[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
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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
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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