[Senate Hearing 112-405]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-405
 
            OVERSIGHT OF THE FEDERAL BUREAU OF INVESTIGATION

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


                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 14, 2011

                               __________

                          Serial No. J-112-57

                               __________

         Printed for the use of the Committee on the Judiciary




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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin                 CHUCK GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
CHUCK SCHUMER, New York              JON KYL, Arizona
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island     LINDSEY GRAHAM, South Carolina
AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
AL FRANKEN, Minnesota                MICHAEL S. LEE, Utah
CHRISTOPHER A. COONS, Delaware       TOM COBURN, Oklahoma
RICHARD BLUMENTHAL, Connecticut
            Bruce A. Cohen, Chief Counsel and Staff Director
        Kolan Davis, Republican Chief Counsel and Staff Director



                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa......     3
    prepared statement...........................................    70
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     1
    prepared statement...........................................    80

                               WITNESSES

Mueller, Robert S., III., Director, Federal Bureau of 
  Investigation, U.S. Department of Justice, Washington, DC,.....     5

                         QUESTIONS AND ANSWERS

Responses of Robert S. Mueller III to questions submitted by 
  Senators Feinstein, Schumer, Franken, Grassley, Kyl, Sesions 
  and Coburn.....................................................    35

                       SUBMISSIONS FOR THE RECORD

Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa:
    Eric H. Holder and Robert S. Mueller, III, August 31, 2011, 
      letter.....................................................    74
    Eric H. Holder, October 5, 2011, letter......................    76
    Eric H. Holder, November 14, 2011, letter....................    77
Mueller, Robert S., III., Director, Federal Bureau of 
  Investigation, U.S. Department of Justice, Washington, DC, 
  statement......................................................    82
Weich, Ronald, Assistant Attorney General, Department of Justice, 
  Washington, DC:
    Senator Grassley, August 8, 2011, letter.....................    93
    Senator Grassley, September 23, 2011, letter.................    94
    Senator Grassley, November 30, 2011, letter..................    97


            OVERSIGHT OF THE FEDERAL BUREAU OF INVESTIGATION

                              ----------                              


                      WEDNESDAY, DECEMBER 14, 2011

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:10 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy, Kohl, Feinstein, Whitehouse, 
Klobuchar, Franken, Coons, Blumenthal, Grassley, and Sessions.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. You can tell, Director, this is an 
important hearing because you have the A Team of photographers 
here. You have all the absolute best on the Hill. There used to 
be one other very good photographer here on the Hill, but he 
left to go to work for the President. But I do get to see him 
now and then.
    Today the Judiciary Committee will hear from Director 
Robert Mueller of the Federal Bureau of Investigation. I want 
to thank the Director once again for agreeing to put his life 
on hold when called upon by the President earlier this year to 
continue to serve for another 2 years as FBI Director. His 
commitment and dedication to service are exemplary, and as I 
said the last time when I mentioned this, I also want to thank 
Mrs. Mueller. She is a wonderful person, and I know that she 
also is willing to put a lot of her life on hold for that. So I 
hope you will pass on my compliments to her.
    Mr. Mueller. I will, Mr. Chairman, and thank you for that.
    Chairman Leahy. Now, the Bureau plays an integral role in 
protecting our Nation's security through its counterterrorism 
investigations and intelligence gathering. Its work has 
contributed to more than 400 convictions in terrorism cases 
since September 11, 2011. Knowing this, I remain deeply 
concerned about a provision of the national defense 
authorization bill that would mandate--and I stress the word 
``mandate''--as the Chair of the Senate Intelligence Committee 
knows, the military detention of certain terrorism suspects, 
even if they are arrested on U.S. soil.
    Director Mueller has written that this provision would 
adversely impact the Bureau's ability to conduct 
counterterrorism investigations and inject ``a substantial 
element of uncertainty'' into its operations. I appreciate what 
Director Mueller meant when he wrote that the misguided 
provision fails to take into account ``the reality of a 
counterterrorism investigation,'' especially the successful 
convictions that we have gotten in our Federal courts.
    Now, Congress needs to do more to support important law 
enforcement efforts. We should give law enforcement the 
appropriate tools to combat the growing threat of cyber crime, 
something Senator Coons mentioned in the other room. More and 
more, American consumers and businesses are being targeted by 
sophisticated cyber attacks designed to steal their most 
sensitive information.
    I met with the CEO of one of our largest companies the 
other day, and he told me all the steps they have taken, the 
millions of dollars they have to spend, just to defend against 
cyber attacks, a lot of it coming from foreign countries, 
competitors, and elsewhere.
    In September, this Committee again voted for the Personal 
Data Privacy and Security Act. It is long overdue legislation 
that will provide tools to help law enforcement combat cyber 
crime. And the Senate and the House should promptly pass this 
measure.
    In the last Congress, we made great strides toward more 
effective fraud prevention. I worked hard with Senators on both 
sides of the aisle to craft and pass the Fraud Enforcement and 
Recovery Act, the most expansive anti-fraud legislation in more 
than a decade. We enacted important anti-fraud provisions as 
well, as part of both health care and Wall Street reform 
legislation. And I am pleased to see that the FBI has greatly 
increased the number of agents investigating fraud, leading to 
more fraud arrests and greater fraud recoveries.
    This year, I introduced the Fighting Fraud to Protect 
Taxpayers Act, which redirects a portion of the fines and 
penalties collected from wrongdoers back into fraud enforcement 
efforts. And the bill would lead to substantial recoveries, 
paying for itself many times over. This Committee voted for the 
bill more than 6 months ago. It is time for the Senate and the 
House to pass this bill without further delay to give law 
enforcement the resources and tools they need to crack down on 
fraud. We will say we are opposed to fraud, but we have got to 
give law enforcement the tools to fight it.
    I commend the FBI for maintaining its historic focus on 
combating corruption. I have worked to develop bipartisan, 
bicameral anti-corruption legislation, the Public Corruption 
Prosecution Improvements Act. I have also worked on the 
Civilian Extraterritorial Jurisdiction Act, which would hold 
accountable American contractors and employees abroad who 
engage in corruption and contracting fraud, especially when it 
hurts taxpayers in this country.
    At a time when anger at corporate wrongdoing, greed, and 
corruption is at an all-time high--and I might say anger at 
Congress--Congress should act promptly to give the FBI and 
other Federal law enforcement the tools they need to rein in 
fraud and corruption. And we should not let partisanship get in 
the way of this.
    Too often these days, whether it is Senator Whitehouse's 
bill to make sure the FBI can respond to requests from local 
officials to provide help in investigating violent crime, or 
Senator Blumenthal's bill to close a gap in the law with 
respect to the authority of the Secret Service, or our bill to 
ensure that the U.S. Marshals upon request can provide timely 
assistance in missing children cases, these seem to be delayed 
for no good purpose.
    I wish we all respected our law enforcement and national 
security agencies more. I wish we would give them the support 
they need and deserve. We hear a lot of tearing down of our law 
enforcement. We should be building them up and giving them the 
tools they need.
    I thank the Director for returning to the Committee, and 
through him I thank the hard-working men and women of the FBI. 
I know many of them--not all by any means--but I know they do 
vital work every day to keep us safe. And, Director, please 
give my compliments to the men and women of the FBI.
    Senator Grassley.

STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM THE STATE 
                            OF IOWA

    Senator Grassley. Thank you, Mr. Chairman, for this very 
important hearing, and I wanted to inform you that I was not 
supposed to be here until 10:30 because I was supposed to be on 
the floor, and when I got over there, they said it would not 
start until 10:25. So I have to come back here and give my 
statement. Then I will go back over there, and I will come back 
for questions.
    Chairman Leahy. In fact, if I might, I told the Director 
when the first vote starts, I will stay until almost the end of 
it and then go over. We will keep the hearing going, and 
Senators can go over and vote and come back, and we will keep 
it going.
    Go ahead.
    Senator Grassley. And, obviously, Mr. Mueller, you know 
there are some questions I want to ask you.
    It has been 5 months since Congress passed and President 
Obama signed into law an unprecedented 2-year extension of 
Director Mueller's term as Director of the FBI. Given the 
historical problems with FBI amassing power, the President's 
request to extend Director Mueller's term for an additional 2 
years, breaking from our 35-year practice of limiting the 
Director to a 10-year term, it was not a decision that I took 
lightly. Ultimately, given the President's failure to nominate 
a replacement timely and in a responsible manner, I agreed to 
the request to provide this historic extension.
    I am pleased that Chairman Leahy and members of the 
Committee agreed with me and moved the extension through 
regular order, including a hearing, an executive markup, floor 
consideration, a new nomination from the President, along with 
a final confirmation vote. This process sets the historic 
record that extending a Director's term was not a fly by-night 
decision. It also puts the President on notice to begin the 
process of selecting and nominating a new FBI Director earlier 
than the last attempt. Another extension will not occur.
    That said, I want to welcome Director Mueller to this day's 
hearing. His tenure as FBI Director has been a very good one, 
and his dedication and reputation were significant factors in 
his 100-0 confirmation vote in July. I am sure that when his 2-
year extension runs, he will be looking for the transition, 
helping other people transition to office, and a well-earned 
change of lifestyle.
    First I want to discuss a perpetual problem at the FBI: 
whistleblower protection. Director Mueller has repeatedly 
assured me that he will not tolerate retaliation against 
whistleblowers at the FBI. Despite these assurances, two 
particular whistleblower cases have been dragging on for years. 
These cases are largely fueled by the FBI's desire to continue 
to appeal rulings and findings of wrongdoing by FBI 
supervisors. FBI Agent Jane Turner filed a whistleblower 
complaint in 2002 when she discovered FBI agents were removing 
items from Ground Zero following 9/11. She faced retaliation 
for raising concerns about these agents, and her case has been 
stuck in administrative limbo at the Justice Department for 
over 9 years. Nine years is far too long for any case to be 
resolved, especially a whistleblower case.
    Another case, that of Robert Kobus, a 30-year non-agent 
employee of the FBI who disclosed time and attendance fraud, 
has languished for over 5 years. Again, the FBI has continued 
to appeal this case despite clear findings of retaliation.
    I wrote to Holder last month about these issues. The 
response was lackluster. If the Attorney General, the Deputy 
Attorney General, and the FBI Director truly wished to help 
whistleblowers, they have the power to end years of appeals. In 
other words, you do not have to appeal. And there may be 
reasons other than just money that you are appealing because 
maybe you hope these people die and go away. I do not think 
they are going to.
    I also want to discuss some issues that have recently 
arisen as a follow-up the FBI's closing the Amerithrax 
investigation. The Justice Department recently settled a death 
lawsuit in Florida for $2.5 million. The lawsuit raised 
questions in the press given the potentially conflicting 
statements made by the Justice Department that seemed to cast 
doubts on Dr. Ivins' ability to actually manufacture anthrax. 
Ultimately the Department filed a supplemental brief correcting 
statements that seemed to cast doubt upon the FBI's case but 
did not seek to refute the depositions of Dr. Ivins' co-
workers.
    I wrote to the Attorney General and FBI Director in August 
asking how the Department's filings and depositions could be 
squared against the FBI's contention that Dr. Ivins was the 
sole assailant. While the Department attempts to thread the 
needle about the Government's liability, the fact remains that 
the Government ended up paying $2.5 million to settle the case 
and cast a further cloud on the FBI's assertion that Dr. Ivins 
was the sole perpetrator.
    I am also concerned about two other issues arising out of 
the anthrax investigation. First, in responding to press 
accounts questioning the Government's case against Dr. Ivins, 
the FBI and the Department of Justice both allowed line agents 
and attorneys to be interviewed on national television.
    Now, pay attention to this because this is another 
inconsistency between Congressional oversight and what the FBI 
and the Justice Department is willing to do for other people 
under other circumstances.
    Despite this full and public access to the press that they 
have given FBI agents on national television, the Department 
has denied access to line agents as part of our investigation 
into ATF's Operation Fast and Furious. Now, how do you square 
that inconsistency? So I want to know from Director Mueller why 
he allows line agents to provide detailed interviews to the 
press on national television but repeatedly refuses to let the 
Congress and their staff interview line agents and attorneys?
    Second, I want to know why the Department of Justice has 
declined to prosecute the individuals that leaked information 
about the investigation of Dr. Steven Hatfill. That leak cost 
the American taxpayers nearly $6 million in a civil settlement 
for Privacy Act violations. The American people who picked up 
the tab for this leak deserve to know the names of the FBI or 
DOJ employees involved, why they were not prosecuted, and 
whether they faced any administrative punishment.
    I would also like to note that today is the 1-year 
anniversary of the shooting of Brian Terry. My investigation 
into ATF's failed Operation Fast and Furious continues. I sent 
Director Mueller a letter dated October 20, 2011, asking some 
questions about the FBI's investigation of the murder of Agent 
Terry. I have not received a response, but I have talked to 
Director Mueller. He has been very good to come to my office 
and discuss these cases. I would like a commitment from 
Director Mueller that my letter will be answered in writing. 
The Terry family deserves answers about Agent Terry's murder, 
and answering my letter is another step toward getting those 
answers.
    If we have time during these rounds of investigation, I 
would like to ask the Director about his involvement in 
drafting of a memorandum that was reported in the press 
regarding the targeted killing of al-Awlaki, the potential 
transfer of known enemy combatant Daqduq from U.S. military 
custody to Iraq, the FBI's involvement in the investigation of 
mortgage fraud at Countrywide Financial, and the alleged cozy 
relationship between mobster Mark Rossetti and the Boston FBI.
    Thank you very much, Mr. Chairman.
    Chairman Leahy. With that cheerful welcome, Mr. Director, 
will you please stand and raise your right hand? Do you 
solemnly swear that the testimony you will give will be the 
truth, the whole truth, and nothing but the truth, so help you 
God?
    Mr. Mueller. I do.
    Chairman Leahy. Go ahead, please, sir.

  STATEMENT OF HON. ROBERT S. MUELLER III, DIRECTOR, FEDERAL 
     BUREAU OF INVESTIGATION, U.S. DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Mueller. Thank you. Good morning, Chairman Leahy, 
Ranking Member Grassley, other members of the Committee.
    Chairman Leahy. Is your microphone on?
    Mr. Mueller. I am sorry. Let me start again. My apologies. 
Good morning, Chairman Leahy, Ranking Member Grassley, other 
members of the Committee, and thank you for the opportunity to 
appear today before the Committee and discuss your concerns. I 
also want to thank you for your continued support of the men 
and women of the FBI.
    Three months ago, our Nation marked the tenth anniversary 
of the September 11th attacks. The horrific events of that day 
were the prelude to a decade of political, economic, and 
cultural transformation, and globalization and technology have 
accelerated these changes. And since that time, there have been 
significant changes in political leadership across the world, 
including the recent events in Libya and Egypt. And in the 
economic arena, the past decade has seen billion-dollar 
investment frauds, the failure of storied financial 
institutions, and the abuse of financial products which have 
undermined the world's financial system. There has also been an 
exponential expansion in the development of new technologies, 
and these advancements have changed the way we work, the way we 
socialize, and the way we communicate with each other.
    These changes in the global landscape have posed 
significant challenges to the FBI and our partners in the 
intelligence community and in the law enforcement community. 
Accelerated by these changes, the threats to our Nation are 
constantly evolving, and today's FBI now faces an ever changing 
threat environment.
    Let me begin with the terrorist threat. During the past 
decade, we have weakened al Qaeda. Due to the coordinated 
efforts of our military, the intelligence community, law 
enforcement, and our international partners, we have captured 
or killed many al Qaeda leaders and operatives, including Osama 
bin Laden and Anwar al-Awlaki, and we have uncovered dozens of 
cells and prevented numerous attacks.
    Yet core al Qaeda operating out of Pakistan remains 
committed to high-profile attacks against the West. This was 
confirmed from the records we seized from bin Laden's compound 
upon his death. And meanwhile al Qaeda affiliates have emerged 
as significant threats. Al Qaeda in the Arabian Peninsula, 
operating in Yemen, has attempted several attacks on the United 
States, including the failed Christmas Day airline bombing in 
2009 and the attempted bombing of U.S.-bound cargo planes in 
October of 2010.
    Most recently, we have a growing concern about the threat 
from homegrown violent extremists. These individuals have no 
typical profile. Their experiences and motives are often 
distinct, but they are increasingly savvy and willing to act 
alone, which makes them increasingly difficult to find and to 
stop.
    We must as an organization, working with our counterparts, 
keep adapting to these changing terrorist threats, staying one 
step ahead of those who would do us harm. And we must do all of 
this while respecting the rule of law and the safeguards 
guaranteed by the Constitution.
    Let me turn for a moment from terrorists to spies. Many 
people assumed the end of the cold war made the world of cloak 
and dagger obsolete. Unfortunately, espionage is still very 
much with us. Nations will always try to learn one another's 
secrets to gain political, military, or economic advantage. 
Indeed, the foreign intelligence presence operating in the 
United States is roughly the same as it was during the cold 
war. And apart from the more traditional types of espionage, 
today's spies, just as often students, researchers, business 
people, are operators of front companies, and they seek not 
only state secrets but trade secrets from corporations and 
universities, such as research and development, intellectual 
property, and insider information.
    Turning to the growing cyber threat, the anonymity of the 
Internet makes it difficult to discern the identity, the 
motives, and the location of an intruder, and the proliferation 
of portable devices that connect to the Internet only increases 
the opportunity to steal vital information. The number and 
sophistication of computer intrusions have increased 
dramatically in recent years. American companies are losing 
billions of dollars' worth of intellectual property, research 
and development, and trade secrets. Outside attackers burrow 
into company networks and remain undiscovered for months or 
even years. And we must also consider that hostile nations or 
terrorist groups could launch cyber attacks against our 
critical infrastructure.
    To combat these threats, the FBI has cyber squads in each 
of our 56 field offices and more than 1,000 specially trained 
agents, analysts, and forensic examiners that run complex 
undercover investigations and examine digital evidence.
    The FBI leads the National Cyber Investigative Joint Task 
Force that brings together numerous partners from the 
intelligence community and other Federal agencies to identify 
and disrupt significant cyber threats. These efforts have led 
to successful disruptions of large-scale illegal botnets and 
transnational hacking schemes involving in some cases millions 
of computers and millions of dollars.
    We also face threats from sophisticated financial crimes as 
well as health care and mortgage frauds. The FBI and law 
enforcement partners continue to uncover major frauds, insider 
trading activity, and Ponzi schemes. At the end of fiscal year 
2011, the FBI had more than 2,500 active corporate and 
securities fraud investigations, a 47-percent increase since 
2008. Over the past 3 years, the FBI has obtained approximately 
$23.5 billion in recoveries, fines, and restitutions in such 
programs. And during fiscal year 2011, the FBI obtained 611 
convictions, a historic high.
    The focus on health care and mortgage fraud is no less 
important. In 2011, the FBI had approximately 2,600 health care 
fraud investigations and roughly 3,000 pending mortgage fraud 
investigations with nearly 70 percent involving losses of more 
than $1 million.
    Let me just add that public corruption remains among the 
FBI's highest priorities, particularly along the southwest 
border. The FBI continues to dedicate resources to 13 Border 
Corruption Task Forces focused on disrupting the efforts of 
Mexican drug organizations to corrupt U.S. public officials.
    Finally, the FBI continues to work hard to protect our 
communities from the longstanding threats from gangs and 
violent crime. We have more than 150 Safe Streets and Safe 
Trails Task Forces across the country. We target high-level 
violent enterprises and senior gang leadership to yield the 
greatest impact prosecutions.
    Nor have we forgotten the children. We remain vigilant in 
our efforts to remove predators from our communities and to 
help keep our children safe. And we have ready response teams 
stationed across the country to quickly respond to child 
abductions.
    Now, regardless of the complexity and the evolving nature 
of modern threats, the rule of law will remain the FBI's 
guiding principle, as will the protection of privacy and civil 
liberties for the American people.
    Chairman Leahy and Ranking Member Grassley, let me conclude 
by thanking you and the Committee for your continued support of 
the FBI and its mission. Of course, I would be happy to answer 
any questions you might have.
    [The prepared statement of Mr. Mueller appears as a 
submission for the record.]
    Chairman Leahy. Well, thank you very much. I am sure that 
other Senators are probably going to ask you about Fast and 
Furious, which was not my No. 1 choice to ask, but I have been 
reading so much about allegations and conspiracy theories that 
have been aired by some Congressional Republicans, I thought I 
would ask you a couple questions.
    Congressman Issa went on national television and suggested 
the FBI engaged in a coverup of the crime scene at which 
Immigration and Customs Enforcement Agent Brian Terry was 
killed and is continuing a coverup. He suggested that there was 
a third gun recovered at the crime scene, even that it was the 
murder weapon, and that the FBI was intentionally covering it 
up. I believe I know the answer to this, but what are the facts 
with respect to whether there was a third gun recovered at the 
scene of the crime, as Chairman Issa suggested?
    Mr. Mueller. Well, let me start with adamantly rejecting 
the suggestion that the FBI would in any way cover up what 
happened in the tragic killing of Brian Terry. To the contrary, 
every available and necessary resource has been put on that and 
similar investigations where we lose one of our own.
    I am familiar with the suggestion that there was a third 
gun at the scene. There was no third weapon found at the scene. 
There were two weapons that were found at the scene, not a 
third. Why there were suggestions as to a third, I am still not 
certain. It may well be that the two weapons that were found 
were designated K-2 and K-3 because there was a K-1 that was 
not a weapon. But the fact of the matter is there were only two 
weapons found at the scene.
    Chairman Leahy. Also, the Congressman said the FBI is not 
looking for the killer of Brian Terry. How would you respond?
    Mr. Mueller. Again, to the contrary, there has been one 
arrest. There is an ongoing investigation. Documents have been 
filed that are under seal, and there is an ongoing, strong 
investigation. And we will bring to justice those persons who 
are in any way involved in the killing of Officer Brian Terry.
    Chairman Leahy. I ask the question only to clear the air, 
and obviously any one of us who have been involved in crime 
investigations knows that the less you talk about the steps you 
are taking, the more effective it is going to be. But I did 
want those allegations out there. Knowing the answers to them, 
I thought it would be a good chance for you to be able to state 
publicly the answer you did, and I thank you.
    Now, protecting American consumers and businesses from 
cyber crime has been a priority of the Committee for many 
years, and recently the FBI issued a warning about a new 
phishing scheme in which cyber criminals are stealing American 
consumers' bank account information. At the same time they are 
launching denial-of-service attacks on U.S. banks to conceal 
these crimes. It is not like the old days where somebody would 
come with a gun into a bank, steal a few thousand dollars, and 
usually get found quickly thereafter. A study released by the 
Symantec Corporation estimates the cost of cyber crime globally 
is $114 billion a year.
    In September, the Judiciary Committee favorably reported 
legislation that would provide new tools to the Justice 
Department to combat the growing threat of cyber crime, 
including a provision that would amend the criminal code to add 
to violations of the Computer Fraud and Abuse Act the 
definition of ``racketeering'' to make it easier for the 
Justice Department to go after such cyber crime.
    So I will ask you first how concerned you are about the 
growing threat of cyber crime. And would my proposal help the 
FBI investigate organized crime and cyber crime?
    Mr. Mueller. As I have indicated in my remarks, both my 
remarks here today but also the longer statement that I 
submitted, cyber crime is going to be one of the top priorities 
of the FBI in the future for the very reasons that you 
articulated and the amount, the numbers of dollars that are 
lost in a variety of ways. But perhaps a more immediate concern 
is the possibility of people using cyber skills to attack our 
National security, whether interfering with the electrical 
grids or the energy and the like. We have seen around the world 
countries willing to utilize the cyber battlefield before they 
launch attacks.
    And so for us in the FBI, we have a long-range plan to 
buildup our cyber capabilities. We have since 2001 roughly 
doubled the number of personnel that we have on this particular 
priority. And we have used some innovative ways to address 
cyber criminals using both the criminal authorities as well as 
the civil authorities. Making cyber offenses the predicate 
offenses for racketeering, a racketeering charge, would be 
helpful--would be both appropriate as well as helpful. And so I 
believe--I have not had a chance to discuss it with the 
Department, but my expectation is that the Department would be 
supportive, as would we.
    Chairman Leahy. It is a long way from the Bonnie and Clyde 
or Willie Sutton days. You can have a career criminal a few 
decades ago who might have spent years robbing banks, while the 
same thing can be done now in a nanosecond.
    Mr. Mueller. And the persons will not be in the city where 
you are located or the county or the State or even the country. 
They can be in Turkey or Morocco or Romania or Bulgaria or 
Estonia or Singapore. And, consequently, the change for us is 
that we have to develop the relationships to be able to conduct 
these investigations worldwide if we are at all to be 
successful in addressing cyber crime.
    Chairman Leahy. I recently introduced a bipartisan Violence 
Against Women Reauthorization Act of 2011. I worked with 
Senators Crapo and Kirk and many Senators on this Committee. I 
know the FBI is currently working to update the definition of 
rape for the Uniform Crime Report. Why is that important to 
update that?
    Mr. Mueller. That definition was in some ways unworkable, 
certainly not fully applicable to the types of crimes that it 
should cover. And as I think you are aware, the Advisory 
Committee for NCIC, in developing the statistics, approved a 
change to that definition, and my expectation is it will go 
into effect sometime this spring.
    Chairman Leahy. Thank you. Last, Senator Grassley and I 
worked together in this Congress on the Fighting Fraud to 
Protect Taxpayers Act to give the Department of Justice and the 
FBI additional resources to investigate fraud cases at no cost 
to taxpayers. It is a good investment. The Vice President 
announced this week in 2011 the Department of Justice recovered 
$5.6 billion in fines, penalties, and recoveries from fraud 
cases, $15 billion since the start of this administration. That 
is a lot more than it cost to investigate and prosecute them. 
If we can pass the bill that Senator Grassley and I have 
introduced--it is now stalled in the Senate even though it 
saves taxpayers money--I suspect we will recover even more. 
Would the American people benefit--and I realize this is kind 
of a leading question--but would the American people benefit if 
the FBI could hire more fraud investigators because of 
increased resources to target fraud if the Fighting Fraud to 
Protect Taxpayers Act becomes law? Feel free to answer that any 
way you want.
    Mr. Mueller. Well, the obvious answer to that leading 
question is yes.
    [Laughter.]
    Mr. Mueller. But whenever it comes to the budget issues and 
discussions, we have got to prioritize. Certainly white-collar 
crime in particular, large-scale white-collar crime is one of 
our substantial priorities.
    Chairman Leahy. Thank you.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman, and I appreciate 
the FBI. I had the honor to work with them 15 years as a 
Federal prosecutor. I believe they represent the very finest in 
American law enforcement, maybe the finest, you would think, I 
am sure, and I share the view they are perhaps the finest law 
enforcement agency in the world ever seen. They are highly 
paid. We have increased the numbers. We have provided them 
technical support and training the likes of which few agencies 
in the world can match, and certainly not in the numbers that 
we have seen before.
    So we expect a lot out of the FBI, and I believe your 
background as a prosecutor and having worked with the FBI for 
many, many years provided you the kind of experience necessary 
to be a good Director.
    I would just say with regard to your letter of November 
24th on mandatory military detention, I thought you overstated 
the case but raised some points of importance. The legislation 
in conference was altered. It is clear to me--let me just say 
this: I am absolutely convinced that the right policy is to 
presume that combatants against the United States will be held 
in military custody, but I absolutely believe the FBI should 
participate in those investigations. So we added language that 
said, ``Nothing in this section shall be construed to affect 
the existing criminal enforcement and national security 
authorities of the FBI with regard to a covered person, 
regardless of whether such covered person is held in military 
custody.''
    Does that answer at least some of the concerns you have to 
make clear that the FBI might continue to participate in 
investigations in which your ability and skills would play an 
important role?
    Mr. Mueller. Senator, you might understand that I would 
disagree on the characterization that I overstated it. I would 
say that I stated it appropriately in that letter, my concerns 
with regard to the NDAA. And there were two basic concerns.
    The first was the adverse impact on our authorities or the 
lack of clarity with regard to our authorities. And the 
language that was developed goes a long way to resolving that 
particular issue, and it tends to assure us that our 
authorities will be maintained.
    The other concern I voice in the letter is the uncertainty 
that the statute raises with regard to what happens at the time 
of arrest, and as I know you know, having been a prosecutor, it 
is tremendously important at the time of arrest that you make 
the right decisions in terms of addressing the person, 
particularly persons whom you hope to cooperate, not just 
interrogate but to cooperate and turn around on others. And the 
statute lacks clarity with regard to what happens at the time 
of arrest. It lacks clarity with regard to what happens if we 
had a case in Lackawanna, New York, and an arrest has to be 
made there and there is no military within several hundred 
miles. What happens if we have a case that we are investigating 
on three individuals, two of whom are American citizens and 
would not go to military custody and the third is not an 
American citizen and could go to military custody?
    Now, in my discussions with others, I understand the answer 
to be, well, the President can waive this provision; or, 
second, procedures are going to be developed that will satisfy 
that uncertainty. And my continuing concern is that that 
uncertainty will be there until it is resolved in some way, by 
statute or otherwise.
    If I may just add one other point--actually, two points. I 
am as interested as anybody in developing intelligence to 
prevent attacks because if there is an attack, the person they 
are going to look to sits here. What I am concerned about, 
however, is long term as well. This statute that gives the 
military an inroad to making detentions in the United States 
may be applicable and work well with the persons you have now. 
But 5 years or 10 years down the road, what could this mean?
    And so while the changes in the statute have addressed some 
of my concerns, the changes have not--and I appreciate it--they 
have not addressed all of my concerns.
    Senator Sessions. We disagree. To me, there is no rational 
argument that can be made that would suggest the United States 
is not in a better legal position to treat an al Qaeda member 
arrested in the United States as they are, a military 
combatant, with the full ability of the FBI to participate in 
the investigation. Giving Miranda warnings, presenting them to 
courts in very short order, providing them with lawyers within 
hours of arrest, allowing them to make phone calls to their co-
conspirators that civil law prosecution requires is not helpful 
in a war. So that is where we disagree, and I will go to the 
next question.
    Mr. Mueller. May I just clarify one thing?
    Senator Sessions. All right.
    Mr. Mueller. What I have focused on is what happens at the 
time of arrest, and----
    Senator Sessions. Well, listen, you need to work this out 
with the Department of Defense, don't you----
    Chairman Leahy. Let him answer the----
    Senator Sessions. Well, I want to--my time is about up.
    Mr. Mueller. I just want to say that the focus----
    Senator Sessions. I let him talk.
    Mr. Mueller. I just wanted to make certain that you 
understand that my focus is on the uncertainty that happens 
during that period of time, at and about the time of arrest, 
and what happens afterwards, particularly when we have been 
successful getting people to cooperate.
    Senator Sessions. Yes, I certainly agree. I think that is 
what the purpose of this was, presumptively treat them as a 
military detainee and then to have memorandums of understanding 
or cross-designations that would allow full participation. But 
maybe this language will help you there. I appreciate you 
sharing that.
    With regard to the Chairman's talks about fraud and 
prosecutions, I got to tell you, I am disappointed in the 
decline of those prosecutions. This chart shows some of the 
cases and their declines. We have had some progress in some of 
the cases, but bank embezzlement went from 230 in 2006 to 130. 
Financial institution embezzlement went from 31 to 17. 
Financial institution fraud went from 752 to 570. Bankruptcy 
fraud stayed about flat. Bank robbery prosecutions down 
significantly. In a time when the American people are concerned 
about the financial integrity of some of the businesses that 
are failing--and it does appear many of them have had 
wrongdoing as a part of that--are you concerned that we are not 
adequately addressing it? And I would note--and I will ask you 
maybe in written questions--that your numbers look a lot 
better. But to me, I have always felt the Administrative Office 
of the Court's numbers represent a more accurate number than 
agency numbers. So your numbers do look better than that, but I 
think these are the ones that represent people actually charged 
and actually convicted.
    Mr. Mueller. Let me just respond to the last, because we 
want to correlate those numbers. We in no way wish to fudge the 
numbers, and you will see in a number of categories the numbers 
going down, particularly since 2001 because we had to 
prioritize.
    Senator Sessions. Well, this is from 2006 to 2011.
    Mr. Mueller. And I will tell you there is not an FBI agent 
who joined in the last 15 to 20 years who does not love doing 
bank robberies. But the fact of the matter is we cannot afford 
to do the same number of bank robberies and embezzlements that 
we have done in the past because of the demands of terrorism, 
gangs, cyber, cyber intrusions----
    Senator Sessions. Well, bank robberies--I understand the 
argument. That has been going on for 25 years----
    Chairman Leahy. The Senator's time has----
    Senator Sessions [continuing]. But the other ones are 
more----
    Chairman Leahy. The Senator's time has expired, and as I 
said earlier, I am glad to see the Department of Justice has 
recovered $5.6 billion this year alone through fines, 
penalties, and recoveries, $15 billion so far in this 
administration.
    Senator Kohl.
    Senator Kohl. Thank you very much, Mr. Chairman.
    Director Mueller, the FBI has proposed closing three of its 
six Wisconsin satellite offices. If these closures go through, 
the Western District of Wisconsin will be especially hard hit 
and will lose half of its FBI offices. As I told General Holder 
and I wrote to you last month, I have strong objections to 
these closures. You have indicated that Wisconsin will not lose 
agents or resources, so this clearly is not a simple cost-
saving issue, and we think it is a bad idea to close these 
offices.
    As I have heard from law enforcement throughout the Western 
District in Wisconsin, FBI presence in these semi-rural areas 
is critical to maintaining long-term partnerships that protect 
Wisconsinites from criminal and terrorism threats.
    Now, you have long emphasized to our Committee the 
importance of the FBI's coordination with local law 
enforcement, and you have stressed that the FBI must maintain 
close contact with the law enforcement officers who are on the 
street day in and day out, working ``shoulder to shoulder'' 
with them.
    How are these closures which would move FBI agents hours 
away from large cities like Wausau and La Crosse consistent 
with the statements that you have made about working shoulder 
to shoulder with local law enforcement?
    Mr. Mueller. Well, the broad view is, Senator, we have 56 
field offices and just less than 400--I think it is about 385, 
390 resident agencies around the country. And the fact of the 
matter is we have undertaken a review for the last 2 years on 
all of our resident agencies to determine if they are the most 
effective way of providing the support to State and local law 
enforcement, which is tremendously important, as you indicate.
    I did go back after the last hearing and look at the issues 
relating to these resident agencies, and I do believe that 
there are cost savings, particularly with regard to the 
necessity for outfitting our resident agencies with SCIFs where 
classified information can be maintained. It is very expensive 
to rent the space and put in the capability of a resident 
agency to handle classified information. And so, yes, it does 
go to cost.
    What we have tried to do is look at the threats in the 
Western District of Wisconsin and determine how best we can 
address those particular threats, understanding that the 
personnel who were in these other two resident agencies would 
be in the other resident agency that is in western Wisconsin.
    And so I would like nothing better than to tell you, 
Senator, I agree, we are going to keep them; but in reviewing 
the situation, I do agree that the decision is appropriate to 
consolidate those resources in a particular resident agency 
where we can better prioritize, make some savings, and my hope 
and expectation is provide exactly the same degree of service 
that we had before.
    Senator Kohl. I understand that there are a total of 26 
office closures being proposed all over the country over the 
next 2 years, and three of them are in Wisconsin. Can you 
provide me a list of the other 23 proposed offices to be 
closed?
    Mr. Mueller. I think I would have to get back to you on 
that. I presume we would be able to, as long as other 
notifications have gone out.
    Senator Kohl. Thank you, Director Mueller.
    [The information appears as a submission for the record.]
    Senator Kohl. As I stated earlier, and often, and here 
today, I object to these closures in Wisconsin. Now, I 
understand that you have already signed off on them, but I hope 
in the spirit of open-mindedness you will continue to work with 
me and to consider the possibility that maybe we can do better 
in Wisconsin in serving the people of Wisconsin. I know you are 
an open man. You have indicated that time and time over your 
tenure. So while the issue is said to be closed, I would like 
to hope that it is not finally and irrevocably closed.
    Mr. Mueller. There is a crack there.
    Senator Kohl. All right. Thank you.
    [Laughter.]
    Mr. Mueller. I am always open to additional arguments. 
Anytime before something happens, I can be--if I see I am 
making the wrong decision, I try to entertain the information 
and make the right decision. So I would welcome what other 
information or whatever you want to provide.
    Senator Kohl. Well said, and I appreciate that.
    Mr. Mueller. Yes, sir.
    Senator Kohl. Director Mueller, last week this Committee 
passed a bill that I authored to increase the maximum sentence 
for economic espionage, which, of course, is the theft of trade 
secrets for the benefit of foreign countries, and to direct the 
Sentencing Commission to consider increasing the sentencing 
range for trade secret theft and economic espionage. This is an 
important step to stem a surge in crime that costs United 
States companies billions of dollars each year, and I look 
forward to its swift passage.
    As you know, when companies fall victim to trade secret 
theft, they are often reluctant to share details of the theft 
with the Government for fear that if the theft becomes publicly 
known at the investigatory stage, it will harm their reputation 
and bottom line. But if the FBI, on the other hand, does not 
know about the theft, it cannot investigate and help other 
companies guard against these threats.
    Director Mueller, what steps are you taking to improve your 
relationship with the private sector to assure them that their 
information will not be exposed unless or until the Government 
decides to prosecute the case? What efforts are you taking to 
bring more economic espionage cases?
    Mr. Mueller. Well, in terms of the economic espionage 
cases, we have had some substantial ones. Several of them I 
think are listed in my longer statement where we have arrested 
and successfully prosecuted individuals who have stolen secrets 
from various corporations. One large case, agricultural 
entities where an individual had stolen a well-recognized 
biologist's--stolen their secrets and was in the process of 
taking them to China where we interceded and successfully 
arrested the individual and successfully prosecuted him. And 
there have been a number of these particular cases.
    We appreciate the enhanced sentencing. Enhanced sentencing 
transcends into enhanced deterrence. With regard to working 
with the private sector, I would say that it is much like the 
issues relating to a data breach where companies would be 
reluctant to inform us of intrusions because of the impact on 
those companies. We work very closely through a number of 
outreach programs that we have in every one of our districts to 
assure the corporations and business leaders in that particular 
community that there are ways of keeping their secrets private. 
We can go in and get a court order that maintains that privacy. 
But it is absolutely imperative that we know what is happening 
in order to be able to stop it, and if it is in your company, 
it may be in another company, and you have to let us know what 
is happening if we are to protect not just your company in the 
future but other companies that may be adversely affected as 
well.
    Senator Kohl. Thank you.
    Thank you very much, Mr. Chairman.
    Chairman Leahy. Thank you very much.
    Senator Grassley.
    Senator Grassley. Yes, thank you, Director Mueller, for 
coming.
    My first question is about the letter authorizing the 
targeted killing of Anwar al-Awlaki and another U.S. citizen. 
The reason I ask this question is I am getting a lot of mail 
from Iowans wanting to know the authority for the United States 
to take that action, and I assume this letter gives that 
authority.
    Do you support Congress having a copy of that letter?
    Mr. Mueller. It really is not my--sir, it is not my role. 
It is--whatever may have been developed would be developed by 
the Department of Justice. We would not have played a role in 
it. Some of our information may have been used if there was 
such a finding. But I ask that you perhaps direct that to the 
Department of Justice.
    Senator Grassley. The Department of Justice settled a civil 
lawsuit for Dr. Hatfill for violation of the Privacy Act for 
leaking details of the investigation. It cost the taxpayers $6 
million in the settlement. I have repeatedly asked both the 
Department as well as your agency to identify the individuals 
who leaked information on the investigation. I have been 
repeatedly told the investigation is ongoing, and I assume that 
is the excuse for not answering our information we have 
requested.
    In response to an August 31, 2011, letter on the anthrax 
attacks, the Department of Justice informed me that the 
investigation is complete and that no criminal charges will be 
filed against those who leaked the information.
    I have three questions. I will give you all three of them. 
Were the individuals who leaked FBI agents or employees of the 
FBI? What, if any, administrative action did you take against 
these individuals if they were FBI agents or employees? And do 
these people still have their jobs if they are FBI employees?
    Mr. Mueller. Well, Senator, I appreciate your discussing 
this with me. These questions are more specific than the ones 
you raised when we met, and I would have to get back to you on 
it because it is specific to the FBI. I know there were other 
entities other than the FBI and the Department of Justice that 
had undertaken an investigation as well. So I will have to get 
back to you on that. And to the extent that the investigations 
were undertaken by entities in the Department of Justice, I 
would defer to the Department of Justice in terms of providing 
information. But to the extent that it is specific to the FBI, 
I would have to get back to you on those questions.
    Senator Grassley. My next question deals with sensitive 
interactions between the FBI and other law enforcement 
agencies, and you probably know that sometimes you get 
accused--your agency does--of not playing well with other law 
enforcement agencies. I am sure you would agree that if we are 
busy fighting each other, then we are not fighting our real 
enemies.
    Recently, I have seen news articles about infighting 
between the FBI and New York police. I was especially bothered 
by press reports of the FBI sources pointing out weaknesses of 
the New York Police Department terrorism case. At the same 
time, I am hearing complaints about the FBI's inability to 
cooperate with the Department of Homeland Security OIG in 
border corruption investigations. These complaints sound as if 
the FBI is using kind of a Pac-Man mentality.
    Since the culture of an organization starts at the top, I 
am concerned about what may be going on in management at the 
FBI. So I want to assume that you would agree that FBI agents 
should not anonymously or publicly attack the New York Police 
Department. I am sure that you are committed to having the FBI 
work with all appropriate partners in addressing border 
corruption.
    So this question: What are you doing to improve the FBI's 
working relationship with other law enforcement agencies? And 
how are you relaying that message to line agents and 
supervisors? And whether it is by impression or whether it is 
fact, it does not matter. There is a feeling out there that it 
exists, so it is a problem for you.
    Mr. Mueller. Well, it is. I confess it has been a long-term 
problem with the FBI. In the wake of September 11th, we 
identified ten priorities. Eight of them were programmatic 
priorities, as you can imagine: counterterrorism, 
counterintelligence, and cyber; and then on the criminal side, 
public corruption and the like.
    The ninth priority was collaboration with our Federal, 
State, local, and international partners. And there were only 
ten priorities, and the significance of that is that we 
understood that we could not be successful by our own, that our 
success is dependent upon our partnerships. And since September 
11th, since I have been there, I think we have made substantial 
strides in working with State and local law enforcement. And if 
you do talk with the IACP, International Sheriffs, or a number 
of the organizations, Major City Chiefs, my hope is and 
expectation would be that they say there has been a substantial 
change and we work very collaboratively.
    I was as distressed as you and others to see the press 
reports, anonymous, of Federal Government persons talking about 
another prosecutor's and another agency's investigation, this 
being NYPD. I gave directions that that should not happen, and 
when I saw it happening, I again went back to give directions 
to have it stop. I had Sean Joyce, who is the Deputy, talk to 
Ray Kelly. I had talked to Ray Kelly. He gave me a call, and we 
have discussed this. It does not interfere--we understand it 
should not have happened. From our perspective it should not 
have happened. But we still have a very good relationship with 
NYPD, particularly when it comes to addressing terrorism.
    We recognize, I recognize that Ray Kelly has done a 
remarkable job in terms of protecting New York City from 
terrorist attacks, New York City being a principal target. And 
as I say, these things are unfortunate. I wish they did not 
happen, but our relationship remains solid.
    Second, with regard to what is happening on the border in 
terms of the handling of public corruption cases within the DHS 
agencies, we seek to work with those partners that want to work 
with us in developing these cases. And we leave it up to the 
Department of Homeland Security to sort out the counterparts 
with whom we should work, understanding that public corruption 
on the border is a substantial issue and those cases have to be 
addressed, and they have to be addressed swiftly. And we seek 
to do it with the Inspector General's office or the Internal 
Affairs, whichever entities would join with us in addressing 
that form of public corruption.
    Senator Grassley. Thank you.
    Chairman Leahy. Thank you very much.
    Senator Feinstein.
    Senator Feinstein. Thank you very much, Mr. Chairman.
    Mr. Mueller, as you know, I have known you for a long time.
    Mr. Mueller. Yes, ma'am.
    Senator Feinstein. I think the FBI is very fortunate to 
have your leadership. You have always been a straight shooter. 
I think your credibility and integrity is unmatched, and I just 
want to say that.
    As you may know, ICANN, the Internet Corporation for 
Assigned Names and Numbers, which governs top-level Internet 
domain names, is planning to open these wide effective January 
12. Names will go beyond .com, .mil, .edu, .gov, and the other 
established extensions to virtually anything, .gap--and the gap 
is very concerned--.sex, .disney, .bomb, anything.
    Do you think it would be advisable for ICANN to delay this 
extension so Congress and others can take a closer look at this 
situation, evaluate its implications for United States 
consumers, United States businesses, and, most importantly, 
Internet security?
    Mr. Mueller. Senator, I have not looked at this in some 
time, and what knowledge I have is somewhat passing. My 
impression is that it opens up a can of worms, and we do not 
know exactly what is going to happen as a result. So any effort 
to analyze and to in my mind constrain the different uses to 
which this could be put would be valuable. I understand, 
however, that ICANN has been a product principally of the 
United States or is an entity supported principally and agreed 
to by the United States and certain countries, but there is a 
desire out there to break the hold. So it may well be an uphill 
battle, but any effort that can be made to look at and 
anticipate what is going to come out of this would be, I think, 
beneficial.
    Senator Feinstein. Well, another way of doing it--and I 
thank you for that--is to stagger what they can do at any one 
time so you do not have literally hundreds or thousands of new 
domains appearing all at once with all kinds of mischief.
    Mr. Mueller. Let me ask you this, if I could get back to 
you and talk to Sean Henry----
    Senator Feinstein. Would you, if you would?
    Mr. Mueller [continuing]. And get his impact. He is the 
expert in this area, and we will get back to you and see what 
thoughts we might have on that particular issue.
    Senator Feinstein. If you could, I would appreciate that.
    Mr. Mueller. Yes, I am happy to do that.
    Senator Feinstein. As you know, when you first began to 
develop a National Security Division and go into the 
intelligence area, I doubted whether it could be done 
efficiently and effectively. I believe you have done it. I 
think the record indicates that. I think the intelligence, I 
think the way the 56 offices operate, I think the fact that you 
have made 400 prosecutions as opposed to six military 
commission trials has demonstrated that the FBI has been 
effective.
    As you know, the defense bill will have a military 
presumption in it, it looks like. Many of us on this side of 
the aisle do not believe that is the way to go, that there 
ought to be flexibility for the administration to say the 
evidence in this case best suits itself for a Federal 
prosecution, the evidence in this case suits itself for a 
military commission, and have the ability to make that 
decision.
    I have never asked you, at least, for your view on this. 
Could you talk a little bit about this and why you believe that 
this flexibility is so important?
    Mr. Mueller. Well, as I indicated in response to questions 
from Senator Sessions, when the bill first came out and we 
looked at it, I had several concerns and expressed those 
concerns in a letter to the Armed Services Committee. The two 
concerns were: first of all, what impact it might have on the 
continuing use of our authorities; and then, second, it created 
uncertainty as to what happens at the time of arrest, 
particularly at a critical time when we are trying to get a 
person to cooperate.
    Now, the legislation talks about not interrupting 
interrogations, which is good, but gaining cooperation is 
something different than continuing an interrogation. And my 
concern is that you do not want to have FBI agents and military 
showing up at the scene at the same time on a covered person, 
or with a covered person there may be some uncovered persons 
there with some uncertainty as to who has the role and who is 
going to do what.
    The answer, as I understand, in the legislation is, well, 
procedures are to be developed by the administration. 
Procedures can change. Procedures can be controversial. And to 
a certain extent, to the extent that the statute introduces 
uncertainty, that is problematic for us. And to the extent that 
the uncertainty is to be resolved by procedures, procedures can 
change. And they can change if you have somebody different in a 
particular position within the Government that can exploit 
procedures where they cannot exploit a statute.
    So my concern comes in resolving that uncertainty, and I am 
not certain that the drafters of the statute went some distance 
in resolving the issues relating to our authority with the new 
language, but did not really fully address my concerns about 
what----
    Senator Feinstein. Because I have been told that you are 
satisfied with what has been worked out.
    Mr. Mueller. I was satisfied with a part of it with regard 
to the authorities. I still have concerns about the 
uncertainties that are raised by the statute, and my 
understanding last week is that there were some suggestions as 
to fixes that could be proposed in terms of resolving that 
other concern that I addressed in my letter.
    Senator Feinstein. Could I ask that you get your specific 
concerns to us? Some of us are working on a bill in this area, 
so it would be very useful to have those.
    Mr. Mueller. Well, I did articulate the second part of my 
letter. The first part related to the authorities. The second 
part related to the concerns I have about what happens at the 
time of arrest. And so I have put that in the letter, but I 
will go back and see if we can--see if there is a possibility 
in conjunction with the Department of fleshing that out some.
    Senator Feinstein. I appreciate that. Thank you very much.
    [The information appears as a submission for the record.]
    Senator Feinstein. Thank you, Mr. Chairman.
    Chairman Leahy. Thank you very much.
    Senator Whitehouse was next, but Senator Franken.
    Senator Franken. Thank you, Mr. Chairman. Thank you, Mr. 
Director, for your service.
    Mr. Director, millions of Americans have smartphones with 
pre-installed software designed by a company called Carrier IQ. 
Recent research has shown that it captures a broad range of 
sensitive information----
    Chairman Leahy. If the Senator would yield just a moment, I 
should note Senator Whitehouse went to vote so he could come 
back to continue the meeting going.
    Please go ahead.
    Senator Franken. Recent research has shown that Carrier 
IQ's software captures a broad range of sensitive information 
like the content of text messages, the content of searches, 
even if those searches are--if the user thinks they are 
encrypted, Carrier IQ gets them back unencrypted; also the full 
addresses of the websites that users use or visit.
    News reports have suggested that the FBI accesses and 
analyzes information gathered by Carrier IQ's software. What 
wireless carriers has the FBI requested this information from? 
And what information have you obtained from those requests?
    Mr. Mueller. Let me start off by saying we have neither 
sought nor obtained any information from Carrier IQ in any one 
of our investigations. Let me follow up by saying that there 
was some confusion, I believe, in terms of the response to a 
Freedom of Information Act request which indicated a standard 
exemption was being utilized, and from that it was extrapolated 
that perhaps we were obtaining information from Carrier IQ. As 
I said before, we are not, have not sought and do not have any 
information from Carrier IQ.
    Senator Franken. Not directly from Carrier, but what about 
from the wireless carriers?
    Mr. Mueller. That is very general in terms of wireless 
carriers. I am sure--well, let me put----
    Senator Franken. Did you get information from them from the 
use of their software of Carrier IQ?
    Mr. Mueller. No, I do not believe so. If you are specifying 
the use of the Carrier IQ software by a wireless carrier, have 
we sought that? I do not believe so. In other words, I would 
have to--I would have to check and be more specific in the 
question and the answer I give you because----
    Senator Franken. Can we follow through with that?
    Mr. Mueller [continuing]. Whether it be FISA Title III, we 
would seek particular information. I do not know any 
information that we seek from wireless carriers or what have 
you, and I am not talking about Carrier IQ. I am talking about 
wireless carriers that we may obtain information that in some 
way Carrier IQ may have been involved with. I would have to get 
back to you specifically on that particular question.
    Senator Franken. Great. I appreciate that.
    [The information appears as a submission for the record.]
    Senator Franken. In January, the FBI will roll out a facial 
recognition service in four States. That service will allow 
State and local law enforcement agents in those States to use a 
photo of a criminal suspect the way they use fingerprints right 
now to see if that photo matches up with people already in the 
system.
    What protections will the FBI have in place to make sure 
that innocent people are not added into this database and to 
make sure that this service is not used for non-law enforcement 
purposes?
    Mr. Mueller. Well, this service is going to be used solely 
for criminal law enforcement and booking photos and the like. 
It will be made available to other law enforcement in the same 
way we provide other data to law enforcement, but we will 
ensure that they are to be used only for approved criminal law 
enforcement purposes.
    Senator Franken. OK. Well, as you roll out this service, I 
would appreciate it if your office would keep our office up to 
date on this.
    Mr. Mueller. Happy to do that.
    Senator Franken. I would just like to follow up on Senator 
Feinstein's point, just to ask you to also keep me in the loop 
on ICANN and their plan to greatly expand these numbers of top-
level domains.
    Mr. Mueller. Happy to do that.
    Senator Franken. I think that is an issue that might affect 
the agency's ability to fight Internet fraud and identity 
theft, et cetera.
    I would like to ask you about reports of virulently anti-
Muslim statements in some of the FBI's training materials. I am 
worried that this will further set back the FBI in its efforts 
to partner it with the Muslim American community to fight 
terrorism.
    Has the FBI issued a clear and unequivocal apology to the 
Muslim American community for the bigoted and inflammatory 
statements found in those materials? And would you do so now?
    Mr. Mueller. We have met with various of the 
representatives of the Muslim community and not only said we 
apologize for what had happened, but also explained to them the 
process that we are undergoing to address this issue. It came 
to our attention last summer that there may have been 
inappropriate materials in the course of our training. In the 
wake of that, we put together a panel of individuals, two from 
the FBI, three from outside the FBI. The ones outside the FBI 
have credentials that--one was at West Point, one was at the 
Naval Academy. But they have credentials at Harvard--not 
Harvard--Yale, Princeton, and Johns Hopkins. They are outside 
the FBI with two persons from the FBI who have credentials in 
the same arena, and they put together a document, a touchstone 
document that would be the base document for any of our 
training when it comes to addressing the counterterrorism, 
particularly when it relates to Muslims.
    After putting together that document, we pulled together 
all of our training materials since September 11th, 
approximately 160,000 pages, and have gone through and reviewed 
those materials with the context being how does it relate to 
the document that these outside and inside experts put 
together. And then in response to FOIA requests, we have been 
producing those documents to the public.
    Yes, we did have materials in these documents that were 
inappropriate. They did not represent in any way, shape, or 
form the FBI's perception. It is tremendously important that 
the Muslim community cooperate with us, and the Muslim 
community in many of these prosecutions has been the entity, 
individuals from the Muslim community have been the ones that 
alerted us to the issues. And I would say overall I believe our 
relationship with the Muslim community is very good.
    Things like this, as you indicate, set it back, but I do 
want to assure that we are addressing it, and we are addressing 
it comprehensively, and it does not represent the belief of the 
FBI.
    Senator Franken. It is an anomaly.
    Mr. Mueller. It is an anomaly. A perfect word to address 
it, yes.
    Senator Franken. Thank you for validating my use of 
``anomaly.''
    [Laughter.]
    Mr. Mueller. Thank you.
    Senator Franken. And for your service.
    Senator Whitehouse [presiding]. Director Mueller, let me 
jump in and take us back to the cyber issue.
    Mr. Mueller. Yes.
    Senator Whitehouse. We are being attacked across the 
Internet in a whole variety of different ways. We have the sort 
of light-of-day theft and piracy of intellectual property--
movies, music, goods, electronic games--that is rampant around 
the world. We have direct fraud and theft against individual 
Americans and businesses. We have what you might call the 
``brain drain'' of intellectual property that is stolen, very 
often without the knowledge of the company, out of their 
computers and exported, it appears, primarily to China so that 
they can compete against our manufacturers without licenses and 
without R&D expense. And it appears to be national policy on 
their part to do this. And then, of course, you have the danger 
of sabotage through the cyber vector, either of our critical 
infrastructure, our banks, our electric grid, and of military 
technology that could be disabled or interfered with.
    You stack all of that up, and I think there is a case to be 
made that this may be the greatest transfer of wealth through 
theft and piracy in the history of the world, and we are on the 
losing end of it.
    So I am concerned about the resources that we dedicate to 
this. I understand that you are dealing with budget 
constraints; you are dealing with an OMB that is primarily 
concerned about budget, not your outcomes. But what I am 
hearing back from the private sector folks who are involved in 
network security and who engage with your agency all the time 
is that your capability is extraordinary. The people who are 
involved are absolutely first rate. Organizations like the 
NCIJTF are operating at the highest level of professionalism. 
If America could get behind the classified screen and see what 
they were doing, people would be really proud and impressed.
    So the capability is great, but the capacity is what two 
recent folks said to me, ``woefully inadequate,'' that there 
has been one Coreflood case which was a great case, but there 
could have been a dozen because the problem that Coreflood went 
after of botnets is profound. It is all over the Web. You 
mentioned a variety of cyber prosecutions for intellectual 
property theft. I am not aware of one of them that is a pure 
cyber case. I believe that they all involved an individual who 
actually appropriated, expropriated intellectual property. And 
yet you see--I had a CEO of a major American energy innovator 
tell me that when he announced a new product, he got hit by 
60,000 attacks in the next 2 hours, his company did. We have 
had one of our major defense contractors have the plans for an 
entire joint strike fighter hoovered out of their electronic 
records. We have been briefed about an American company that 
had a huge investment in a new product that is gone, and there 
is actually a facility that is being prepared to make that 
product. Again, no license, no R&D, just stole it from the 
company.
    So I am concerned that we do not yet have the right model 
for dealing with this in terms of capability, and I have spoken 
to Jack Lew and to Dana Hyde at OMB, and they are willing to 
open up to a discussion that would look into how we might 
better pursue this. You know, should it be its own organized 
crime strike force model from the Kennedy era? Should it be 
akin to OCDETF, which has been quite successful against 
domestic narcotics trafficking? Should it be a new DEA or ATF 
or FBI? Should it be that big when you consider the scope of 
the threat and the complexity of making these cases, the 
forensics of putting together the case, the international angle 
to virtually all of them, the complexity of the statutes?
    I mean, you stack it all up, and each one of these cases is 
an almost majestic accomplishment to pull it together. And if 
we are going to do a lot of them, which we need to do, we have 
got to, I think, throw more money at the problem. And how we 
best do that I think is a discussion that we need to have, and 
I would like to ask you if you would be prepared to join in 
that discussion and let me know who the right person to 
participate in that discussion for the FBI would be, kind of 
brainstorming what should this look like for the coming 
century, because it is not clear that the existing model just 
accreting a few more agents here or a few more agents there is 
where we want to end up.
    Mr. Mueller. Let me talk a little bit about where I think 
we need to go. There are several steps that we are taking to 
position ourselves to address this phenomenon. The first is----
    Senator Whitehouse. You agree it is enormous, it is 
massive.
    Mr. Mueller. Enormous. It is massive. And there has to be 
triage, and there has to be prioritization, but there has to be 
additional resources that are directed to it.
    One of the base things we are doing is upgrading the 
capabilities of every one of our agents by having a basic cyber 
training so that it brings everybody up to a level to handle 
much of the cyber crime or that which has migrated to the 
Internet with sufficient understanding and background in the 
cyber arena, a baseline for every one of our agents.
    Second, to add and to continue to grow with persons who 
have the backgrounds in this arena, an agent cadre.
    Third, internationally. I was in Romania and Bulgaria last 
week. Both areas, particularly Romania, it is known for its 
widespread Internet fraud. We have specialists over in Romania 
at this point. I have got two persons, one that used to be an 
IBM programmer, the other one worked for a number of software 
companies, and it extends our reach to our counterparts in the 
Romanian and the Bulgarian services. We have persons in 
Estonia, I think in Latvia, and a number of other countries 
where we have expanded internationally in order to address 
these crimes.
    Internally, the structure of the FBI does not lend itself 
to easily addressing cyber. Yes, we have a Cyber Division, but 
what we find, when it comes to espionage, it is now cyber, and 
the information is exfiltrated as opposed to getting an 
intelligence officer, getting him in and getting him latched up 
with people. It is cyber.
    Senator Whitehouse. The era of microfilm is over.
    Mr. Mueller. It is still there. People use--they do not 
want to lose their old ways. We are the same way. But if you 
are sitting back in one of these countries and you are saying, 
``Where can I get the biggest bang for my buck? '' it has got 
to be in exfiltrating the information without risking people 
overseas.
    And so what we are looking to do is build on the concept of 
the NCIJTF, which is threat focus cells. As you know, the 
principle there is you take an intrusion and you bring your 
best people to address it, not knowing whether it is going to 
be espionage or a crime, whether it is going to be a high 
school student, and then decide how you are going to treat it, 
whether you are going to treat it as a crime domestically, 
whether you are going to treat it as a national security risk 
to be addressed by other agencies in the intelligence side. And 
that concept of the NCIJTF in my mind has to grow to address 
cyber crime, because you cannot address it as we have crimes in 
the past where we have organized crime, we have narcotics, we 
have public corruption and the like, because it cuts across all 
those.
    So organizationally, we have got to change and buildup our 
capabilities. Building up the specialists such as the persons 
that we have over in Romania and Bulgaria now is tremendously 
important. And we have to find better ways to be more 
efficient, particularly when it comes to the forensic areas. 
And as you know, being a United States Attorney, backlogs in 
terms of forensic capabilities often hold up prosecutions. We 
have to become more efficient when it comes to utilizing the 
forensics to translate what we have forensically into the 
courtroom and putting people away.
    That is generally the direction that we are going in. I 
would be happy to both myself talk with you and also have Sean 
Henry, who basically oversees this side of the house, sit down 
with you and discuss additional areas.
    Senator Whitehouse. Good. Well, I have talked to some of my 
colleagues on the other side of the aisle. They are equally 
interested in participating in this and trying to figure out 
where the choke points are, what the best structure would look 
like, and then I think we have got--it is a big enough problem 
that I think we need to figure out what the proper design 
should be for going after it and then worry about how we pay 
for it, because, frankly, if, in fact, we are on the losing end 
of the biggest transfer of wealth ever through wealth and 
piracy, then paying for stopping it is a 1,000:1, 10,000:1, 
1,000,000:1 payback. It is really a big deal. I have heard 
numbers as high as $1 trillion a year as estimates of what we 
lose in intellectual property that is just siphoned away, often 
unbeknownst to the factory or chemical plant or whoever it is 
that feels that they have adequate security.
    In terms of the numbers that we do have--I am going to keep 
going for a little while because I think some of my colleagues 
are coming back from the vote, and I will turn it over to them 
as soon as they return. But while I have you, I would like to 
pursue this a little bit further with respect to the FBI's own 
numbers.
    When you describe that an agent is headquarters Cyber 
Division personnel or in the computer intrusion program or in 
the cyber crime program, does that mean that they are full-time 
absolutely only dedicated to cyber? Or is this a little bit 
more like--on the DOJ side, they will report how many cyber 
AUSAs they have, but having been a U.S. Attorney, I know 
perfectly well that those cyber AUSAs are probably doing other 
cases. They are just the ones who have to listen to the 
conference call with the mute button pushed while they are 
preparing their gun case or their drug case or whatever, but 
they are not really a full-time, cyber-only, dedicated member, 
you know, prosecutor. How does the FBI's count work for that? 
Do you count your cyber people people who are designated if a 
cyber case comes up but they are working bank robberies, 
terrorism, whatever else while they are in between cases?
    Mr. Mueller. Well, nobody is in between a cyber case now. I 
mean, there is so much work to go around, rarely do you find 
that. I would have to look at----
    Senator Whitehouse. If you count an agent as a cyber-
dedicated person, the agent is 100 percent cyber?
    Mr. Mueller. Well, 90 percent. I mean, they have additional 
duties. They may have SWAT duties, for instance, that kind of 
thing. But in terms of their caseload, it would be a cyber 
caseload, and each of the special agents in charge are 
desperate for additional persons for their cyber squads.
    I am not certain what statistics you are looking at, but we 
have doubled the number of agents who are doing cyber cases 
since 2001. That is still less than 1,000. But we are----
    Senator Whitehouse. Yes, compared to, say, nearly 5,000 DEA 
agents, nearly 2,500 ATF agents, approximately 3,200 Secret 
Service agents, over 1,400 postal inspectors, and over 1,200 
NCIS agents--all who are doing great work, all who I am very 
proud of, but when you put those numbers side by side and match 
it against the cyber problem, there is a disconnect.
    Mr. Mueller. Well, I think we are one of the agencies--the 
Secret Service quite obviously does, but we have separate cyber 
career paths. We recruit and bring in agents for the cyber 
program into new agents class. They get the foundational 
instruction as to how to be an agent, how to conduct 
interviews, be an agent, the same way the military will bring 
somebody in, well, you are army first and then your secondary 
will be artillery or tanks or something like that. For us, we 
bring them in, you will be an agent first, but you have 
particular qualities. You were a software programmer before. I 
do not want you to do narcotics cases. I want you to do--you 
are in here to be in the cyber program. And we put them in 
generally a smaller office for a period of time, but in the 
cyber arena, and then they will graduate to a larger office.
    We have a number of cases, a number of capabilities now 
where we have persons with special expertise that may be living 
in Cleveland or San Diego or Portland, Oregon, or Portland, 
Maine, whom we will bring in on a virtual case, coordinated by 
headquarters, but where the expertise is around the country, 
and the bad guys can be anywhere. And for us to be effective 
down the road, we are going to have to make use of those 
specialties, regardless of where the individual lies, because 
the crime is most often not a local crime, not a State crime, 
but a crime that is launched overseas. And we need to bring the 
expertise to developing that and allow that group of persons, 
wherever they are in the United States, to bring the case to a 
successful close.
    Senator Whitehouse. And, first of all, let me just make 
clear that I very much applaud the direction that you have been 
going in. I think that within the resources and structure that 
you have been provided, I am very laudatory of the focus and 
the professionalism and the additional resources, particularly 
as you have been constrained and had the terrorism 
responsibilities added all at the same time. So I do not want 
to in any way have anything that I have said be taken as a 
criticism of you or the FBI management. I think it is Congress' 
job to make sure that you have the resources and the structure 
that will be most effective to accomplish your mission, and 
that is a discussion that we need to be having in a different 
way here in the Congress.
    Let me ask you one more question about these cyber cases 
and where in the array of cases that the FBI engages in they 
rank in terms of their resource intensiveness and their agent 
intensiveness. It strikes me that between the subject matter 
expertise that is necessary to deal in this specialized area, 
between the computer familiarity that is required and the 
forensic computer capability to pick apart the actual traffic 
of what was done where and understand it and be able to bring 
it out of the code and make it real for prosecutors, for 
instance, who have to make the case, dealing with the fact that 
the vast majority of this crime has an overseas component to 
it, if not being primarily directed from overseas, which means 
you have to deal with intelligence services and with legats and 
with foreign treaties and with--and it is probably a 
complicated racketeering type case to begin with. So you add it 
all up, and it strikes me, as a guy who used to have to run 
these kind of cases, that this is the sort of thing that I look 
at and think, ``Oh, my God, I am going to have to put an awful 
lot of people on this one to get it done right. This is about 
as complicated as it gets.''
    Is that your take on this as well?
    Mr. Mueller. It really depends on the case, and one thing 
that I do believe should not be lost in this is that often 
sources, human sources, are as important as anything else. When 
you talk cyber, you think about that person with the software 
development expertise that you need to do the kind of 
investigative work. But often in these cases it is a 
combination of cyber and also sources, so we cannot forget 
that.
    But it really depends on the case, the spread of the case, 
how far it takes you, whether or not if you are operating in 
Turkey or Morocco or Estonia or Latvia or Romania or France, 
England, Sweden, something like that, it brings in the legal 
attache's office, and our people spend a fair amount of time 
coordinating with their counterparts overseas. I did not just 
mean Europe, but also in the Far East, quite obviously.
    And so it can take a lot, but you take down something like 
Coreflood, and with the innovative ways of addressing that, it 
was a relatively small group of people in New Haven and 
headquarters and some across the country and some 
internationally that were able to undertake that. And once you 
develop, as you would know as a prosecutor, a template for 
doing these kinds of cases, it is easier the next time around.
    Senator Whitehouse. Easier the next time. Very good. I see 
that Senator Coons has returned from the vote that is going on 
right now on the Senate floor, and I recognize him.
    Senator Coons. Thank you, Senator Whitehouse. The Senate is 
voting now on an amendment to the United States Constitution, 
and our Chairman is about to speak, so please forgive the 
interruption, if you would, in this hearing.
    Director Mueller, thank you for your service and for your 
testimony here today and for your willingness to continue in a 
leadership role at the FBI. As you were just discussing with 
Senator Whitehouse, one of the challenges, I think, that we 
face in this particularly difficult budgetary environment for 
State and local law enforcement around the country is the 
steady downward pressure on local law enforcement agency 
budgets.
    In my role as county executive before becoming a Senator, 
one of the things we relied heavily on was an effective 
partnership with the FBI. The FBI works very well and closely 
with State and local law enforcement through a task force 
structure and does a lot of information sharing.
    Talk, if you would, a little bit about how the FBI and DOJ 
have institutionalized openness and partnering with local law 
enforcement through the National Data Exchange, or N-DEx, and 
others, and what impact you have seen on the reach and 
effectiveness of your multi-agency task forces given what I 
presume must be the steadily decreasing availability of local 
law enforcement partners given the budgetary pressures local 
law enforcement currently face.
    Mr. Mueller. Let me start by saying my belief is that we 
are most effective when we work in task force, or work in joint 
investigations. Bringing together expertise from a variety of 
different places enhances your capability. I worked here in the 
U.S. Attorney's Office, and they had a cold case squad with FBI 
agents working with homicide detectives from the Metropolitan 
Police Department, and the homicide detectives were some of the 
best investigators I have ever seen. The FBI brought 
capabilities that State and local did not have, and it worked 
exceptionally well. And that in my mind has been a model.
    Out of that has come, as I think I have said in some of my 
remarks, over 150 State and local task forces relating to 
violent crime and drugs and gangs in particular. We had, I 
think, 34 or 35 Joint Terrorism Task Forces in 2001. We are now 
up at around 100. We have Safe Trails Task Forces in Indian 
country, and we now around the country have started Cyber Task 
Forces. We have regional forensics labs which relate to the 
handling of cyber material and the forensics aspect of it. And 
so we have developed these over a substantial period of time.
    When it comes to cyber in particular, we are at the 
threshold of a development of an approach to cyber crime across 
the country, and I say that because in the past the State and 
local law enforcement have not been able to develop the 
capabilities in this arena as far as perhaps we have and look 
to us, look to the Secret Service and look to others to handle 
much of the more important work. The impact of the cyber arena 
is such that in the future the Federal authorities will not be 
able to do it alone, and we are going to have to continue to 
develop the task force structure and have State and local law 
enforcement develop the capabilities to address cyber in the 
same way that State and local law enforcement has developed it 
in a variety of areas in the past.
    I will tell you that when I visit offices, when we have 
them and have an exchange about what is happening in particular 
offices around the country, one question we ask is: Have you 
seen State and local law enforcement officers leaving task 
forces because of the budget constraint? And very rarely is 
that happening. I do believe that State and local law 
enforcement appreciate the opportunity to participate at that 
level and find that participating in these task forces 
leverages their capabilities, and it is not just having a 
person on a task force, but they can be more effective as a 
State and local department with having persons on the task 
force.
    Senator Coons. Well, that is a testament to the value that 
State and local law enforcement finds in partnering with the 
FBI because of your superior intelligence and specialized unit 
capabilities and your National information-sharing role. You 
referred to cyber crime, something we are both very concerned 
about, as are a number of my colleagues. There have been a 
number of recent reports suggesting that cyber crime has 
exploded in the last decade, that it is growing at a dramatic 
pace, that it has consequences not just for individuals and for 
harm to them, but also broader harm to our economy. In fact, I 
think it was the Executive Assistant Director for the FBI that 
described it as an ``existential threat'' to the United States. 
And I am wondering--I know you and Senator Whitehouse just had 
an exchange about this--whether you are resourced effectively 
in terms of the number of agents, the training. I know you have 
very difficult choices to make, many different areas of 
challenge in your service.
    If I understand right, there are about 1,000 advanced 
cyber-trained FBI agents, but nearly five times that many 
dedicated to the war on drugs. There have been some studies 
that have suggested that at the State and local level we do not 
have enough professionals, law enforcement officers trained to 
the right level.
    How do you feel we are doing at staffing and training in 
the FBI to meet the level of threat? And what else could we in 
the Congress be doing to support you in that effort?
    Mr. Mueller. In the wake of September 11th, we knew we had 
to prioritize and in the wake of September 11th move 2,000 
agents from the criminal side of the house to national 
security, particularly counterterrorism. Of those, 
approximately 1,500 were in the drug program. Another 500 were 
doing smaller white-collar criminal cases, but we had to 
prioritize.
    We have doubled the number of agents--almost doubled the 
number of agents that are doing cyber work at this juncture, 
and we have a number of specialists in addition to agents who 
do the forensics and work on it.
    Our drug cases are in the context of OCDETF and the joint 
task force arena. We rarely at this point in time do any 
individual drug cases such as we did beforehand.
    Do we need additional resources? Yes. Is the No. 1 request 
I make each year in the last several years when we took care of 
counterterrorism to a certain extent a request for more agents 
in this arena? It is. Has Congress given us some? Yes. In any 
one of these, is it enough? Probably not. Part of it is also 
our prioritize, our reorganization so that we can address these 
cases more efficiently, and it goes to something I was saying 
to Senator Whitehouse, and that is, around the country we will 
have this area of expertise, and where in the past it was 
important to have it localized on local cases, that expertise 
has to be utilized to address cyber cases wherever they may 
arise because often at the outset of any intrusion you do not 
know where the home is. And, consequently, we as an 
organization have to adapt as well as getting additional 
resources, but adapt our structure and our organization to be 
more efficient in handling these cases.
    Senator Coons. How does the FBI differentiate between a 
criminal cyber threat and one that implicates the national 
security and that then implicates other non-law enforcement but 
more military-oriented assets in the cyber field?
    Mr. Mueller. Well, we established a National Cyber 
Investigative Joint Task Force. It might be worthwhile for you 
to visit it if you have not. But it has ourselves and other 
relevant agencies in this arena, intelligence agencies as well 
as law enforcement agencies. And so in conjunction with NSA, 
for instance, and others, once a substantial intrusion is 
identified, it will be looked at, and the beginning work 
forensically will be done by a number of contributing agencies 
who have that expertise without putting it into a particular 
cubbyhole at the outset. You do not know whether the person is 
a foreign state or an organized crime group or an organized 
crime group operating at the behest of a state or the high 
school student in a bedroom down the block.
    And so we treat them each at the outset with the same 
approach to dissect it and try to identify it, and once you get 
an identification you can make a decision, OK, this is 
domestic, it is a criminal case, it will be handled 
domestically, or no, it is a national security threat that 
ought to be handled by our military in some way, shape, or 
form, and then allocate--or then tag it with, OK, how are you 
going to resolve this, how are you going to disrupt this 
threat.
    Senator Coons. And that exact process, that interface, that 
decisional iterative process is of great interest and concern 
to me given your exchange with Senator Sessions and Senator 
Feinstein previously in the context where in the National 
Defense Authorization Act a number of us have raised real 
concerns about the possibility of uncertainty. I would agree 
with you. I take very seriously your written input to the 
Senate that you have real concerns about the possibility in the 
short run and the long run that the military and law 
enforcement will begin having an unresolved and unclear joint 
role in investigations, in apprehension, in the early stages of 
trying to encourage cooperation and that in the lack of a 
resolution there, there is both a threat to civil liberties and 
a possibility of missing vital opportunities for us to advance 
our National security.
    In the national security context, in the counterterrorism 
context, it implicates constitutional liberties, civil 
liberties, and our National security, and I think that is true 
both in cyber and in the development at the very earliest 
stages of potential counterterrorism cases within the United 
States.
    Speak, if you would, about how you would encourage us to 
resolve some of these longer-term issues. There was no specific 
hearing for the detention provisions of the NDAA. There were a 
number of us who voted to pull those provisions out of the 
Defense Authorization Act to have a brief period where we would 
have focused hearings, get input, but it concerned me deeply 
that leaders in our law enforcement and counterterrorism and 
national security communities in the current administration 
opposed the language in that bill. And without having the 
benefit of a hearing or full development of this intersection 
between security and liberty, I was gravely concerned about our 
moving forward with this language.
    How would you advise us to deal with this in a way that 
does not deprive law enforcement of critical tools in the fight 
against both cyber crime and terror?
    Mr. Mueller. Well, I would hesitate to try to advise 
Congress in this way. What I tried to do is express the 
concerns I have with the language that has been presented, and, 
again, it focuses on--part of it has been resolved in terms of 
our ongoing authorities, for which I am grateful. The other 
level of concern relates to the uncertainty of what is going to 
happen at the time of arrest and what is going to happen in 
terms of investigations down the road. Is it going to go 
military? Is it going to go Article III? And the statute is 
still unclear in terms of allocating that.
    Now, I know the argument on the other side is that will be 
cleared up by procedures, and that will be developed by the 
President, and the President has the waiver authority. Given 
the statute the way it is now, it does not give me a clear path 
to certainty as to what is going to happen when arrests are 
made in a particular case and the facts are gray, as they often 
are at that point, and the possibility looms of we will lose 
opportunities to obtain cooperation from the persons that in 
the past we have been fairly successful in gaining.
    Senator Coons. Well, I see that it is time for me to 
conclude my questions. I just want to congratulate you and the 
agency for being a very successful partner in the war on terror 
and in the effort to isolate, identify, and prosecute folks who 
are engaged in domestic efforts at terrorism. I want to thank 
you for your efforts in combating cyber crime, and in 
particular some of the issues that Senator Kohl raised about 
trade secret theft are a real interest and concern to me, and I 
would like to note I share Senator Franken's concerns about 
some of the as yet unknown privacy implications of the software 
on our cell phones.
    Thank you very much for your testimony today.
    Thank you, Mr. Chairman.
    Mr. Mueller. Thank you.
    Chairman Leahy. [Presiding.] Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman, and thank you, 
Director, for your public service not only in your present role 
but throughout your career as a prosecutor and as a member of 
our military, and thank you for being so forthright in your 
answers today to some difficult areas of questioning.
    I want to come back to cyber but in a different context, 
and I am very concerned about cyber attacks on this country, 
which General Petraeus has said will be our next 9/11, and you 
have very vividly and graphically described what you view as 
the threat. But the threat to women and children on the 
Internet I think is equally troubling, and I proposed a bill 
called the Internet Abuse Act, which would be a companion to 
the reauthorization of the Violence Against Women Act, which 
focuses on stalking, intimidation, harassment, which can lead 
to physical violence when it occurs on the Internet, lead to 
physical violence then in the real world.
    I would like to get from you some sense of what you view as 
the perils and the dangers on the Internet to children and 
women and what the FBI is doing to combat them.
    Mr. Mueller. Well, we have a number of programs to address 
that. Our one program we have had for years is the Innocent 
Images program that I think you are probably familiar with from 
your time as Attorney General in Connecticut, in which we 
operate undercover on the Internet to identify stalkers, and 
particularly it is related to children.
    The threat that you articulate to women and children on the 
Internet is growing daily, and the ubiquitous nature of the 
Internet is such that it is very difficult to address and to 
educate persons because a number of people, including 
occasionally myself, are baffled by what happens when certain 
things--when you are on the Internet and getting on the 
Internet, many people I think are baffled by the privacy 
protocols and uncertain as to how to utilize them. But our 
programs are directed at identifying those persons who are 
luring children into sexual liaisons on the Internet. Quite 
obviously, beyond that there are and have been prosecutions, 
most recently I think in California, for persons who were 
stalking in some sense on the Internet, but also others who 
were driving--particularly in schools, driving other children 
to suicide and the like. And so the variety of harm that can 
come from abuse on the Internet is substantial.
    We have throughout the country over the last several years 
put together with U.S. Attorney's Offices, FBI, as well as 
State and locals ICAC teams that address this together, but 
there is so much of it out there you have to prioritize. And, 
again, it is going to be--I absolutely agree that it is going 
to be a huge issue in the future, this particular area, and 
anything that can be done legislatively to enhance the 
penalties, enhance the certitude of conviction appropriately, 
and deter persons from abuse on the Internet will be welcomed.
    Senator Blumenthal. Well, I am glad to hear you make that 
comment because that is exactly the goal of the measure that I 
proposed, to enhance the certitude and make penalties more 
severe so that individuals who, in effect, are aiding and 
abetting or enticing or luring or harassing on the Internet can 
be held more accountable. And I am delighted to hear that you 
would consider supporting that kind of measure.
    I also want to ask you, if I may, about human trafficking 
by Federal contractors abroad. You may be familiar with this 
problem where contractors on our bases abroad in effect take 
advantage of individuals who are recruited from Third World 
countries, more than 100,000 foreign nationals working on our 
bases abroad, sometimes exploited by our contractors. And, 
again, I have worked with the Chairman--and I thank Senator 
Leahy for his support--to try to target and criminalize the 
human trafficking of persons working for contractors abroad 
under conditions and terms that would not be tolerated in this 
country. And I would like to ask you whether the FBI is doing 
anything on the enforcement side with respect to this problem.
    Mr. Mueller. This is an issue that I am not familiar with. 
I will go back and see what, if anything, we are doing in that 
arena. Since our presence usually is in embassies, not really 
on military bases, that falls to the various law enforcement 
entities in the military generally. But I will go back and see 
what, if anything, we are doing here, and if there is any issue 
with regard to our jurisdiction to investigate or prosecute in 
an Article III court, we will get back to you on that.
    Senator Blumenthal. I appreciate that. And, finally, 
because my time is almost up, you mentioned the idea in your 
responses to one of the questions, perhaps from Chairman Leahy, 
of making a cyber crime a predicate under the Racketeering Act. 
I wonder if you could expand on that thought.
    Mr. Mueller. Only to say I think it is a good idea, that it 
would enhance--it should be a predicate, in my mind, and the 
sentences attendant to a conviction on racketeering are 
substantial and would send the message.
    I think too often in the past we have looked at individuals 
who were involved in cyber crimes, and they may be relatively 
young individuals, and there may be a perception among some 
that it is a turnstile. Yes, you may get caught, yes, you may 
be convicted, but you will be walking out relatively soon, and 
the crime may be worth the time that you spend. That cannot be 
the message that is sent. The message to be sent is that if you 
engage in cyber crime you will go to jail, and you will go to 
jail for a substantial period of time.
    Senator Blumenthal. And I think that observation, your 
support for that kind of measure, illustrates the kind of gaps 
that may be arising. The Internet Abuse Act that I proposed is 
one measure trying to address them, but using a cyber act, so 
to speak, as a predicate for a racketeering violation I think 
is a very promising avenue that we should explore. Thank you.
    Mr. Mueller. Thank you.
    Chairman Leahy. Thank you very much, Senator Blumenthal.
    Senator Klobuchar.
    Senator Klobuchar. Well, thank you very much, Mr. Chairman. 
Thank you also, Director Mueller, for being willing to stay 
through our votes and everything else and for your good work. 
You have served the FBI so admirably. I think it is quite a 
testament that President Obama asked you stay for another 2 
years, and you were confirmed by a vote of 100-0. That is 
usually like for volley ball team resolutions or something, so 
excellent work.
    I wanted to ask about something that has been on my mind 
because this Committee passed the synthetic drug bill. I have 
one, Senator Schumer has one, Senator Grassley has one. The one 
I have deals with a synthetic hallucinogen known as 2C-E. As 
you probably know, the House passed similar versions of these 
bills this past week. In our case in Minnesota, this young man 
died and the problem, as you know, is nationwide. I just think 
it is incredible, talking to some of our police chiefs, 
especially in the rural areas of our State, where they have 
seen this increase in these cases, and it is very difficult if 
you are in a city like Moorhead as opposed to Minneapolis to 
try to get experts to prove what the substance was. And in the 
first half of 2011, there were roughly 6,600 calls to poison 
control centers across the country. That is 10 times the amount 
we had in all of 2010. So it is clearly a growing issue.
    Senator Paul currently has a hold on these bills in the 
Senate. We are trying to get them done by the end of the year. 
I had a good talk with him yesterday. I hope we will be able to 
work this out. But I wanted to get your take on this problem. 
One of my views is we can add these substances to the schedule, 
but we still have an issue with the way the analog statute 
works that we may want to make some amendments going forward. 
That is something I want to work on, but let me get your take.
    Mr. Mueller. I am afraid I cannot be as much help as 
perhaps I would want to be because it really falls within the 
purview of my friends at the DEA, what you are getting at. But 
to the extent that it is coming along in the same way that 
OxyContin or some of the other drugs, we have to watch it, and 
together with State and locals and our friends at DEA, not only 
would we want to watch it, but also have the statutes in place 
that enable us to appropriately address it and send the persons 
who were involved in this kind of trafficking to jail.
    Senator Klobuchar. Very good. Well, we have been working 
with DEA, obviously, and they came out and did--along with Gil 
Kerlikowske, and we have been working on it. But I just want to 
call it to your attention.
    I also know that the FBI and the DOJ have been focusing on 
the health care fraud issue.
    Mr. Mueller. Yes.
    Senator Klobuchar. Minnesota tends to have better 
enforcement in those areas, and I know there are certain areas 
known as ``hot spots'' where a lot of our health care dollars 
are getting sucked down to places that are not as good at 
trying to track these things. Could you talk about those 
efforts and what you have seen with the coordination with the 
HEAT task forces.
    Mr. Mueller. One of the interesting things is the benefit 
from building an intelligence capacity to address 
counterterrorism and then bringing it to bear in the criminal 
arena. We have found, as you point out, that there are health 
care hot spots where there will be schemes and plots that are 
utilized for a period of time by a number of individuals. There 
will be an enforcement effort that shuts it down, often by a 
task force of ourselves working with individuals who are from 
the AG's office or from State and local, but then it will pop 
up someplace else.
    One of the things the building of an intelligence 
infrastructure across the country enables us to do is to 
identify this, educate others, and be on the alert for other 
places where the same hot spots may grow if we do not get in 
there early and address it. And so with a combination of task 
forces, identification of those, as you call them, hot spots 
where the activity is particularly high, but also with the use 
of intelligence to identify where the persons are going to move 
next, we have had some impact.
    It is still billions of dollars. It is still rampant out 
there. But we have increased personnel, and we have identified 
and added persons across the board to address health care. And 
I think we are being effective, but there is still more work to 
be done.
    Senator Klobuchar. Very good. I know you talked to some of 
my colleagues bout cybersecurity. Actually, one of the examples 
that you used was Cargill--Cargill is based in Minnesota--in 
your testimony of some stolen secrets that they experienced.
    Mr. Mueller. Yes.
    Senator Klobuchar. And I just see this as the next big 
thing we need to work on, cybersecurity for our country, but 
also Internet fraud and some of the things that we are seeing 
being stolen. The Internet Crime Complaint Center, or IC3, is a 
partnership, as you know, with the FBI and the National White-
Collar Crime Center aimed at addressing Internet crime.
    In my former job as a prosecutor, this was just at the 
beginning of all this, and we would have local police who would 
be confronted with computers, and they would turn them on, and 
everything would vanish. We have gotten much better than that, 
but there is so much of an issue for local police not having 
the resources to deal with this, so much of it international.
    Could you give us an update on that? And where do you think 
we need to go?
    Mr. Mueller. Well, we have to build our resources across 
the Government and better organize to address cyber, identify 
the lanes in the road with some additional particularity. At 
home we have to adjust our organizational structure to address 
cyber. One of the points I do make is we have expertise around 
the country, but you never know where an intrusion is going to 
arise, much less from whence it came. And, consequently, we as 
an organization have to address cyber crime differently than we 
address bank robberies, which was localized and the expertise 
was across the country. Here we do have expertise across the 
country, but often the crime can shift from city to city, 
county to county, country to country, and we have to be able to 
address that, and that is what we are working on.
    I will say that today, of the number of Senators who have 
questioned me--maybe six, seven, eight--maybe four of them have 
been focused on cyber crime. Four years ago, one would not 
have. And I venture to say when we meet again, as undoubtedly 
we will next spring, that it will be a No. 1 issue on the 
agenda. Too often, in a variety of ways, the statutes do not 
keep up with technology, particularly in this day and age and, 
consequently, the work of this Committee to provide the tools 
to address the enhanced technology will be tremendously 
important.
    Senator Klobuchar. Well, thank you very much for that. We 
look forward to working with you.
    Mr. Mueller. Thank you.
    Senator Klobuchar. Thank you.
    Chairman Leahy. I will put in the record or submit to you 
for answers some questions by Senator Grassley, and if I have 
other questions, I will submit them for the record.
    [The information appears as a submission for the record.]
    Chairman Leahy. Not seeing others and knowing what is going 
on on the floor, we will stand in recess, but with the 
appreciation of the Committee to Director Mueller.
    Mr. Mueller. Thank you, sir.
    [Whereupon, at 12:05 p.m., the Committee was adjourned.]
    [Questions and answers and submissions for the record 
follows.]
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