[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]





                      ROLE AND OPERATIONS OF THE 
                      UNITED STATES SECRET SERVICE

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON CRIME, TERRORISM,
                         AND HOMELAND SECURITY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 29, 2010

                               __________

                           Serial No. 111-140

                               __________

         Printed for the use of the Committee on the Judiciary









      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

            Perry Apelbaum, Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

        Subcommittee on Crime, Terrorism, and Homeland Security

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

PEDRO PIERLUISI, Puerto Rico         LOUIE GOHMERT, Texas
JERROLD NADLER, New York             TED POE, Texas
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               TOM ROONEY, Florida
ANTHONY D. WEINER, New York
MIKE QUIGLEY, Illinois
TED DEUTCH, Florida

                      Bobby Vassar, Chief Counsel

                    Caroline Lynch, Minority Counsel















                            C O N T E N T S

                              ----------                              

                             JUNE 29, 2010

                                                                   Page

                           OPENING STATEMENTS

The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Chairman, Subcommittee 
  on Crime, Terrorism, and Homeland Security.....................     1
The Honorable Louie Gohmert, a Representative in Congress from 
  the State of Texas, and Ranking Member, Subcommittee on Crime, 
  Terrorism, and Homeland Security...............................     2
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     3

                               WITNESSES

Mr. Mark Sullivan, Director, United States Secret Service, United 
  States Department of Homeland Security
  Oral Testimony.................................................     4
  Prepared Statement.............................................     7

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Chairman, Committee on the Judiciary...........................    29
Prepared Statement of the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Member, 
  Subcommittee on Crime, Terrorism, and Homeland Security........    32
Response to Questions from Mark Sullivan, Director, United States 
  Secret Service, United States Department of Homeland Security..    35

 
                      ROLE AND OPERATIONS OF THE 
                      UNITED STATES SECRET SERVICE

                              ----------                              


                         TUESDAY, JUNE 29, 2010

              House of Representatives,    
              Subcommittee on Crime, Terrorism,    
                              and Homeland Security
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2 p.m., in 
room 2141, Rayburn House Office Building, the Honorable Robert 
C. ``Bobby'' Scott (Chairman of the Subcommittee) presiding.
    Present: Representatives Scott, Conyers, Pierluisi, Jackson 
Lee, Quigley, Gohmert, and Goodlatte.
    Staff Present: (Majority) Bobby Vassar, Subcommittee Chief 
Counsel; Joe Graupensperger, Counsel; Veronica Eligan, 
Professional Staff Member; (Minority) Caroline Lynch, Counsel; 
and Kelsey Whitlock, Minority Legislative Assistant.
    Mr. Scott. The Subcommittee will come to order. And I am 
pleased to welcome you today on the hearing before the 
Subcommittee on Crime, Terrorism, and Homeland Security, an 
oversight hearing on the United States Secret Service.
    The role of the Secret Service has expanded greatly since 
it was created in 1865 to fight counterfeiting U.S. currency. 
The Service became part of the Treasury Department in 1883 and 
took many additional investigative responsibilities with 
respect to safeguarding the payment and financial systems of 
the United States. It wasn't until 1894 that the Secret Service 
started protecting our Presidents on a part-time basis and in 
1901 on a full-time basis. That protective role has grown 
substantially since that time.
    Now, as a component of the Department of Homeland Security, 
the Service continues to focus on the investigation of 
counterfeiting and a wide variety of other schemes which 
financially defraud individuals, organizations, and our 
government. The Secret Service has led in the investigation of 
some of the most extensive instances of computer intrusion and 
data theft ever uncovered, such as the TJX and the Heartland 
cases. The TJX case involved a breach of more than 45 million 
credit cards. In the Heartland Payment Systems case, 130 
million credit card accounts were compromised.
    With increasing frequency of such breaches, the high volume 
of consumer data compromised, the Subcommittee will want to 
know what challenges law enforcement faces in preventing and 
investigating these crimes. While the size of some of these 
cases is astounding, I am also interested to know how we can 
have law enforcement do more to assist individual citizens 
whose credit cards or other personal information is stolen. The 
impact of these thefts on individuals can be very damaging, if 
not devastating.
    I believe the key reason for such crime proliferating is 
that the perpetrators know that they are unlikely to be caught 
or even have their cases investigated. They know that thefts 
below certain threshold amounts do not get the attention of law 
enforcement. The result is a credit card company doesn't charge 
the customer who proves that the charge is unauthorized, the 
card holding victim is made whole because they don't have to 
pay, and the perpetrator keeps the proceeds of the crime 
without having to face any serious risk of consequences.
    These cases aren't so complicated that they can't be solved 
if the appropriate amount of resources is devoted to them, and 
I want to know from the Director why more cases are not 
pursued.
    I also want to mention something of interest to me that is 
not part of the usual investigative or protective mission of 
the Secret Service, and that is because of the Secret Service's 
unique experience in threat assessment and protection of 
individuals at national security special events.
    The Service was called upon recently to assist in the 
preparation of a report studying threat assessment and 
preventing violence in institutions of higher education. A 
report was prepared in the wake of the 2007 tragedy at Virginia 
Tech. As the author of the House-passed Campus Safety Act, 
which has been waiting for 2 years for the Senate to act upon 
it, I am very interested in this issue.
    The Secret Service has an important and varied mission, and 
the Subcommittee is pleased to have the opportunity to discuss 
these and other issues relating to the agency. Today we will 
have one witness, Mark Sullivan, the Director of the Secret 
Service. And before we proceed with his statement, it is my 
pleasure to recognize the Ranking Member of the Subcommittee, 
the gentleman from Texas, Judge Gohmert.
    Mr. Gohmert. Thank you, Chairman Scott. Welcome, Director 
Sullivan. Thank you for joining us today for this hearing.
    The Secret Service was formed in 1865 to address the 
prevalence of counterfeit U.S. currency. An estimated one-third 
to one-half of all the currency in circulation following the 
Civil War was counterfeit. And at the recommendation of 
Treasury Secretary Hugh McCulloch, President Lincoln 
established a commission to study this rapidly growing problem. 
And on April 14, 1865, he created the U.S. Secret Service to 
implement the commission's recommendations. Ironically, this 
was one of President Lincoln's last official acts. He was 
assassinated later that same day.
    Housed within the Treasury Department, the Secret Service 
began this operation July 5, 1865, and shut down more than 200 
counterfeiting plants in its first year. But it would take 36 
years and two more presidential assassinations, James Garfield 
in 1881 and William McKinley in 1901, for Congress to expand 
the Service's mission to include protection of the President. 
Every President since 1901 has been protected by the Secret 
Service. The Service's protection responsibilities have 
expanded since then to include the First Family, the Vice 
President, former Presidents, visiting heads of states and 
others. The Service's investigative authority has also expanded 
over the years to include other financial crimes such as 
identity theft, credit and debit card fraud, and financial 
institution fraud.
    The Service continues its original task of shutting down 
counterfeiting operations both here and abroad. Through the 
Project Colombia Initiative and Peruvian Counterfeit Task 
Force, the Service provides support to local law enforcement 
investigations in Colombia, the largest producer of counterfeit 
U.S. currency, and Peru a growing competitor.
    Since 1994, the Service provided forensic and technical 
support to the National Center for Missing and Exploited 
Children, including polygraph exams, handwriting, and 
fingerprint analysis and voice print comparisons. The Service 
operates Electronic Crimes Task Forces to investigate hacking, 
phishing, skimming, malware attacks, and other electronic 
crimes.
    The Service also operates a national network of 38 
Financial Crime Task Forces to investigate crimes associated 
with the Nation's economic crisis, particularly mortgage fraud. 
Since 2006, the Service has referred over 400 mortgage fraud 
cases for prosecution.
    These are but a few of the Service's investigative 
responsibilities. It is clear that the Secret Service is not 
merely in charge of protecting our President, but also plays a 
major important role in investigating large scale financial 
electronic crimes. For that reason, I do look forward to the 
testimony of our witness and would yield back at this time.
    Thank you, Chairman.
    Mr. Scott. Thank you. We have been joined by the Chairman 
of the full Committee, the gentleman from Michigan, Mr. 
Conyers.
    Mr. Conyers. Thank you, Chairman Scott and Judge Gohmert. I 
am glad we have so many of our Members of the Committee out.
    Director Sullivan, I have a confession to make to you. I 
was prepared to suggest that you be reassigned because of what 
happened at the White House, but my able staff has persuaded me 
that that would be no more fair than holding someone 
responsible for something that they thought was being covered 
properly. So I have revised my statement so that--we just want 
to say this. I don't know how we lost the Social Secretary at 
the White House, but blaming her is misplaced. The protection 
of the President of the United States is a job for Secret 
Service. It is not the Secretary's job or anybody else's. And 
what I need to know is whether this is preventible. Nobody is 
perfect. But we are talking about in effect the most 
influential, if not most powerful single human being on the 
planet. We don't have time to get his protection right the 
second time. And I have got to find out whether we can get some 
certainty that this can never happen again, especially at the 
White House itself.
    The other part of your duties that Chairman Scott referred 
to, I would like your able men and women behind you to just let 
me know how many--what was the disposition of all the mortgage 
fraud cases. We have got so much rip-off coming from the 
mortgage companies and all the lines of--they resell them, then 
go out of business. No one can even find them to work out any 
kind of compromise. We have got foreclosures going on at a 
record rate in many of our cities, and that is an area of your 
responsibility I would like you to deal with.
    Thank you, Mr. Chairman.
    Mr. Scott. Thank you. If other Members have a statement for 
the record, by unanimous consent, without objection, so 
ordered.
    Our witness today is Mark Sullivan, the Director of the 
United States Secret Service, who was sworn in as the 22nd 
Director in 2006. Immediately prior to that he served as 
Assistant Director of the Office of Protective Operations. He 
began his Secret Service career as a special agent in the 
Detroit field office in 1983.
    Mr. Sullivan, your total written statement we entered into 
the record in its entirety. So I would ask you to summarize 
your testimony. It is usually 5 minutes. But since you are the 
only witness, do the best you can. We will have the timing 
light on, but feel free to make your complete statement that 
you think we need to hear. We have your complete written 
statement. And so at this point, you may begin your testimony.

  TESTIMONY OF MARK SULLIVAN, DIRECTOR, UNITED STATES SECRET 
     SERVICE, UNITED STATES DEPARTMENT OF HOMELAND SECURITY

    Mr. Sullivan. Thank you. Good afternoon, Chairman Conyers, 
Chairman Scott, Ranking Member Gohmert. It is my privilege to 
appear before you today to discuss the current state of the 
U.S. Secret Service. I will offer brief remarks and ask that my 
full statement be included in the record.
    Before I begin, I would like to recognize the great 
relationship we have enjoyed with the staff of this 
Subcommittee for years. Whether it was working to expand our 
successful Electronic Crime Task Force program or addressing 
the spike in mortgage and other financial frauds in recent 
years, your staff has always demonstrated a level of 
cooperation and professionalism that is appreciated by all of 
us at the U.S. Secret Service.
    Since the majority of our statutory authorities fall under 
Title 18 of the U.S. Code, the Judiciary Committee has a long 
distinguished history of working with the U.S. Secret Service 
on investigative priorities that many in the general public may 
not recognize we cover. While most people associate the U.S. 
Secret Service with the protection of the President and Vice 
President, the special agents in our field offices around the 
world who make that protection possible also spend roughly half 
of their time protecting our country's banking and financial 
system from criminals who seek to harm us.
    Although these may appear to be disparate missions on the 
surface, our protective responsibilities are reliant on the 
experienced staffing and assets from our investigative field 
offices to cover daily presidential, vice presidential or other 
protective travel. They also provide a surge capacity for the 
U.N. General Assembly, designated NSSEs, and presidential 
campaigns. Special agents in the field are on the front lines 
of protecting intelligence cases, responding 24 hours a day, 7 
days a week to every threat made toward a Secret Service 
protectee. In addition, Secret Service field office personnel 
are responsible for maintaining the excellent relationships we 
have built through the years with our State and local law 
enforcement partners.
    Finally, but important to understand, is that the special 
agents you see in close proximity to the President, Vice 
President or other protectee are not fresh out of our training 
academy. These agents have spent years in our field offices 
honing their investigative skills by conducting criminal and 
protective intelligence investigations. They have also 
developed their protective skills by performing advance work, 
providing physical security for visiting heads of state, as 
well as supporting our permanent protective details. It is 
through these assignments that special agents in the field 
develop the expertise, maturity, and judgment needed to succeed 
in the next phase of their career, a permanent protection 
assignment.
    From our original mandate in 1865 to suppress the 
counterfeiting of U.S. currency to the complex transnational 
financial crimes we are investigating today, the U.S. Secret 
Service has always held two things as sacrosanct, our 
relationship with law enforcement and other partners and 
intensive training as a means to prevent bad things from 
happening. One example of this is our Electronic Crimes Task 
Force program, or ECTF, that started in our New York field 
office but has since been replicated in 28 other locations, to 
include our first internationally ECTF based in Rome, Italy. 
Membership in our ECTF program includes over 2,100 State, 
local, Federal and international law enforcement partners, over 
3,100 private sector partners, and nearly 300 academic 
partners. These partnerships are critical to the success of the 
ECTF program's preventive approach.
    Effective collaboration with the banking and financial 
sector to protect their system networks has led to a stronger 
business continuity plan and routine risk management 
assessments of their electronic infrastructure. This 
collaborative approach also affords the business community 
direct access to law enforcement if an intrusion is detected. 
In addition, the research and development that our academic 
partners bring to the table ensure that all ECTF members are on 
the cutting edge of technology.
    At the core of our ECTF program is the training provided 
through our Electronic Crimes Special Agent Program, or ECSAP. 
Nearly 1,200 special agents or 35 percent of the agent 
workforce has received at least one of three levels of ECSAP 
training. These special agents are deployed in 98 offices 
throughout the world and are experts in computer forensics and 
the preservation and retrieval of electronic evidence. Given 
the success of ECSAP, the U.S. Secret Service identified a 
growing need for our State and local law enforcement partners, 
as well as prosecutors and judges to receive similar training. 
While this training was provided on an ad hoc basis for years 
through our electronic crimes State and local program, the 
Secret Service in partnership with DHS stood up the National 
Computer Forensic Institute, or NCFI, with the goal of 
providing a national standard of training for a variety of 
electronic crimes investigations. By the end of this fiscal 
year, the U.S. Secret Service through the NCFI will have 
provided training to 932 State and local law enforcement 
officials, representing 300 agencies from 50 States and the two 
U.S. territories.
    Since moving to the Department of Homeland Security in 
2003, the benefits of our investigative program have been 
evident. Whether it was the successful investigation and 
prosecution of the two largest network intrusion cases in U.S. 
history or the seizure of more than $20 million of counterfeit 
U.S. Currency in Lima, Peru during the first year of our 
operation there, we have contributed to the success of the 
Department by protecting the banking and financial 
infrastructure of our country.
    Let me be clear, the U.S. Secret Service would be unable to 
effectively meet our protective mandate if not for the 
expertise that our special agents develop through conducting 
criminal investigations in our field offices both here and 
abroad. If the President schedules a trip to the Pacific 
Northwest 2 days from now, we would be able to immediately 
conduct the necessary advance work, including liaison with 
local law enforcement, to ensure the President's safety. This 
would not be possible without the strong support of our State 
and local law enforcement partners and the dedicated men and 
women across the United States and around the world who serve 
with distinction as special agents, uniform division officers, 
and administrative professional and technical personnel.
    Despite the demands of our dual mission, the men and women 
of the U.S. Secret Service are ever vigilant and prepared for 
the challenges that lie ahead.
    Mr. Chairman, distinguished Members of the Committee, this 
concludes my opening statement. I would be more than happy to 
answer any questions at this time.
    [The prepared statement of Mr. Sullivan follows:]
                  Prepared Statement of Mark Sullivan




                               __________

    Mr. Scott. Thank you very much. We will begin and recognize 
ourselves under the 5-minute rule. I will begin with the 
gentleman from Puerto Rico.
    Mr. Pierluisi. Thank you very much, Chairman Scott. Thank 
you, Director Sullivan, for appearing before us.
    Beyond its protective function, the Secret Service plays 
other key roles, some of which you have mentioned. I am 
particularly interested in its work in the area of financial 
crimes as it may relate to money laundering, And I will tell 
you where I am coming from. I represent Puerto Rico, and we 
have had a lot of drug trafficking in Puerto Rico, as well as 
the Caribbean since the mid '90's. Back then I was Attorney 
General. We were designated as a High Intensity Drug 
Trafficking Area as a result of efforts on my part, and I am 
particularly interested in what, if anything, you are doing, 
your agency is doing in the Caribbean relating to money 
laundering, which I know is happening.
    I know--let me say up front--that your agency participates 
in Financial Crime Task Forces throughout the Nation. I wonder 
whether you are participating in High Intensity Drug Traffic 
Area programs throughout the Nation, including in Puerto Rico. 
And I want to see what commitment you have regarding this 
terrible crime that happens and that generates violence, among 
other things.
    Mr. Sullivan. Thank you for that question. Sir, what we 
instruct all of our agents in the field to do is to have an 
impact in that community where they oversee for that particular 
office. Nationally we are in partnership with DEA for that very 
reason when it comes to drug trafficking and the other 
financial type crimes that are involved with drug trafficking.
    Now, I can't give you the particulars as far as what we are 
doing in the Caribbean. I can tell you that we are very active 
down there. We do see a lot of money laundering that our people 
are involved in. I can tell you that it is evident to me just 
in the seizures that I see, the asset forfeiture seizures that 
I see--last year, our asset forfeitures were up 35 percent. 90 
percent of those asset forfeitures are going back to the 
victim.
    But I can tell you that that is an area that we do pay 
attention to, that we do ensure that we do partner up. As you 
know, we have an office in Puerto Rico. And I do believe that 
our people down there are very involved in this particular type 
of criminal activity, as well as our office in Miami, which is 
the office that, you know, San Juan reports to.
    Mr. Pierluisi. I tell you, one thing that concerns me is 
that with all of this attention--and it is due attention--that 
the Mexican border is receiving from us, I hope that we don't 
forget that the southern most border of the U.S. Is the one you 
have in Puerto Rico and the USVI, and that these drug 
trafficking organizations and the related money laundering 
organizations are like moving targets. If you do not have a 
global or regional approach, you are wasting your time and 
effort. To the extent you are paying attention to, let's say, 
the Mexican border, you cannot forget that they simply change 
routes, they change their focus. So I just urge you to keep an 
eye on the Caribbean as well because otherwise your efforts 
could be fruitless.
    Mr. Sullivan. Congressman, what we are seeing--and you have 
hit on a very important point--everything now is transnational. 
I mean, all of our crimes are of borderless type crimes. And 
that is why we have seen again--we are looking to replicate the 
Financial Crime and the Electronic Crime Task Forces we have 
here domestically. We are looking to expand those 
internationally. And, you know, that is part of our foreign 
field office strategy, is for these financial--it fits very 
well within both our protective mission and with our 
investigative mission.
    So I agree with you wholeheartedly and I would be more than 
happy to get some information for you on what we are doing down 
in Puerto Rico. And we can get it back to your staff if you 
like.
    Mr. Pierluisi. I thank you.
    Mr. Sullivan. Thank you, sir.
    Mr. Scott. The gentleman yields back. The gentleman from 
Texas.
    Mr. Gohmert. Thank you again, Mr. Chairman. Director 
Sullivan, it is good to see you again.
    I understand one of the many things that your agency gets 
into investigating at least is mortgage fraud. What is the most 
common form of mortgage fraud that your department ends up 
investigating?
    Mr. Sullivan. You know, I would say straw buyers.
    Mr. Gohmert. Straw buyers?
    Mr. Sullivan. Yes, sir. We just were involved in a task 
force that went--it was Broken Dreams. It was generated by the 
Attorney General along with--the FBI was involved, several 
other Federal and State and local law enforcement agencies, a 
nationwide initiative. It went from, I believe, March through 
April. During the course of that time, I believe we had about 
22 officers working about 40 different mortgage fraud 
investigations. We arrested, I believe--or charged 70 people 
and we uncovered about $135 million worth of fraud and mortgage 
fraud. And I would say for the most part what we are seeing is 
straw buyers.
    Mr. Gohmert. One of the things that we have seen going 
through September and October of 2008 were the mortgage-backed 
securities. And it seemed that one type of fraud was straw 
buyers, as you mentioned. But one is people approaching fraud 
in the manner in which they pushed people into loans they 
couldn't afford and ultimately loans that had no chance of 
succeeding and then banding--another type seemed to me in cases 
where it appears they knowingly put together a whole bunch of 
really bad loans and put a big thick document with it to make 
it a security and then sold the securities as mortgage-backed 
securities and unfortunately without recourse, so that even 
though they were bad loans all packaged together and it 
certainly seems they should have been knowingly put together, 
they are sold, people left with millions and millions of 
dollars and left others holding those bad papers and bad 
securities. And then the credit default swaps to insure the 
MBSs and all that kind of thing.
    But I was just wondering through the course of your 
investigations if you saw any of the laws that needed to be 
tightened up to help prevent that kind of thing? I have 
wondered about eliminating the ability to sell mortgage-backed 
securities without recourse. It seems as if maybe if the 
generators of these loans had recourse back against them, they 
would be a whole lot more careful.
    But I was just curious if you saw some things we maybe 
could do to help cut back on loan fraud.
    Mr. Sullivan. You hit on a very good point, you know, 
because we are seeing collusive--you know, there are collusive 
people. There are insiders there that are manipulating 
documents to qualify people that just aren't qualified for that 
particular loan. You know, one of the things I have seen is, 
you know, that various people are going in and claiming 
bankruptcy. And bankruptcy will delay the system in that the 
call on these loans now will be delayed. And I think that is an 
area that maybe we might want to look at, is these people 
claiming bankruptcy as a technique to put off the inevitable 
before the debt loan has to be called in. So all payment now is 
forgiven or delayed. And to me that was an area that I believed 
we should take another look at.
    Mr. Gohmert. And I appreciate that. One of the things that 
has come up this week, of course, is making public the arrest 
of Russian spies. And we know the President, with whom your 
agency is charged with protecting, had just met with and sat 
down with the President from Russia. And I am curious. Is the 
Secret Service in their role as protectors of the President 
made aware of information indicating we are meeting with the 
President who has spies all around? Is that part of your packet 
of knowledge when you protect a President?
    Mr. Sullivan. Yes, sir. I could not ask for better 
cooperation than we get from the intelligence components and 
from the FBI. We get very good information from their very good 
briefings from them. I am briefed every single day. But our 
partners out there are very good about providing any 
information to us that will enable us to do our job better and 
protect the President better.
    Mr. Gohmert. I am glad. So would the President be made 
aware of that, too, so he knows what exactly he is dealing 
with?
    Mr. Sullivan. Sir, that would not be our role to provide 
him with that information.
    Mr. Gohmert. But you may have the information but the man 
you are protecting may not?
    Mr. Sullivan. No. I would say, sir, that that information 
would be provided to him by the people that provide him with 
intelligence information.
    Mr. Gohmert. Thank you. I thank the Chair.
    Mr. Scott. Thank you. The gentleman yields back. The 
gentleman from Illinois.
    Mr. Quigley. Thank you, Mr. Chairman. Welcome, Director.
    You mentioned in your opening statement--I believe it was 
$20 million that was counterfeit money from Peru; is that 
correct?
    Mr. Sullivan. I believe that is correct, sir.
    Mr. Quigley. I understand that Peru and Colombia are major 
sources of counterfeit money coming into the United States. 
Forgive the 101 question. Is it just the drug trade or is it 
other money launderers that are the people they are dancing 
with here to bring money into this country?
    Mr. Sullivan. I think it is a combination of both of those 
things. You know, back in 2001, we saw that there was a large 
quantity of counterfeit money coming into this country being 
manufactured in Colombia. And at that time, we formed a 
partnership with the Colombian law enforcement, with a vetted 
group of Colombian law enforcement. And over the next 8 to 9 
years, we have seized, I believe, about $250 million in 
counterfeit coming out of Colombia. We have arrested about 700 
people. And I believe we have made about 100 or so counterfeit 
plant seizures down there. And the majority of those all do 
involve some nexus to the drug trade.
    Meanwhile, the fastest growing region now in South America 
for the manufacture of counterfeit currency is Lima, Peru. And 
so we have pretty much mimicked the same strategy that we did 
in Colombia back in 2001. And back in March of 2009, we entered 
into a partnership with our Peruvian law enforcement partners. 
And so far, that has yielded about $20.5 million, I believe. I 
think we have arrested somewhere around 35 or 40 people. And I 
think we have about maybe 17 or 18 plant seizures.
    Mr. Quigley. So does the new technology in our currency, do 
they just keep matching it somehow? Or is it easier to catch 
because of the new technology, the water marks and so forth?
    Mr. Sullivan. You know, they do try to replicate that. What 
is interesting is when we first began--and up until about maybe 
15 years ago--the majority of all the counterfeit currency that 
we saw being manufactured here in the U.S. was all offset 
printing. All the offset printing we see now is being done in 
foreign countries, whether it be in Europe or in South America. 
All of that counterfeit currency that is offset printing is 
coming mainly foreign. And that is where all of our plant 
seizures are coming from.
    The majority of the counterfeit currency that we see here 
domestically is mainly computer or ink jet generated. And as I 
said, they do attempt to replicate the security features. Some 
people do a fair job with it, other people not as well. And the 
bottom line is we tell all people who come in contact with 
money to take a real hard look at the money that they are 
handling.
    Mr. Quigley. And it is your understanding or you get 
briefed as to where the next generation of our currency is 
going? It is more advances coming as well?
    Mr. Sullivan. Yes, sir. As a matter of fact, they just 
rolled out the new $100 bill. It will be coming out, I believe, 
in February of 2011. But we work with our partners at Treasury, 
at the Bureau of Engraving and Printing, and with the FRB to 
make sure that we have the right security features in our 
currency and keep up with anyone who is trying to defeat those 
features.
    Mr. Quigley. Thank you. I yield back.
    Mr. Scott. Thank you. The gentleman from Virginia.
    Mr. Goodlatte. Thank you, Mr. Chairman. And, Mr. Sullivan, 
thank you for joining us today.
    It seems to me that your work in the Electronic Crimes Task 
Force gives your service a unique insight into some of the 
vulnerabilities in our Nation's critical infrastructure. As a 
member dedicated to making sure we get any cybersecurity 
legislation right, I would be interested in hearing from you 
what you believe are some of the most important things we need 
to do to secure our Nation's critical infrastructure.
    Mr. Sullivan. One of the things that we see when you look 
at the two identity theft cases that we worked back in 2008/
2009, one was a cyber intrusion where 40 million identities 
were stolen. The next one was a cyber intrusion with about 130, 
140 identities stolen. And I think the one thing is that people 
have to evaluate the systems and they have to make sure that 
they are protected as well as they can be protected.
    I think it goes back to--I think you also have to look at 
partnerships. I think all of us have to look at this as a 
collaborative effort. That is why I believe, sir, that these 
Electronic Crime Task Forces are so important, because we bring 
into play here not only State and local law enforcement, we 
also bring in academia, we bring in the business community, we 
bring in a wide range of people. It is not just the traditional 
law enforcement effort, but it is a true community effort. And 
I think it is really important for us to take that approach.
    Mr. Goodlatte. Thank you. Would you be willing to work with 
me to explore this issue further?
    Mr. Sullivan. Absolutely, sir.
    Mr. Goodlatte. Thank you. Could you go into more detail 
about electronics benefits transfer fraud? Is this related to 
food stamp benefits? Is that----
    Mr. Sullivan. I think it can be anything, you know. You 
look at again the evolution of our investigations. 20 years ago 
if somebody was getting a Social Security benefit, they got it 
via a Treasury check. And we used to see Treasury checks 
stolen, forged, cashed. You know, today those benefits are, you 
know, transferred via wire. You know, everything now is being 
done via wire.
    Mr. Goodlatte. That is a broader category than just the 
cards that people carry when they purchase foods under the SNAP 
program?
    Mr. Sullivan. I think just about any type of payment you 
can think of would be included in that category.
    Mr. Goodlatte. Are there any trends in terms of the type of 
perpetrator who commits this type of fraud?
    Mr. Sullivan. Do you mean as far as the electronic fund 
transfers?
    Mr. Goodlatte. Yeah, EBT fraud.
    Mr. Sullivan. I think these are all people that are just 
looking for vulnerabilities. I think these are the type of 
people that have a high degree of a technology background, 
which again there is more and more increasing in our population 
now. But again, I look at this as a crime of opportunity, the 
same as I looked at these type of crimes when it was paper. You 
know, now it is electronic. You know, 50 years ago if somebody 
was going to rob a bank, they used a gun. Today they use a 
keyboard. Again, that is why I go back to it is so important 
for us to protect our critical infrastructure and our payment 
systems.
    Mr. Goodlatte. What criteria does this task force use to 
prioritize the field investigations that it conducts?
    Mr. Sullivan. Again, we want to make an impact on the 
community. So we leave it up to our agents in charge working 
with their State and local law enforcement partners, with the 
business community, with the financial industry, with academia 
to determine what the impact is there. We meet with the U.S. 
Attorney's Office. We get the guidelines for prosecution. But 
we also look to State and local prosecution. And one of the 
things that we have found is that an investigation initially 
may not appear to be a large high dollar or large dollar 
investigation. It might appear to be only $1,000 fraud. But 
what we have found is as we start to peel back on that, we 
realize that maybe this group is affiliated with a bigger 
group. So we do take a pretty hard look at everything that is 
referred to us and then we prioritize and make sure that 
whatever we are working does have an impact on the community.
    Mr. Goodlatte. Thank you. Thank you, Mr. Chairman.
    Mr. Scott. The gentleman yields back. Does the Chairman 
have questions? Okay.
    Ms. Jackson Lee is recognized for 5 minutes.
    Ms. Jackson Lee. Mr. Sullivan, welcome.
    Mr. Sullivan. Nice to see you.
    Ms. Jackson Lee. Since I am going to start off with a 
question of the state dinner, thank you for the manner in which 
the Secret Service addressed its responsibility and the manner 
in which you appeared before a number of Committees, I believe. 
And we appreciate that kind of stand-up-manship, if you will. 
And I know you prefer not to have to do that on a regular 
basis, but I do appreciate it very much.
    I am just going to start off with you telling us what you 
have learned from the Indian Prime Minister's state dinner and 
that series of incidents as it relates to staffing and 
procedures that may now be in place or generally so in any 
manner surrounding the White House.
    Mr. Sullivan. Thank you, Congresswoman. Thank you for the 
question.
    First of all, as I have said from the very beginning, this 
was a mistake. This was our fault that happened. Somebody made 
a judgment call and it wasn't the right judgment call. And some 
individuals got into the White House who shouldn't have gotten 
in there.
    One thing I do want to make clear is these people that did 
get in did go through every level of security that all the 
other individuals went through. But it was a mistake, an error. 
It was a mistake in judgment. It never should have happened, 
and nobody was more disappointed that that happened than me. 
And believe me, nobody has been more difficult or harder on us 
than ourselves regarding those people getting into the White 
House on that evening.
    As I have told you before, this continues to be under 
investigation, criminal investigation. And I will share with 
you as much as I can.
    One of the things that immediately happened is we did 
review our procedures, we did review all of our policies. You 
know, at the White House we put close to 100,000 people through 
there every month. We have thousands of pass holders at the 
White House. We have all kinds of workers coming and going from 
the White House every day. For us, we have to be right though 
100 times out of 100. We don't have the luxury of being right 
99 times out of 100.
    I believe that our policies, our procedures, I believe that 
they were correct. Again, I just believe that they were not 
followed. In the meantime, we have worked with our partners at 
the White House. We have worked with our partners at the State 
Department. We have worked with all of our partners when it 
comes to granting access to the White House.
    I can tell you since that time, we have had numerous events 
at the White House. Right after that state dinner, we had 
numerous Christmas parties at the White House. We have had 
numerous events at the White House. We had a state dinner, the 
Mexican state dinner back in May. All of these have gone off 
without a flaw.
    Ms. Jackson Lee. Do you feel comfortable that you had a 
sufficient wake-up call, that you are moving toward, you are 
moving--I do realize there is a criminal investigation. I would 
hope that it is indictable to have a reality show. That might 
be one offense that we might charge those individuals with. But 
in any event, you just feel that the T's are crossed and the 
I's are dotted? That is what I think is very important for the 
American people to hear.
    Mr. Sullivan. I believe so. You know, Congresswoman, as I 
told you before, protecting the President is our number one 
priority, and we are not going to let anything happen to him or 
his family.
    Ms. Jackson Lee. I understand that.
    Mr. Sullivan. That was a wake-up call. And I feel very 
comfortable with our procedures at the White House now, what we 
are doing at the White House now.
    Ms. Jackson Lee. Let me give you these quick questions. If 
you can expand on how effective the Electronic Crimes Special 
Agent Program is because that certainly is--from cybersecurity 
breaches to fraud on electronic facilities is very important. 
And then also, as I understand it, you have involvement in the 
report on the issues raised by the Virginia Tech tragedy, if I 
am not mistaken. And a number of incidents have happened on our 
college campuses, from Virginia Tech, Morehouse, UNC. A number 
of our children attend those schools, and I am wondering where 
we are with those kinds of incidents.
    Lastly, you just mentioned it earlier, your commitment to 
securing and protecting the White House. Do you have enough 
resources and staffing as relates to the increased amount of 
threats that we hear against the White House and, of course, 
the President?
    Mr. Sullivan. If it is okay, I will start with the 
Electronic Crime Task Forces. For us, these have been a huge 
success, not only the Electronic Crime Task Forces but our 
Financial Crime Task Forces.
    As I have said before, we have 29 Electronic Crime Task 
Forces and 38 Financial Crime Task Forces. Last year, we opened 
about 1,100 electronic crime cases and we closed about 1,140. 
The potential loss that we saw in these investigations was 
about $533 million. The actual fraud that our investigators saw 
was about $100 million. And we arrested about 510 people via 
the Electronic Crime Task Force concept. And we also did 5,450 
cyber forensic exams. And out of that, about 42 percent were 
for State and local law enforcement.
    So I would say that these Electronic Crime Task Forces we 
have around the country have been very successful and have been 
very collaborative with all of our partners. And also as a 
result of the Electronic Crime Task Force--and I mentioned it 
in my opening statement--you know, the National Computer 
Forensic Institute in Hoover, Alabama, the opening of the NCFI 
a few years ago has allowed us to train by the end of this year 
about 940 State and local law enforcement, as well as State and 
local prosecutors. This for us is a force multiplier. Now these 
State and local law enforcement, they get the training, they 
get the equipment that they need to go back out and do their 
own forensic exams. And again, as I mentioned before, every 
State has been represented as well as, you know, the two U.S. 
Territories.
    As far as Virginia Tech, this was a study that we conducted 
with the FBI and the Department of Education. What we looked at 
here, we looked at going back to 1900, I believe, up through 
2005, 2007, I believe. We looked at about 150,000--I am sorry. 
We looked at about 300 incidents from a total of about 150,000 
incidents that had transpired during that time to see if we 
could come up with some type of behavior pattern, to see, you 
know, exactly what type of individuals we were looking at here, 
to see if there is any clues prior to the event that maybe 
could have been identified that could help identify these 
people as being a potential problem. I do believe that one of 
the big issues here is that you, you know, do need to have 
people come forward when they see things about people that may 
trouble them. And that was one of the things we saw in the 
study, that there were people after the fact that came back and 
said that there was some behavior there that they had noticed 
and just didn't report it to anybody.
    But these are really important issues to us. Again, it goes 
back to us wanting to make an impact on the community. You 
know, we have people in our Protective Research Division who 
were involved in this study, and I would like to have them come 
up and brief, you know, you or your staff and any of the 
Members on the full findings of the study.
    Ms. Jackson Lee. Do you have enough resources to protect 
the President?
    Mr. Sullivan. Ma'am, as I said, our number one priority is 
to protect the President and we will never compromise on that. 
And every resource we have is available to protect him.
    Ms. Jackson Lee. Thank you. Thank you very much. I yield 
back.
    Mr. Scott. Thank you. I recognize myself for 5 minutes. 
That doesn't really answer the question.
    Are you using all the resources you have? Are there any 
sources you have asked for and haven't gotten?
    Mr. Sullivan. No, sir. I don't know an agency head out 
there that would ever tell you that they have enough resources. 
Any additional resource, any additional funding that you would 
support us on, I would be more than happy to take.
    Mr. Scott. On the question of protecting the President, are 
there any resources that you think you need that you haven't 
gotten?
    Mr. Sullivan. Sir, I work very hard and diligently with the 
Secretary to ensure that we have all the resources we need to 
protect the President.
    Mr. Scott. And what are the results of all of that 
communication? Do you get the resources you need or don't you?
    Mr. Sullivan. Sir, right now as a matter of fact I am 
working with the Secretary on a reprogramming initiative to get 
some additional resources to protect the President.
    Mr. Scott. And if you don't get what you need, would you 
let us know?
    Mr. Sullivan. You will be the first one to know, sir.
    Mr. Scott. Thank you. In response to the question from the 
gentleman from Texas on these loans, some of these loans were 
called NINJA loans, N-I-N-J-A, no income, no job or assets. 
They subsequently, as he indicated, have gotten into the public 
stream.
    Are you pursuing any prosecution for fraud in these 
packages and loans that had limited value being passed off as 
bona fide loans?
    Mr. Sullivan. Sir, if it is a mortgage fraud, it is a 
criminal violation. We are going to pursue it.
    Mr. Scott. Are you pursuing those cases now? I mean, it has 
a name. So people knew what they were doing. Are there cases 
being pursued now?
    Mr. Sullivan. Sir, I am not familiar with that. Again, I 
would say if we are working in mortgage fraud, no matter what 
name they give it, if it is a fraud, we are pursuing 
prosecution on that fraud.
    Mr. Scott. Could you get back with us with a little more 
specifics? On individual identity theft, what is the role of 
Secret Service on individual identity theft cases?
    Mr. Sullivan. On a one person identity theft?
    Mr. Scott. Yeah. Just run of the mill--well, you steal a 
lot of credit cards, but for the individual it is an individual 
case. What usually happens is the bank writes it off and nobody 
does anything. That is why these guys--why it is such a 
profitable business. What is the role on individual identity 
theft? What is the role of the Secret Service on cases like 
that?
    Mr. Sullivan. Again, sir, I would say, Mr. Chairman, that 
we look at every single investigation as they are referred to 
us. And we have to prioritize all of our investigations. But as 
I said before, we sometimes have taken a one individual, it 
looked to be one victim and that has turned into 100 victims. 
And again, I go back to our Financial Crime Task Forces. And 
that is why many times those individual type investigations are 
able to be pursued, because of our partnership with the State 
and local law enforcements.
    Mr. Scott. The problem you run into with the individual ID 
theft, if you get thousands of credit card numbers, if you 
don't get greedy and only milk each one for a couple of 
thousand dollars, you are pretty much risk free. What I am 
asking is, does the Secret Service have any role in creating a 
risk? And if it is for lack of resources, could you let us know 
what you would need to pursue these cases so that someone who 
is milking credit card numbers for just a couple of thousand 
dollars would incur some risk of investigation and prosecution?
    Mr. Sullivan. Sir, that is a great point. And believe me, 
every one of us would love to go after every single person out 
there. One of the issues we have as well, though, is 
prosecution of these people. And I think that the issue here is 
not just us having enough assets to go after these individuals, 
but also the U.S. Attorney's Office, as well as at State and 
local prosecutors.
    Mr. Scott. Well, can you give us an idea what it would cost 
to create risk for people who are promoting individual credit 
card fraud? Do you have some idea what we would be talking 
about if we----
    Mr. Sullivan. Sir, we can look at that and get back to you 
on that.
    Mr. Scott. Okay. You mentioned the campus attacks, targeted 
violence affects institutions of higher learning. The Campus 
Safety Act has passed the House twice which would create a 
research in best practices and training opportunities. You 
indicated that things aren't happening the way they should be 
happening. That is what the Campus Safety Act is supposed to 
cure. Your report just reports it. Don't we need some ongoing 
training available for institutions of higher education and 
research for best practices?
    Mr. Sullivan. Sir, I think that is happening. Again our 
report went into what happened prior to 2007. I do believe that 
there is a much greater awareness right now than there was 
before. I know that we have gone out and done training for some 
college police, not as much as we would like to do, but for 
campus police. But I do think that there is a much greater 
awareness now. I do believe that people are being much more 
proactive now.
    Mr. Scott. The campus police officers have endorsed the 
Campus Safety Act. So maybe we need to look at that and get the 
Senate to move on it.
    The final question is you mentioned protection of the 
President. You also have the responsibility of protecting 
former Presidents.
    Mr. Sullivan. Yes, sir.
    Mr. Scott. And that protection for Presidents from Clinton 
back is for their life. And beginning with former President 
George W. Bush, it is only for 10 years?
    Mr. Sullivan. Yes, sir.
    Mr. Scott. Is there any reason to limit protection of 
Presidents beginning with that presidency for 10 years or 
should we repeal that limitation?
    Mr. Sullivan. I think that is something that we all have to 
take a hard look at. It is something I have given a lot of 
thought to. As you know, that law was passed over 10 years ago 
now, I believe. I think that the times are much different 
than--I think given the current environment, I believe that 
that is something that we really need to work together on 
because I do think that the prudent thing to do would be to 
consider making it lifetime.
    Mr. Scott. Has any report or recommendation been made?
    Mr. Sullivan. I have talked to our Congressional Affairs 
people who are putting something together right now about that 
very issue, sir.
    Mr. Scott. We will look forward to hearing it.
    Any other questions? The gentleman from Texas.
    Mr. Gohmert. Thank you. And I think that is a great idea at 
this day and time with former Presidents potentially being 
targets for people who don't mind blowing themselves up to hurt 
innocent people. That is a good idea.
    But I was hearing the discussion about the Indian state 
dinner, and it has affected the way things are done over there 
in getting tour groups in. But in talking to someone on the 
Oversight Committee, it was my understanding that the Social 
Secretary--although the White House did not allow her to come, 
apparently it was a matter of national security, executive 
privilege or something--that the Social Secretary wouldn't come 
testify. But she apparently made her own decision not to show 
up for the dinner when normally Social Secretaries do show up 
and that left the Secret Service in a terrible quandary as to 
whether someone would be allowed.
    Is that your understanding of why she did not show up that 
night for the state dinner?
    Mr. Sullivan. No, sir. We had----
    Mr. Gohmert. Did somebody from Secret Service tell her 
don't come, we will take care of it, you don't have to be there 
to say people are okay and approved to come in?
    Mr. Sullivan. Sir, what I was going to say is we agreed to 
be the individual----
    Mr. Gohmert. The scapegoat?
    Mr. Sullivan. The Secret Service agreed to be the people 
that would be the name checkers. And----
    Mr. Gohmert. Well, you are always the name checkers, right?
    Mr. Sullivan. Sometimes it is a shared responsibility, 
whether it is at the White House or at a function outside of 
the White House.
    Mr. Scott. Have you gotten it straight? I mean, do we have 
to go through this again? I mean, do we have any reason to be 
concerned that the coordination between the Social Secretary's 
office and the Secret Service, do we have any reason to be 
concerned that that coordination is not taking place now?
    Mr. Sullivan. Sir, I can tell you that the coordination 
between us and this White House, as well as every other White 
House before, is outstanding.
    Mr. Gohmert. Well, Mr. Chairman, the thing is now we have 
gone in the mornings when there is tours from having one 
checkpoint to having two checkpoints a block apart and making 
hundreds of people wait, much longer than before, having 
doubled the number of people, now all in uniform instead of 
plainclothes, when the whole problem was not the morning tours, 
it was a state dinner. And so I am curious--and I realize our 
time is up and we've got to go vote, but I would really like to 
know why it was necessary to completely double the hassle of 
getting in for a morning tour because of something that 
happened at a state dinner when, as I understand it, there 
hadn't been a problem with somebody getting in that wasn't 
supposed to for a tour. Is that not correct?
    Mr. Sullivan. No, sir. You know, our methodology has always 
been a redundant checkpoint and there should always----
    Mr. Gohmert. Well, if it was always redundant, now it is 
doubly redundant. So anyway, I would appreciate knowing why it 
was necessary and if we could get a follow-up statement in 
writing as to why it was necessary to double the redundancy 
basically for the morning tours.
    But thank you, Mr. Chairman.
    Mr. Scott. The gentleman's time has expired. No other 
questions, I would like to thank the Director for your 
testimony today. Members may have additional written questions 
which we will forward to you and ask that you answer as 
promptly as possible so that the answer may be a part of the 
hearing record. The record will remain open for 1 week for 
submission of additional materials.
    Without objection, the Subcommittee stands adjourned.
    [Whereupon, at 3 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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               Material Submitted for the Hearing Record





   Response to Questions from Mark Sullivan, Director, United States 
     Secret Service, United States Department of Homeland Security




                                 
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