amendments, though I have no idea.
Let us close here by clarifying a couple of things. I raised this question about the Social Security card and the counterfeit cards. That probably is not something that the Secret Service has the jurisdiction to normally investigate. But am I not correct that somebody, the FBI or somebody else, has a law enforcement investigative role in the Federal Government for documenting fraud dealing with the government documents that are not Treasury bills?
Mr. FOLEY. Yes, sir, we do, under title 18, section 1028. The Social Security card falls within that domain as well as any other fictitious
Mr. MCCOLLUM. Which would be the FBI?
Mr. FOLEY. No, that would be us.
Mr. MCCOLLUM. So you do not see a lot of it? You don't investigate a lot of it?
Mr. FOLEY. We don't investigate a lot of counterfeiting of Social Security cards, but we do encounter that in the course of investigations where we see the printing of any number of fictitious instruments and currency. Oftentimes we will serve a search warrant and find on a hard drive Social Security cards, credit card information, counterfeit notes, fictitious instruments. So we encounter that. We don't encounter that as a large portion of what we do, but we do have jurisdiction to investigate that. More often we see the number used in terms of identity.
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Mr. MCCOLLUM. I hear what you are saying. The question begs it a little bit. Is the fact that you don't investigate counterfeit fraud in the Social Security much because there is not much of it, or because it is not reported, or because you simply don't have the resources to devote to it and it isn't the priority for other reasons?
Mr. FOLEY. No, sir. We encounter it, but we don't encounter it to a large degree in terms of the actual printing of that card. What we see again more often is the use of a person's identification number as opposed to the card in the commission of a financial fraud. If we do encounter it, we will investigate it.
Mr. MCCOLLUM. I guess the real question I am asking, and it comes down to a pregnant question you all may want to follow up with me later, and I hear the INS, immigration service, complaining about this all the time, and I am just wondering if they turn that over to you or do their own investigation. But it strikes me maybe there is not the appropriate communication going on at the field level between immigration officers and Secret Service with respect to this if indeed there is as much Social Security card fraud as I have been led to believe by the immigration folks, and you are not seeing as much of it. That is the reason I am asking the question, and, again, maybe that is better answered later if you can look into it if you don't have an answer for now.
Mr. FOLEY. We do coordinate closely with our counterparts at Justice and Treasury, and to the extent that there is a problem, particularly in terms of financial crimes which we investigate, we aggressively pursue those cases. And I don't and can't tell you the scope of the problem as it relates directly to Social Security cards, but I can provide that to you at a later date.
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Mr. MCCOLLUM. I would like to talk about it later, because I do hear that from them, and I would like to maybe sit a couple of you down and find out what the story is and resolve that.
Last thing, we passed a couple of bills last Congress, the Wireless Telephone Protection Act of 1998 and the Identity Theft Assumption and Deterrence Act. I am curious if those have been of use to you yet. I know they are new laws. Have we had any arrests made under these authorities, or can anybody here tell me whether anything has been made of those two new laws?
Mr. FOLEY. Mr. Chairman, in relation to 1029, the enactment of that legislation, as you know, made it illegal to possess a telecommunication altering device. It has had a dramatic effect in terms of the offering of these devices over the Internet and through commercial and trade magazines. It has been diminished significantly, and as a result we have seen a reduction in cloning. It has been very successful.
Section 1028, as I just mentioned, false identification is a companion to financial crimes. Your billthe passage of that bill has given us another tool in our investigation of financial crimes. It has also merged the efforts of several agencies in terms of public education and made the FTC, as you know, the focal point for all information, reporting identity theft. There is one-stop shopping for people. We can get that information to help in our investigations, but they also have an advocate to go forward to alleviate some of the pain and suffering and difficulties that they have it dealing with the financial service industry in straightening out their credit. So both have been tremendous enhancements for us.
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Mr. MCCOLLUM. Good. I am glad to hear that, and we are glad that we passed the law, and hopefully we will be able to do what we said earlier, and that is give you some new legislation here shortly.
Director Stafford and to all of you who came today and all the members of Secret Service, I want to thank you, and again appreciate very much all the dedicated efforts and the lives that are put on the line every day in your agency as well as the hard work that they do. And, again, thank you for coming. With that in mind, we will adjourn the hearing. Thank you.
[Whereupon, at 11:25 p.m., the subcommittee was adjourned.]