[Senate Hearing 112-793]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-793

 
      COMBATING INTERNATIONAL ORGANIZED CRIME: EVALUATING CURRENT 
                   AUTHORITIES, TOOLS, AND RESOURCES

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

                                HEARING

                               before the

                  SUBCOMMITTEE ON CRIME AND TERRORISM

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 1, 2011

                               __________

                          Serial No. J-112-49

                               __________

         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
                                 ------                                

                  Subcommittee on Crime and Terrorism

               SHELDON WHITEHOUSE, Rhode Island, Chairman
HERB KOHL, Wisconsin                 JON KYL, Arizona
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
AMY KLOBUCHAR, Minnesota             LINDSEY GRAHAM, South Carolina
CHRISTOPHER A. COONS, Delaware
                Stephen Lilley, Democratic Chief Counsel
               Stephen Higgins, Republican Chief Counsel


                            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, 
  prepared statement.............................................    61
Kyl, Hon. Jon, a U.S. Senator from the State of Arizona, prepared 
  statement......................................................   103
Whitehouse, Hon. Seldon, a U.S. Senator from the State of Rhode 
  Island.........................................................     1
    prepared statement...........................................   106

                               WITNESSES

Breuer, Lanny A., Assistant Attorney General, Criminal Division, 
  U.S. Department of Justice, Washington, DC.....................     3
Glaser, Daniel L., Assistant Secretary for Terrorist Financing, 
  U.S. Department of the Treasury, Washington, DC................     4
Kibble, Kumar C., Deputy Director, U.S. Immigration and Customs 
  Enforcement, U.S. Department of Homeland Security, Washington, 
  DC.............................................................     6

                         QUESTIONS AND ANSWERS

Responses of Lanny A. Breuer to questions submitted by Senators 
  Leahy, Grassley, Klobuchar and Durbin..........................    26
Responses of Daniel L. Glaser to questions submitted by Senator 
  Durbin.........................................................    37
Responses of Kumar C. Kibble to questions submitted by Senator 
  Durbin.........................................................    39

                       SUBMISSIONS FOR THE RECORD

Breuer, Lanny A., Assistant Attorney General, Criminal Division, 
  U.S. Department of Justice, Washington, DC, statement..........    41
Glaser, Daniel L., Assistant Secretary for Terrorist Financing, 
  U.S. Department of the Treasury, Washington, DC, statement.....    52
Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa, 
  attachment:
    List of Documents
    Department of Justice, February 4, 2011, letter..............    63
    Department of Justice, Lanny A. Breuer, Assistant Attorney 
      General and Kenneth Melson, Acting Director, December 3-4, 
      2009, e-mails..............................................    65
    Department of Justice, Joseph Cooley, Trial Attorney, Gang 
      Unit, March 1, 2012, e-mails...............................    66
    Department of Justice, Joseph Cooley, Trial Attorney, Gang 
      Unit, March 5, 2010, notes.................................    67
    Department of Justice, Gary Grindler, Acting Deputy Attorney 
      General, March 12, 2010, notes.............................    70
    Department of Justice, P. Kevin Carwile, Chief, Gang Unit, 
      March 15, 2010, e-mails....................................    77
    Department of Justice, Jason Weinstein, Deputy Assistant 
      Attorney General, April 30, 2010, e-mails..................    78
U.S. Senate Caucus on International Narcotics Control, November 
  15, 2011, letter...............................................    79
Holder, Eric H., Jr., Attorney General, Washington, DC, October 
  7, 2011, letter................................................    81
Kibble, Kumar C., Deputy Director, U.S. Immigration and Customs 
  Enforcement, U.S. Department of Homeland Security, Washington, 
  DC, statement..................................................    86
National Retail Federation, Washington, DC, statement and report.   108
Newell, William D., Mexico Weapons Trafficking - The Blame Game, 
  July 7, 2010, e-mails..........................................   136


      COMBATING INTERNATIONAL ORGANIZED CRIME: EVALUATING CURRENT 
                   AUTHORITIES, TOOLS, AND RESOURCES

                              ----------                              


                       TUESDAY, NOVEMBER 1, 2011

                               U.S. Senate,
               Subcommittee on Crime and Terrorism,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:31 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Sheldon 
Whitehouse, Chairman of the Subcommittee, presiding.
    Present: Senators Whitehouse, Feinstein, Klobuchar, Coons, 
and Grassley.

 OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, A U.S. SENATOR 
                 FROM THE STATE OF RHODE ISLAND

    Chairman Whitehouse. Good morning. The hearing will come to 
order. I appreciate the witnesses' having taken the time to 
join us. I am not sure if any of our Republican members will be 
joining us, but I have been given the nod by the minority staff 
to go ahead and proceed, so I will begin with my opening 
statement. If anybody else does arrive, we can proceed to their 
opening statements if they care to make one.
    Every day, as we know, overseas criminal networks target 
Americans, weakening our economic prosperity and compromising 
our safety. Today's hearing provides us an opportunity to 
evaluate our current statutory authorities, law enforcement 
tools, and resources for protecting the American people from 
the serious and ever growing threat of international organized 
crime.
    The international organized crime networks we confront 
today are significantly different from La Cosa Nostra and other 
criminal networks we confronted in the past. Criminal groups 
increasingly operate internationally, taking advantage of 
globalization, of the Internet, and of new technologies to 
engage in sophisticated and expansive crimes targeted at 
victims an ocean away.
    Overseas networks of cyber criminals have hacked into the 
computer networks of innovative American businesses, stealing 
their valuable intellectual property in order to produce cheap 
competitors or counterfeits. Large-scale criminal enterprises 
are openly engaged in the online sale of massive amounts of 
stolen American movies, music, and software. And an entire 
criminal industry has grown up around stealing and selling 
credit card numbers, bank account passwords, and personal 
identification information of American consumers.
    Criminal groups involved in human trafficking or smuggling 
narcotics and weapons are dangers to our communities, often 
engaged in kidnapping, extortion, and related acts of violence 
along the way. Some overseas crime networks are linked to 
terrorist organizations.
    These foreign criminals' overseas base of operations, 
flexible network structures, and use of the Internet and other 
modern tools creates significant challenges for U.S. law 
enforcement. Investigators tracking an international crime 
group must regularly work in and with several different 
countries to build a single case. The laws and practical 
circumstances in each country pose obstacles to uncovering 
evidence, to interviewing witnesses, to locating criminal 
suspects. And the high-tech tools used by foreign criminals 
require our law enforcement experts to use complex and often 
costly forensics to identify those responsible for a crime.
    Even once investigators have pieced together a case against 
a dangerous group and found their suspects, additional hurdles 
may stand in the way of bringing foreign criminals to justice. 
Criminal statutes, for example, may not apply to criminal 
groups based overseas. And some of our most powerful criminal 
laws for prosecuting organized crime may not capture the types 
of fraud and theft that international criminals engage in 
today. Our RICO statute, for instance, does not apply to 
computer crimes and, thus, does not help combat overseas 
hacking rings.
    Overseas criminal groups demand heightened attention and 
resources from many elements of our Government. Investigative 
and law enforcement agencies must work together to detect and 
disrupt overseas criminal plots. They must also collaborate 
with our economic, diplomatic, and intelligence communities to 
share threat information, cut off criminal networks' access to 
funds, and supplement criminal prosecutions with other 
approaches to keeping the American people safe.
    It is good that the administration has announced an 
aggressive strategy to combat international organized crime and 
prepared specific legislative recommendations on which Congress 
can act. Today we are joined by representatives from the 
Department of Justice, the Treasury Department, and ICE who are 
well positioned to discuss the threats we face in foreign 
criminals. I also look forward to hearing more from them about 
what actions the administration has taken and what we in 
Congress can do to provide law enforcement with the tools it 
needs to confront this challenge.
    Protecting American citizens and business from foreign 
criminals is no partisan issue. Members of Congress in both 
parties agree that we must strengthen our ability as a Nation 
to take down these overseas criminals.
    Our Ranking Member, Senator Kyl, is unfortunately not able 
to join us today because of his important commitments on the 
Debt Committee, but I have greatly enjoyed collaborating with 
him this year on legislation concerning cybersecurity and on 
other hearings, and I look forward to working with him and 
other members of the Committee on this important issue.
    Since there is no one immediately present to make further 
opening statements, we can get right to the meat of the 
hearing, which is always a good thing. I would just go right 
across the panel here, beginning with Lanny Breuer, who is the 
Assistant Attorney General for the Criminal Division at the 
Department of Justice. Before joining the Justice Department, 
he was a partner at Covington & Burling, LLP, here in 
Washington, where he served as co-chair of the white-collar 
defense and investigations practice group. Previously in his 
career, he served as an assistant district attorney in 
Manhattan and as Special Counsel to President Clinton. He 
received his B.A. from Columbia College and his J.D. from 
Columbia Law School, and we are pleased to have him here today.
    Mr. Breuer, please proceed with your testimony.

STATEMENT OF HON. LANNY A. BREUER, ASSISTANT ATTORNEY GENERAL, 
 CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC

    Mr. Breuer. Good morning, Mr. Chairman. It is a real 
pleasure to be here. Thank you for the opportunity to appear 
before you today along with my partners from the Departments of 
Treasury and Homeland Security to discuss the Justice 
Department's efforts to address the threat posed by 
transnational organized crime.
    Transnational organized crime poses a grave and growing 
threat to our economic and national security and the safety of 
our citizens. These groups commit a staggering array of crimes, 
all the way from credit card fraud and cyber crime to violent 
crime and drug trafficking. They penetrate and undermine 
Government institutions, they threaten the world financial 
system, and they subvert legitimate markets. For these reasons, 
the task of combating transnational organized crime has never 
been more urgent.
    The fight against transnational organized crime is among 
the highest priorities of this Administration, and the Justice 
Department is proud to play a leading role in that effort. The 
Department has made great strides in attacking transnational 
organized crime groups. As the cases highlighted in my written 
testimony illustrate, our work often depends upon our close 
relationships with foreign law enforcement. It is often 
impossible to identify, arrest, and prosecute offenders or 
obtain critical evidence without the assistance of our allies.
    To give just one example, our prosecutors and agents work 
with Romanian law enforcement to target organized criminal 
groups operating in that country that threaten American 
citizens and institutions. Just last month, I traveled to 
Romania and saw firsthand how closely our two nations are 
working together, and that work is paying off. For instance, 
early this year joint investigations resulted in the arrest of 
over 100 organized cyber criminals in our two countries. But 
the challenges to pursuing these groups remain significant.
    For example, law enforcement in some countries is unable or 
unwilling to cooperate with our investigative efforts. In 
addition, finding the assets of sophisticated criminal 
organizations often involves unraveling a web, a sophisticated 
web of shell corporations used to disguise and launder profits. 
And even if we are able to build a case, securing extradition 
of the defendants often poses a significant obstacle.
    Attorney General Holder and I have taken important steps to 
better position the Justice Department to confront 21st century 
organized crime. In 2009, the Attorney General announced the 
creation of the International Organized Crime Intelligence and 
Operations Center, or IOC-2, which coordinates the efforts of 
nine Federal law enforcement agencies against transnational 
organized crime networks. And late last year, the Attorney 
General accepted my recommendation to merge the Organized Crime 
and Gang Sections within the Criminal Division to make more 
efficient and effective use of our resources to go after 
organized crime groups both here and abroad. With the support 
of Congress, that merger took effect earlier this year.
    But combating the threats posed by transnational organized 
crime requires more than effective law enforcement. To that 
end, in July the Administration announced a cutting-edge 
strategy that for the first time brings all of the resources 
and tools of the Federal Government to bear in a coordinated 
way against transnational criminal groups.
    One of the centerpieces of our new strategy is a package of 
essential legislative updates designed to ensure that we have 
the tools we need to confront these evolving threats. This 
package includes changes to our money laundering and forfeiture 
laws to improve our ability to break the financial backbone of 
criminal organizations. We also seek to modernize our 
racketeering laws. And we propose other amendments aimed at 
addressing the increasing global reach of these organizations. 
We believe that these legislative proposals will enhance our 
ability to attack transnational criminal groups wherever they 
are and protect the American people from this global threat.
    Thank you for the opportunity to discuss this important 
issue with you, and I am, of course, pleased to answer your 
questions.
    [The prepared statement of Mr. Breuer appears as a 
submission for the record.]
    Chairman Whitehouse. Thank you, Mr. Breuer.
    Our next witness is Daniel Glaser, the Assistant Secretary 
for Terrorist Financing at the Department of Treasury's Office 
of Terrorism and Financial Intelligence. He has also served as 
Treasury's Deputy Assistant Secretary for Terrorist Financing 
and Financial Crimes. In addition to his prior roles at the 
Treasury Department, he has served as an attorney for the 
United States Secret Service and as the head of the U.S. 
delegation to the Financial Action Task Force, an 
intergovernmental agency charged with formulating policies to 
combat international money laundering and terrorism financing. 
He is a graduate of the University of Michigan and the Columbia 
University School of Law, and we welcome him here.
    Mr. Glaser.

  STATEMENT OF HON. DANIEL L. GLASER, ASSISTANT SECRETARY FOR 
     TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY, 
                         WASHINGTON, DC

    Mr. Glaser. Chairman Whitehouse, distinguished members of 
the Committee, thank you for the opportunity to appear before 
you today to discuss the Treasury Department's contribution to 
the Obama administration's strategy to transnational organized 
crime.
    In my testimony today, I will focus on the Treasury 
Department's efforts to implement this strategy with the use of 
our unique authorities, including Executive Order 13581, as 
well as our ongoing work to promote financial transparency both 
domestically and abroad.
    In early 2010, the United States completed a comprehensive 
assessment of transnational organized crime which concluded 
that these networks have expanded in scope and sophistication, 
engage in a range of illicit activities, and are exploiting the 
international financial system. To combat this growing threat 
to U.S. interests, the Obama administration announced the 
national strategy to combat transnational organized crime that 
utilizes new and innovative capabilities and tools to combat 
this threat. The most significant new tool is Executive Order 
13581, designed to specifically block the property of major 
transnational criminal organizations. In the Executive order, 
the President identifies and imposes sanctions on four 
significant criminal organizations: the Brothers' Circle in 
Russia, the Camorra in Italy, the Yakuza in Japan, and Los 
Zetas in Mexico. These groups' growing infiltration of 
legitimate commerce and economic activity threatens U.S. 
economic interests at home and abroad through subversion, 
exploitation, and distortion of legitimate markets and economic 
activity. The result is a convergence of complex, volatile, and 
destabilizing threats to U.S. national security.
    The Treasury Department is now implementing a strategy to 
effectively implement Executive Order 13581. First, we are 
attempting to map the financial networks of these organizations 
so we can target them with derivative designations, thereby 
undermining their ability to operate effectively within the 
international financial system. Our efforts will complement 
U.S. law enforcement authorities in the fight against the 
criminal organizations, building on our already close 
cooperation with the U.S. Department of Justice.
    We will also work with like-minded foreign partners and the 
international financial community to build an international 
coalition to combat transnational organized crime more broadly. 
In fact, I will travel to Moscow next week to discuss this very 
issue and build on our ongoing cooperation with our Russian 
counterparts.
    Of course, the Treasury Department will not limit our 
efforts to these four groups or solely to this Executive order. 
We will also seek out new organizations to target, and we will 
employ our full arsenal of tools, including Section 311 of the 
USA PATRIOT Act.
    The success of our efforts to combat organized crime 
through targeted action also relies on our ongoing work to 
promote a transparent global financial system. Transnational 
criminals seek to exploit the complexity and opacity of the 
international financial system. We, therefore, must enhance 
financial transparency and diminish their ability to commit and 
profit from crime. In order to improve this transparency, the 
Treasury Department has worked internationally to create a 
global anti-money laundering and counterterrorism financing 
framework as a foundation for taking action against criminal 
groups. This work has been advanced through such organizations 
as the Financial Action Task Force, the IMF, the World Bank, 
and the G-20.
    These efforts, however, are undermined by the ability of 
criminal organizations to launder illicit proceeds through the 
abuse of legal entities. Accordingly, Treasury has developed a 
strategy to address this vulnerability in the U.S. and 
international financial systems.
    First, we are working with our interagency partners and 
with Congress, including in particular Senator Levin, to 
develop new legislation that will enhance the ability of 
beneficial ownership information to law enforcement about legal 
entities created in the U.S.
    Second, we plan to clarify and strengthen customer due 
diligence requirements for financial institutions with respect 
to the beneficial ownership of legal entities.
    Finally, we are working with our international partners in 
the FATF to clarify and facilitate the global implementation of 
international standards regarding beneficial ownership. Without 
widespread global implementation, illicit actors could evade 
strengthened U.S. requirements and access the U.S. financial 
system through other means.
    Transnational organized crime presents a persistent and 
unique security threat to our financial system. Our efforts to 
combat this threat will persist, and we will continue to find 
innovative ways to disrupt and dismantle illicit financial 
networks, and to ensure that the international financial 
community builds strong systems to counter penetration by 
organized crime groups.
    Thank you for the opportunity to testify today, and I look 
forward to answering any questions.
    [The prepared statement of Mr. Glaser appears as a 
submission for the record.]
    Chairman Whitehouse. Thank you, Mr. Glaser.
    Our final witness is Kumar Kibble, who is the Deputy 
Director for U.S. Immigration and Customs Enforcement at the 
Department of Homeland Security. He has served in leadership 
roles at ICE headquarters, including as the Deputy Assistant 
Director for the National Security Investigations Division and 
as Deputy Director and Acting Director of Investigations. Mr. 
Kibble began his Government career in 1990 as an infantry 
officer in the U.S. Army's 82nd Airborne Division. He is a 
graduate of the U.S. Military Academy at West Point. We are 
pleased he is here.
    Mr. Kibble.

STATEMENT OF KUMAR C. KIBBLE, DEPUTY DIRECTOR, U.S. IMMIGRATION 
AND CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY, 
                         WASHINGTON, DC

    Mr. Kibble. Chairman Whitehouse and distinguished members 
of the Subcommittee, on behalf of Secretary Napolitano and 
Director Morton, thank you for the opportunity to discuss ICE's 
role in combating transnational organized crime.
    Our roughly 20,000 employees include 7,000 homeland 
security investigations--or HSI--special agents assigned to 
more than 200 cities throughout the United States and 70 
foreign offices around the world. This global team focuses 
exclusively on investigating transnational threats. HSI 
investigators are uniquely equipped with cross-border 
authorities, expertise, and information enabling them to 
disrupt and dismantle transnational criminal networks operating 
along the entire illicit travel and trade pathways in 
destination, transit, and source countries.
    Just yesterday, we announced the results of Operation 
Pipeline Express, a 17-month multi-agency investigation 
responsible for dismantling a massive narcotics-trafficking 
organization affiliated with the Sinaloa Cartel. Conservative 
estimates indicate that during a 5-year period this 
organization smuggled more than 3.3 million pounds of 
marijuana, 20,000 pounds of cocaine, and 10,000 pounds of 
heroin into the United States, generating almost $2 billion in 
illicit proceeds. HSI agents, working with the Pinal County 
sheriff's office, the Arizona Attorney General's office, and 
more than 20 Federal, State, and local partners, arrested 76 
subjects and seized more than 60,000 pounds of narcotics and 
more than 100 weapons. The organization's smuggling methods 
included use of backpackers, vehicles, and sophisticated 
countersurveillance operations. This case demonstrates how HSI 
targets transnational criminal organizations along the entire 
continuum of transnational crime beyond our borders in 
coordination with foreign partners, at our borders in 
coordination with Customs and Border Protection, and within our 
borders in cities throughout the United States in partnership 
with Federal, State, local, and tribal agencies.
    Over the last two decades, transnational organized crime 
has expanded dramatically in size, scope, and impact. In 
response, earlier this year the administration launched its new 
strategy to combat transnational organized crime, or the TOC 
Strategy. To support the administration's strategy within ICE, 
we have developed the Illicit Pathways Attack Strategy, or 
IPAS. Using a risk-based approach, IPAS prioritizes our efforts 
to attack convergence points and vulnerabilities in the 
networks, routes, and infrastructure used by high-risk 
transnational criminal networks.
    Our first IPAS plan facilitates engagement with host 
country partners to increase joint human smuggling 
investigations, enhance exchange of information, build 
capacity, and support foreign and domestic prosecutions. A 
coordinated strategy of attacking human smuggling networks 
along the entire illicit travel continuum reduces pressure on 
our borders and assists partner nations in disrupting organized 
alien smuggling within their own territories.
    In addition to human smuggling, HSI works with our 
interagency and international partners to disrupt and dismantle 
criminal networks engaged in schemes that include intellectual 
property theft, arms and technology proliferation, bulk cash 
smuggling, child exploitation, human trafficking, drug 
smuggling, and transnational gang activity.
    But to truly dismantle these schemes, partnerships and 
information sharing with domestic and, more importantly, 
foreign counterparts are absolutely essential, and we lead 
several interagency centers to coordinate a comprehensive 
response to these threats. The National IPR Center brings 
together 19 Federal and international partners to address 
intellectual property theft. Through the center we are leading 
an effort to educate the public and audiences about IP theft 
and its connection with international organized crime. Working 
with our Cyber Crime Center, or C3, the IPR Center has led 
innovative cyber operations resulting in the seizure of 200 
domain names used to facilitate counterfeiting and copyright 
infringement.
    The Export Enforcement Coordination Center, created by 
Executive order last year and led by HSI, will coordinate 
counterproliferation investigations and industry outreach among 
CBP, the Departments of Homeland Security, State, Commerce, 
Treasury, Defense, Justice, Energy, and the Office of the 
Director of National Intelligence. And our Human Smuggling and 
Trafficking Center is an interagency fusion center and 
information clearinghouse to help coordinate interagency 
efforts involving human smuggling and trafficking. And, sadly, 
a significant number of these victims are children, and we take 
these cases very seriously.
    Bulk cash smuggling investigations are also coordinated 
through our Bulk Cash Smuggling Center through which we provide 
real-time operational and tactical support to Federal, State, 
and local officers involved in bulk cash smuggling seizures 24 
hours a day, 7 days a week. And we coordinate closely with the 
El Paso Intelligence Center to respond to these bulk cash 
smuggling inquiries from State and local agencies.
    Thank you again for the opportunity to appear before you 
today and for your continued support of ICE and its law 
enforcement mission. I would be pleased to answer any questions 
you may have.
    [The prepared statement of Mr. Kibble appears as a 
submission for the record.]
    Chairman Whitehouse. Let me thank the witnesses for being 
here and for their work. I do not need to tell you, as people 
who are on the front lines of this battle, that we have never 
been more vulnerable to international organized crime, and I 
certainly do not need to lecture you about the urgency of our 
response. You are living it. But I think you can tell us what 
tools we can provide you to make your job easier and more 
effective in dealing with this large, growing, and increasingly 
pernicious threat.
    Let me first ask a question about the scale of the 
enterprises that you are facing and compare for me the 
revenues, for instance, that you believe some of the largest 
criminal cartels and organizations have access to with the 
revenues of, let us say, small sovereign countries, just to 
give us a sense of the scale for starters. Mr. Breuer?
    Mr. Breuer. Thank you, Mr. Chairman.
    Mr. Chairman, you are absolutely right. The challenge that 
we face internationally and nationally in combating 
international organized crime is extraordinary, and some of 
these groups, of course, have sway that crosses borders easily 
and have become almost institutions, almost extraterritorial, 
if you will, states in and of themselves. If you talk about 
some of the groups in the former Soviet Union, if you talk 
about groups in Latin American cartels, they have amassed 
enormous resources, they are extraordinarily diversified, and 
they have, of course----
    Chairman Whitehouse. When you say enormous resources, 
compare it to--are they resources larger than the revenues of 
countries that we recognize----
    Mr. Breuer. Certainly, certain countries, yes, Senator, 
they are, and compared to some countries they absolutely are at 
least equivalent, or so we believe. And they are, of course, 
massively diversified, so it poses an enormous threat and 
underscores your point that to combat this, not only do we need 
to have enhanced tools, but we need to have our international 
partners join us in this very important preeminent battle.
    Chairman Whitehouse. Mr. Glaser, anything to add on that?
    Mr. Glaser. Just to give you some numbers, Mr. Senator, the 
narcotics industry in the United States is reported to generate 
between $19 and $39 billion in profit per year. The Camorra, 
which is one of the groups you have targeted with our new 
Executive order, their annual budget has been estimated at up 
to $25 billion. The World Bank has estimated that there is $1 
trillion per year that is spent in bribery around the world. So 
Lanny is absolutely right. We are talking about big numbers, 
and numbers that have the ability to skew the ability of 
governments around the world to really combat it.
    Chairman Whitehouse. Do you agree, Mr. Kibble?
    Mr. Kibble. Yes, sir. I can even think of specific cases. 
The investigation we took down or announced yesterday, that 
group over a 5-year period generated $2 billion in revenue. I 
can think of a bulk cash smuggling investigation that resulted 
in the dismantling of a Colombian super cartel. That generated 
in excess of $5 billion. So we are talking about amounts that 
range into the billions.
    Chairman Whitehouse. So the other question is, when I think 
back to my U.S. Attorney tenure and I consider the cases that 
we did that were the most intensive on the office, one was a 
public corruption case. It involved a lot of DOJ oversight 
because DOJ does a lot of oversight on public corruption cases, 
as you know, Mr. Breuer. It involved the RICO Act, racketeering 
prosecution, which has a number of complexities and also some 
oversight issues with DOJ. It involved undercover investigators 
who had to be backstopped and put in position. It involved 
working with confidential informants, which is always complex. 
And you put the whole thing together, and it was very time 
intensive and management intensive. It took a lot of work.
    We had an environmental case with a lot of forensic work 
that had to be done to rebuild what had happened to a burned 
tug and barge array in order to show the culpability of the 
company. And a wonderful FBI agent spent an enormous amount of 
time effectively virtually rebuilding, I guess you would say, 
that tug from its records so that we could show the necessary 
criminal standard had been met.
    You look at cases that are as intensive as that, and then 
you add to it the foreign element, and I am going to be out of 
time, so I will come back around to this some more in a second 
round. But just quickly scale for me in terms of gathering 
evidence, you can tail a suspect very readily in the United 
States if you are an FBI agent; you can get subpoenas; you can 
go out and interview witnesses. That is the very simplest part 
of a simple investigation. You move that to a foreign country, 
and all of that becomes suddenly complex. Could you comment on 
that?
    Mr. Breuer. Of course, Mr. Chairman, you are exactly right. 
I am exceedingly proud of what we are doing, but the complexity 
is vast. When you have these transnational organized crime 
groups, we have to collect data internationally. We do that 
through law enforcement-to-law enforcement partnerships, all of 
which take a long time, because we have to build those 
relationships. If we are going to bring admissible evidence 
into court, we have to do that through mutual legal assistance 
treaties. Some countries are more progressive and quicker about 
those than others.
    We have to deal with byzantine financial records all over 
the world in different institutions that sometimes are more 
helpful or not helpful. And we have to do that with our 
resources.
    So these are very difficult. With some countries we have 
better relations; with others we have less. Some countries are 
more sophisticated, others are less. And with transnational 
organized crimes being so powerful, so wealthy, and so 
entrenched, identifying, exploiting our knowledge, and 
prosecuting is an overwhelming responsibility of ours. I think 
it is one we are doing well, but clearly it is a challenge that 
becomes harder each day.
    Chairman Whitehouse. My time has expired. But before I turn 
to Senator Grassley, let me ask you for a one-word answer. 
Given the power and the wealth and the reach of these 
organizations, is it always clear in dealing with a foreign 
country that the foreign country is not on their side?
    Mr. Breuer. No.
    Chairman Whitehouse. Thank you.
    Senator Grassley, and then on our side, in order of 
arrival, is Senator Feinstein, Senator Coons, and Senator 
Klobuchar.
    Senator Grassley.
    Senator Grassley. Thank you, Mr. Chairman.
    Mr. Breuer, yesterday you made a public statement saying 
that ATF and U.S. Attorney's Office officials ``repeatedly 
assured officials in the Criminal Division and the leadership 
of the Department of Justice the allegations about walking guns 
in Fast and Furious were not true.'' Please be more specific. 
Who exactly at ATF said that the gun-walking allegations were 
untrue? And who exactly at the U.S. Attorney's Office said the 
allegations were untrue?
    Mr. Breuer. Senator Grassley, as I said yesterday, of 
course, it was my office that ultimately prosecuted the Wide 
Receiver case. I want to be very clear to you, Senator, that 
when I learned of this in April of 2010 and I learned about it 
and we decided to prosecute this case from 2006 and 2007, I 
regret that at that point, knowing then--knowing now, I wish 
that at that time that I had said clearly to the Deputy 
Attorney General and the Attorney General that, in this case, 
Wide Receiver, we had determined that in 2006 and 2007 guns had 
walked. I did not do that, and I regret not doing that. But----
    Senator Grassley. Thank you for that statement. Now, who 
told you at ATF and the Attorney General's office that these 
allegations were untrue?
    Mr. Breuer. Well, Senator, at the time, as I recall, we 
first spoke to the ATF back in April of 2010, my front office 
did. And based on what I understood, we had an understanding 
from the ATF that this practice of 2006 and 2007, that the ATF 
understood the seriousness of that, and----
    Senator Grassley. What is that individual's name?
    Mr. Breuer. Well, this clearly, as far as I know, Senator 
Grassley, at the time Mr. Hoover, who is the Deputy, was one of 
the people who would have been involved in that discussion. Of 
course, I was not there for it, so I can only tell you my 
understanding. And then, of course----
    Senator Grassley. That is all I want is your understanding 
of it.
    Mr. Breuer. That is my understanding, Senator. Then, of 
course, Senator, in early this year when this matter came to 
life, and the ATF agents made the claims that they did, I 
recall that both the leadership of ATF and the leadership of 
the United States Attorneys Offices in Arizona, those, of 
course, who were closest and were handling the matter, were 
adamant about the fact that this was not, in fact, a condoned 
practice. I am sure you recall that as well.
    Senator Grassley. The word ``leadership'' applies then to 
the people that were head of the U.S. Attorney's Office and the 
head of ATF. Even though you did not give me their names, that 
is who you are talking about, right?
    Mr. Breuer. That is exactly right, as I recall.
    Senator Grassley. Let me go on then.
    Mr. Breuer. Yes, Senator.
    Senator Grassley. On February 4, 2011, the Department sent 
me a letter also assuring me that allegations of gun walking 
were untrue. It reads, ``ATF makes every effort to interdict 
weapons that have been purchased illegally and prevent their 
transportation to Mexico.'' That statement is absolutely false, 
and you admitted as much last night, that you knew by April 
2010 that ATF walked guns in Operation Wide Receiver. That is 
correct, yes?
    Mr. Breuer. Yes, Senator. What I----
    Senator Grassley. That is all I need to know, if that is 
correct.
    Did you review that letter before it was sent to me?
    Mr. Breuer. Senator, again, I just want to be clear that, 
as I told you a moment ago, I regret that in April of 2010 that 
I did not draw the connection between Wide Receiver and Fast 
and Furious. And, moreover, I regret that even earlier this 
year I did not draw that connection.
    In direct answer to your question, Senator, I cannot say 
for sure whether I saw a draft of the letter that was sent to 
you. What I can tell you, Senator, is at that time, I was in 
Mexico dealing with the very real issues that we are also 
committed to. But I also regret, as I have said, that I did not 
draw that connection earlier.
    Senator Grassley. After learning of gun walking in Wide 
Receiver, did you ever information Attorney General Holder or 
Deputy Attorney General about it? And if so, when? And if not, 
why not?
    Mr. Breuer. Senator, I cannot be more clear. I have said to 
you, and I will continue to, I regret the fact that in April of 
2010 I did not. At the time I thought that dealing with the 
leadership of ATF was sufficient and reasonable, and, frankly, 
given the amount of work I was doing at the time, I thought 
that that was the appropriate way of dealing with it. But I 
cannot be more clear that knowing now--if I had known then what 
I know now, I, of course, would have told the Deputy and the 
Attorney General.
    Senator Grassley. Did you ever tell anybody else in the 
Justice Department leadership the same thing? And if so, who 
and when?
    Mr. Breuer. Senator, I thought we had dealt with it by 
talking to the ATF leadership.
    Senator Grassley. OK. How many guns were walked in Wide 
Receiver?
    Mr. Breuer. Well, Senator, I can probably try to look at 
that. Of course, that was in 2006 and 2007. And just to be 
clear, if I may, Senator, that was a case that had been 
abandoned and had languished. It was my Division that decided 
to take the case where guns had been permitted to go to Mexico 
years earlier and at least make sure that the criminals who 
were responsible for purchasing those guns were held to 
account. As a result of that, Senator, we prosecuted 11 
different people. I think, to answer your question, in total, 
if my math is good, probably about 350 or so. But, Senator, I 
will have to double-check that number.
    Senator Grassley. OK. I think you are very close, so you do 
not have to check that number. According to my information, 
just five straw buyers--and I will refer to the chart here, and 
then I will quit and let you go on to another member, and I 
will do some more in a second round. According to my 
information, just five of the straw buyers in Fast and Furious 
were allowed to buy nearly 1,000 weapons. When did you first 
know that guns were walked in Fast and Furious?
    Mr. Breuer. Senator, I found out first from the public 
disclosures made by the ATF agents early this year. When they 
started making those public statements, of course, at that 
point, as you know, both the leadership of ATF and the 
leadership of the U.S. Attorneys Offices adamantly said that 
those allegations were wrong. But as those allegations became 
clearer, that is when I first learned that guns that could--
that ATF had both the ability to interdict and the legal 
authority to interdict, that they failed to do so. And that is 
when I first learned that, Senator.
    Senator Grassley. Thank you, Mr. Breuer.
    Mr. Breuer. Thank you, sir.
    Senator Grassley. Thank you, Mr. Chairman.
    Chairman Whitehouse. I will next call on Senator Feinstein, 
who not only brings to this concern her distinguished service 
of this Committee, but her service as Chair of the Senate 
Intelligence Committee. Senator Feinstein?
    Senator Feinstein. Thank you very much, Mr. Chairman. I 
appreciate that.
    Mr. Breuer, in June of this year, I received a letter from 
BATF--this was in response to a letter I had asked them--from 
Acting Director Melson stating that 29,284 firearms recovered 
in Mexico in 2009 and 2010 and submitted to the ATF Tracing 
Center, with those weapons 20,504, or 70 percent, were United 
States sourced. The country of origin for the remaining 
firearms apparently could not be determined by ATF, meaning 
that the number could be much higher.
    What actually is the number? Now, this was back in June. Is 
that the most current number? Is it fair to assume that 70 
percent of the firearms showing up in Mexico are from the 
United States?
    Mr. Breuer. Thank you, Senator, for the question and for 
your leadership on this issue. You have, of course, identified 
the paramount issue that we have to face as we deal with 
transnational organized crime from the Mexican cartels. From my 
understanding, 94,000 weapons have been recovered in the last 5 
years in Mexico. Those are just the ones recovered, Senator, 
not the ones that are in Mexico. And of the 94,000 weapons that 
have been recovered in Mexico, 64,000 of those are traced to 
the United States. We have to do something to prevent criminals 
from getting those guns, Senator, and that is my understanding 
of the most accurate numbers.
    Senator Feinstein. Well, you see, this is a deep concern 
for me, and I know others disagree, but we have very lax laws 
when it comes to guns. And I think this to some extent 
influences BATF in how they approach the problem as to whether 
they have political support or not. But I think these numbers 
are shocking, and I think when you know the number of deaths 
these guns have caused, used by cartels against victims, it is 
literally up in the tens of thousands. So the question comes: 
What can we do? And I would really rather concentrate on the 
constructive rather than other things, and so the question 
comes: Do you believe that if there were some form of 
registration when you purchase these firearms, that would make 
a difference?
    Mr. Breuer. I do, Senator. Senator, we are talking today 
about transnational organized crime, and your leadership and 
the Chairman's and other Senators' shows that information is 
the tool we need to challenge and defeat organized crime. 
Today, Senator, we are not even permitted to have ATF require 
reports about multiple sales of long guns, of any kind of semi-
automatic weapon or the like. So the ATF is unable to get that 
in all States. Very few hunters in the United States, or sports 
people, law-abiding people, really need to have semi-automatic 
weapons or long guns. So today if I go into a dealership and I 
want to buy 50 or 60 semi-automatic weapons, there is nothing 
that requires that to be in any way notified to ATF. Without 
that kind of notification, we lose track and can lose track of 
these kinds of potent weapons, and that is just one example of 
the kind of tool that I think would empower ATF and law 
enforcement to help fight this scourge.
    Senator Feinstein. My concern, Mr. Chairman, is there has 
been a lot said about Fast and Furious, and perhaps mistakes 
were made. But I think this hunt for blame does not really 
speak about the problem, and the problem is anybody can walk in 
and buy anything, .50-caliber weapons, sniper weapons, buy them 
in large amounts, and send them down to Mexico. So the question 
really comes: What do we do about this? I have been here 18 
years. I have watched the BATF get beaten up at every turn in 
the road. And, candidly, it is just not right.
    We have more guns in this country than we have people, and 
somebody has got to come to the realization that when these 
guns go to the wrong places, scores of deaths result, and that 
is exactly the case with the cartels.
    So you are saying today that, if I understand this, over 5 
years in recovered weapons there were 94,000; 64,000 of those 
came from the United States. So, clearly, over two-thirds of 
the weapons used in Mexico by cartels are coming from the 
United States.
    Mr. Breuer. That is correct, Senator. And just to make a 
point of that, in Wide Receiver, which was a matter where the 
guns were permitted to go to Mexico during the prior 
Administration, in the years 2006 and 2007, when my team 
discovered that, we decided we had to prosecute that case, 
because even though years and years earlier the guns had gone 
to Mexico, we had to hold the people who bought those guns 
responsible. And so we prosecuted those people, as Senator 
Grassley pointed out.
    But it is clear that we need more tools to get those people 
who are buying the guns and illegally transporting them to 
Mexico. We cannot permit the guns to go knowingly, and we 
cannot permit the guns to go unknowingly. We need to stop the 
flow.
    Senator Feinstein. A last question. What would be the No. 1 
tool that would be of help to you?
    Mr. Breuer. Well, I think that the No. 1 tool would be if 
ATF were given the ability to know when guns are purchased. 
Frankly, I do not know if it is the No. 1 tool, but one of the 
issues we are asking for in connection with the legislation we 
are talking about today, is the ability to forfeit the weapons 
and the inventories of gun dealers who knowingly sell their 
guns to criminals, if we could forfeit the guns of the dealers 
who we can prove knowingly are selling to criminals. We do not 
want to do anything to people who are selling to law-abiding 
citizens. But we have to stop these dealers from selling to 
criminals.
    Senator Feinstein. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Whitehouse. Senator Coons.
    Senator Coons. Thank you, Chairman Whitehouse, and thank 
you for convening this important hearing.
    Let me start, if I could, Mr. Kibble, with some of the 
things you mentioned in your testimony, and the whole panel 
did, that transnational organized crime has broadened from its 
traditional areas of narcotrafficking, gun running, bribery 
extortion, into perhaps less obvious or less well expected 
areas--identity theft, cyber crime, intellectual property 
crimes, and counterfeiting. A whole series of recent articles 
have documented how in Mexico nine out of ten DVDs are pirated, 
and so blatantly so that most of them are stamped with the 
insignia of La Famiglia or Los Zetas, who are two of the 
notorious drug cartels. And according to a 2009 RAND report, 
gangs in Mexico are turning to DVD piracy because it provides a 
huge profit margin, very low risk compared to other criminal 
enterprises.
    What can we do that we are not already doing? What 
additional resources might we be able to offer, legal or 
otherwise, to strengthen our enforcement activities and to get 
our allies and partners around the world to join us in 
combating pirated DVDs or counterfeiting in pharmaceuticals or 
other areas that have a high profit margin but currently very 
low risk?
    Mr. Kibble. Senator, the trend that you correctly describe, 
we see this--whereas before we had transnational criminal 
networks that maybe focused on one specific commodity, we see 
this diversification, and we have seen that with the Mexican 
cartels as well. Intellectual property theft is very 
attractive, as you noted, because the sentencing exposure is 
fairly low given the profit potential that can be gained by 
moving these counterfeit commodities.
    So what we are doing is we are trying to partner 
internationally with our partners in Mexico to share 
information to aid in the interdiction of copyrighted material 
or infringed material. What would be helpful is, because a lot 
of the ways we build these cases to get cooperating defendants, 
so the extent that we can have more significant penalties that 
help to encourage cooperation, that helps us to work up to the 
higher echelons of organizations that are engaged in 
counterfeiting.
    Senator Coons. I noted that was one of the principal 
recommendations and something I look forward to working with 
the Chairman on.
    Mr. Glaser, in your testimony--I want to start by 
commending your work in combating the financing of 
transnational crime and terrorism in particular. You mentioned 
the Financial Action Task Force is planning on releasing new 
international standards regarding beneficial ownership, I think 
early next year. And during the comment period, many of the 
stakeholders, the American Bar Association, European Bar 
Association, British Bar Council, National Association of 
Secretaries of State, shared a concern they were not being 
meaningfully consulted, and that concerns me because if you are 
not actively consulting the Secretaries of State and the folks 
mostly in the bar who will be required to partner to administer 
and comply with the new beneficial ownership standard, I think 
we run the risk of creating a standard that works great on 
paper but bogs down in the real world and might potentially put 
needless regulatory burdens on small business that do not 
achieve your real goals.
    Do you agree that the FATF should work closely with those 
who would be responsible for implementing its new guidance? And 
what is Treasury doing to improve that collaboration and 
consultation in advance of a new rule?
    Mr. Glaser. Thank you, Senator. I certainly agree that it 
is extremely important that the FATF consult with the private 
sector and take very seriously the views articulated by the 
private sector. As you point out, after all, the private sector 
really serves as a reality check for the types of things that 
are going to work and that are not going to work, what is going 
to be unduly burdensome, and they also have just some good 
ideas about how to make things go forward.
    I do think the FATF consults--and I know that the standards 
that you are referring to and that I referred to in my 
testimony are scheduled to be released I believe in February of 
2012, February of next year, and in advance of that there is 
formal private sector consultations that the FATF does.
    What I think is even more important for the U.S. private 
sector is the consultations that they do directly with us, with 
the U.S. Government, because at the end of the day the 
international the District are implemented through governments. 
So what is going to apply to them is going to be the 
regulations and the laws and the policies that we adopt in the 
United States. That is why, you know, in working--you mentioned 
beneficial ownership in particular. We have been working very 
closely with Congress, with Senator Levin in particular, and I 
know Senator Grassley has also cosponsored the beneficial 
ownership legislation. This has been a multi-year process where 
we have been working very closely with the Secretaries of State 
of the States and with the private sector to try to understand 
how this company or corporation process works and how we can 
make it work as a practical matter. So I do think all of that 
is important, and that is what we are working very hard to do.
    Senator Coons. Thank you. Given the short period until 
those rules come out, I would just urge some renewed 
consultation with those who do this professionally or as they 
are elected.
    Madam Chair, if I might, one last question?
    Senator Feinstein. [presiding.] Please go ahead.
    Senator Coons. If I might, Mr. Breuer, the broader context 
we are talking about here was how bribery and narcotrafficking, 
IP counterfeiting, identity theft, and so forth are--the 
expanded the reach of transnational organized crime has, as 
your early comments suggested, expanded its previous scope to 
the point where even some nation states are thoroughly 
compromised. Later today I will be chairing a hearing on China 
in Africa and how the economic and political situation on the 
continent of Africa, mostly Sub- Saharan Africa, has changed 
fundamentally. There are real challenges with counterfeit 
products, with transparency, with the trafficking of drugs and 
human trafficking throughout Africa. Any comment for me in that 
context about how we see transnational organized crime 
beginning to affect the stability of partner allied states on 
the continent of Africa?
    Mr. Breuer. Absolutely, Senator, and thank you for what you 
are doing in this area. We have to be very nimble and 
understand that those countries that are under economic duress 
or those countries that have less stable governments or newer 
governments are going to be less able to resist the ever 
strengthening role of organized crime. Earlier this year, along 
with an Assistant Secretary of State, I was honored to lead a 
delegation. We went to Liberia and to Ghana, and we spoke to 
leaders in both of those countries about this very issue.
    We have to be careful that Western Africa and other regions 
do not become beachheads for the cartels. They take their drugs 
and their other products and try to use different places around 
the world for staging areas. We have to be partners with them. 
In Liberia I was fortunate enough to see the beginning of a 
coast guard that we are helping to build there. Well, that is 
essential, because i they themselves can begin in a meaningful 
way to police themselves, they can do a better job of fighting 
organized crime. And so I think we have to be nimble and we 
have to continue to develop partnerships throughout.
    Senator Coons. Thank you.
    Senator Feinstein. Thank you very much.
    Senator Klobuchar.
    Senator Klobuchar. Thank you. Thank you very much, all of 
you, for being here for this important topic. I know that 
Senator Coons raised the issue of intellectual property theft. 
It is an issue which I have been very focused on, and not just 
with the DVDs that Senator Coons mentioned but also with theft 
over the Internet. And I think people do not often realize the 
relationship between these kinds of thefts and organized crime. 
So I wondered, Mr. Breuer, if you could talk about what types 
of intellectual property have been targeted by organized crime 
groups and what we can do to better prevent such crimes.
    Mr. Breuer. Well, Senator, we very much think that 
transnational organized crime today, as you have identified, is 
absolutely challenging intellectual property and is using 
computers and is expanding around the world.
    What we have to do is we have to have more tools. We have 
to empower us, as we have asked to be able to bring 
racketeering cases, RICO cases against organizations, and to 
have more of an international reach in doing that, because 
these are sophisticated organizations.
    I was just in Romania last week, as I mentioned, and the 
very issue you are identifying is one that we talked a lot 
about, because, of course, groups in those kinds of countries 
through computers and others are stealing the intellectual 
property of the United States.
    But we are bringing many, many cases in that area, and we 
are going to continue to do it. But using the racketeering 
powers that we have asked for, money laundering and forfeiture 
powers, and enabling us to continue to have countries around 
the world join international conventions, is the way for us to 
work hard in this area.
    Senator Klobuchar. I have always believed that our laws and 
our prosecutors have to be as sophisticated as the crooks that 
are breaking them, and this is a whole new area, obviously, 
with the Internet and trying to make sure we maintain people's 
freedom and their ability to put things up there, but at the 
same time are able to draw the line when actually it is for 
organized crime for commercial use for making money off it.
    In your written testimony, you propose strengthening 
criminal penalties for violation of IP law and focus on those 
that involve the conscious or reckless risk of death or bodily 
injury. Can you give us an example of what the Department of 
Justice has dealt with with such a scenario as that?
    Mr. Breuer. Absolutely, Senator. Time and again, even in 
the last couple of years, we have been bringing cases where 
individuals have taken counterfeit products and have tried to 
sell them to our military--that is one of the large 
categories--have tried to deal with the infrastructure of our 
United States--that is another major category--or have dealt 
with pharmaceuticals or products that we ingest. Those cases, 
just in the last year, I think, are at an all-time high, and if 
I were to generalize, they are exactly that: whether they are 
trying to counterfeit Cisco products and have them sold for our 
military air force or our computers, whether people are taking 
products that go to our computer systems more generally, we 
have tried as hard as we can to prosecute those crimes. But we 
think we need enhanced tools, and we are hopeful we can get 
them.
    Senator Klobuchar. Very good. And you are aware of the two 
bills that we have been focusing on in the Judiciary Committee 
which is, first of all, the rogue website bill, which allows 
the Justice Department to take down websites that meet very 
high criteria--the criteria is that it is being used to steal 
things, basically--and also to make the felony penalties the 
same as people selling DVDs on the corner, which Senator Coons 
had brought up. Correct?
    Mr. Breuer. Yes, Senator, I am, and we are very supportive 
of exactly those kinds of provisions and trying to have as 
comprehensive an approach as we can have.
    Senator Klobuchar. Thank you very much.
    Did you want to add something, Mr. Kibble?
    Mr. Kibble. Senator, I just wanted to say those tools are 
going to be very important for stepping up our fight on online 
IP theft. But I would say there are some interesting things 
that we are doing already in terms of we are up to now about 
200 domain names that have been seized using existing 
authorities, and what we are doing with that is we are posting 
seizure notices. And what we have found is, in partnering with 
industry, that they have told us that a number of folks that 
are operating illicit websites that are used to distribute 
counterfeit merchandise, 80 of them have unilaterally taken 
down websites. We also have forfeited about 86 of those 200, 
and we use that to route people who go to those sites to a 
public service announcement that talks about how it impacts the 
American economy in terms of participating in intellectual 
property theft.
    But these tools that have been proposed in the legislative 
package are going to be important for staying up as the bad 
guys adapt.
    Senator Klobuchar. Thank you very much. I appreciate it.
    Senator Feinstein. The vote has begun. Senator Whitehouse 
has gone to vote, says he will be right back, and so he wants 
to continue this, so I will continue on.
    Last month, I authored with Senator Grassley the Targeting 
Transnational Drug Trafficking Act. This essentially strives to 
strengthen extraterritorial law. Among its provisions, the bill 
creates penalties for extraterritorial drug-trafficking 
activity when individuals have reasonable cause to believe that 
illegal drugs will be trafficking into the United States. Now, 
current law says that drug traffickers must know that illegal 
drugs will be trafficked to the United States. So what we have 
done is essentially lower the knowledge threshold to reasonable 
cause to believe.
    I would like to get each one of your views on that.
    Mr. Breuer. Senator, your legislation, your proposed 
legislation here, and Senator Grassley's, is essential. Right 
now, as we have talked about, these transnational organized 
crime groups are very sophisticated and can be very segmented. 
So you can have an outfit in South America, in Colombia, you 
can have a separate outfit that is simply responsible for the 
transmission of the drugs in a certain area or for a certain 
ingredient. And right now, you are absolutely right, to 
prosecute you we have to prove that you knew that the drugs 
were going to the United States.
    What we want to do is exactly what you say, and it will be 
an enormous tool. If you had reasonable cause to believe that 
the products were going to the United States--and we do not 
have to prove that you individually knew it--that will be an 
enormous tool in us prosecuting the cartels. And more to the 
point, if you are part of a conspiracy and we can prove that 
one member of the conspiracy had reasonable cause to believe 
the product was going to the United States, that will be a tool 
that will enable us to go after all the conspirators, and it is 
essential in our fight against organized crime and against 
these cartels. So we could not be more supportive, Senator.
    Senator Feinstein. Thank you very much.
    Do you differ from that, Mr. Glaser or Mr. Kibble?
    Mr. Glaser. No, Senator.
    Mr. Kibble. No, Senator.
    Senator Feinstein. Thank you. I better go vote, Senator.
    Chairman Whitehouse. Yes. First of all, Senator Feinstein, 
thank you very much for stepping in as Chair for me. As I think 
the witnesses are aware, we are now in a voting sequence in the 
Senate, and so Senator Grassley and I have made the mad dash 
back and forth to vote in order to be here for a second round. 
I have to say, he was quite something to keep up with.
    Senator Grassley.
    Senator Grassley. Thank you.
    Mr. Breuer, I think this will be my last round of 
questioning. Were you aware at the time that Deputy Attorney 
General Gary Grindler was briefed on Operation Fast and Furious 
in March of 2010?
    Mr. Breuer. Senator, I do not believe that I was briefed on 
Operation Fast and Furious, and, Senator, I do not believe that 
I was aware of that briefing.
    Senator Grassley. OK. In December 2009, Director Melson 
asked you to assign a prosecutor to the case from headquarters, 
and in March 2010, a prosecutor from the gang unit was assigned 
to Fast and Furious. Why did the No. 2 official in the Justice 
Department get a briefing around the same time headquarters 
assigned a prosecutor to Fast and Furious?
    Mr. Breuer. Senator, I cannot answer that. What I can say 
to you is, from the very beginning of my tenure as the 
Assistant Attorney General, I have been very committed to doing 
everything we could to fighting the drug cartels and to doing 
what we can to stop what they are doing. It was in that vein 
that I offered the southwest borders whatever help we in the 
Criminal Division could bring, and that is how the very issues 
you are raising came about. But I cannot tell you anything 
about the briefing because I simply did not participate in it.
    Senator Grassley. OK. You said that when you first learned 
about gun walking in Wide Receiver, you instructed one of your 
deputies to schedule a meeting with the ATF Acting Director to 
``bring these issues to their attention.'' When you first 
learned about gun walking in Fast and Furious, did you do the 
same thing? And if not, why not?
    Mr. Breuer. I did not, Senator, and that is what I regret.
    Senator Grassley. OK. Was the deputy who you assigned to 
meet with ATF, Jason Weinstein, also responsible for 
authorizing any of the applications to the court for wiretaps 
in Fast and Furious?
    Mr. Breuer. Senator, the answer is, he and other deputies 
in my office, including the longest-serving deputy in the 
United States' history, who has served for almost 60 years, 
did. If I may, Senator, for a moment, I would like to explain 
what that role is, if you would permit me.
    The Congress made clear in law that wiretaps on telephones 
are an extraordinarily intrusive technique. They are a 
technique that I support fully and that I think are essential 
in fighting organized crime and transnational organized crime. 
And they are why, Senator, in my 2\1/2\ years I have over 
tripled the number of reviewers who do it. But as Congress made 
clear, the role of the reviewers and the role of the deputy in 
reviewing Title III applications is only one. It is to ensure 
that there is legal sufficiency to make an application to go up 
on a wire and legal sufficiency to petition a Federal judge 
somewhere in the United States that we believe it is a credible 
request. But we cannot--those now 22 lawyers that I have who 
review this in Washington, and it used to only be 7 cannot and 
should not replace their judgment, nor can they, with the 
thousands of prosecutors and agents all over the country. 
Theirs is a legal analysis: Is there a sufficient basis to make 
this request? We must and have to rely on the prosecutors and 
their supervisors and the agents and their supervisors all over 
the country to determine that the tactics that are used are 
appropriate.
    Senator Grassley. Thank you for that explanation.
    You said in your statement last night that you ``did not 
draw a connection'' between gun walking in Wide Receiver and 
gun walking in Fast and Furious. You also said that you regret 
your failure to ``alert others within the Department 
leadership'' of similarities.
    What finally made the light bulb go on for you that the two 
cases had similar problems?
    Mr. Breuer. Senator, thank you for that question. I hope 
you know, Senator, that I have tried and my Division has tried 
as comprehensively as we can to deal with the plight of Mexico. 
I am proud to say, Senator, that it is my Division that is 
prosecuting the thugs and criminals who killed the three U.S. 
consulate officials in Juarez. It is my Division that is 
responsible for the investigation right now of the murderers of 
ICE Agent Zapata and the shooting of Avila. And it is my 
Division, working with law enforcement, that has brought 104 
Mexican criminals, cartel leaders and the like, including 
Benjamin Arellano Felix, to justice this year in the United 
States.
    So every day, whether it is an organized crime or white-
collar crime or cyber crime case we are working, there is 
absolutely no question, Senator, that as I was involved in this 
exercise and as all of this has come to light, that I, in 
thinking about it, realized that I should have back in April of 
2010 drawn that connection. I have expressed that regret 
personally to the Attorney General of the United States, and 
then I determined that I should do it publicly as well.
    Senator Grassley. I have just three short questions, Mr. 
Chairman. When did you finally alert others within the 
Department leadership about the similarities that I just 
described? And who did you alert?
    Mr. Breuer. Senator, I cannot anymore recall because, of 
course, by the time that the connection is drawn with me----
    Senator Grassley. That is OK. How did you first hear about 
Fast and Furious?
    Mr. Breuer. Well, I first heard about the tactics about 
guns being permitted to go to Mexico when ATF had both the 
legal authority to interdict them and the ability to interdict 
them, I first heard of those allegations when the ATF agents 
went public.
    Senator Grassley. OK. And then when and how did you first 
learn about the connection between Fast and Furious and U.S. 
Border Patrol Agent Brian Terry's murder?
    Mr. Breuer. Senator, Border Patrol Agent Brian Terry's 
murder is an absolute horrible tragedy, as are the tragedies of 
the other people, law enforcement and others, who have been 
killed. The only way I learned about any connection there was 
when it became public. But, of course, as you know, Senator, 
with respect to many of these tragedies, my Division has done 
everything we can to hold the people liable. When CBP Agent 
Rosas was killed, I worked personally, tirelessly, to bring his 
murderer to the United States. I attended the funeral. I spent 
time with his family. And that is why we are working tirelessly 
to hold the murderers of Agent Zapata accountable and the 
murderers of the consulate officials accountable.
    Senator Grassley. Mr. Chairman, I have a request of you. I 
released a report that I would like to ask be made a part of 
the record. It refutes the numbers referenced earlier that 70 
percent of the guns in Mexico came from the U.S. The answer is 
not to clamp down on law-abiding citizens or gun dealers. Would 
you include that in the record?
    Chairman Whitehouse. Without objection, the report will be 
included in the record.
    [The report appears as a submission for the record.]
    Senator Grassley. Thank you, Mr. Chairman, and thank you, 
Mr. Breuer, for your comments.
    Mr. Breuer. Thank you, Senator.
    Chairman Whitehouse. Thank you, Senator Grassley.
    We will wind up the hearing now because the votes are 
underway and we have, I think, six remaining, so I do not think 
I can manage to continue, plus we are now through a second 
round. But I did want to go back to the point that I raised 
initially and ask each of you, obviously briefly, you are all 
law enforcement professionals--for you this is a practical 
problem--evaluate for us and for those who will be listening to 
this record how and how much a case is complicated by having an 
international component. There is the initial investigative 
piece of tailing suspects and getting subpoenas for evidence 
and doing witness interviews, and that is a kind of traditional 
investigative piece. There is the electronic piece of trap-and-
trace, pen register, wiretap authority. There is often a third 
scientific piece of putting together forensic evidence, whether 
electronically or, you know, rebuilding a crime scene or 
reconstructing a fire or something like that. Then there is the 
question of getting access to the criminals themselves, the 
arrest and seizure of the individual. And, finally, there are 
the asset protection and ultimately forfeiture and seizure 
parts of trying to make sure that the proceeds and instruments 
of the crime are claimed and seized by our Government.
    If you could kind of walk us through a hypothetical case 
and in those five areas, if there are a couple where you have a 
particular specialty and you want to pass off others so we are 
not repeating ourselves too much, I will leave that to you to 
sort out. But I would like to kind of leave this hearing with a 
flavor for exactly how what could already be a very complicated 
case in the United States under U.S. law with our existing 
procedures and protocols becomes exacerbated as a challenge 
when it has an overseas component. Mr. Breuer, I will let you 
go first.
    Mr. Breuer. Senator, I will take a try at that. In a 
typical case we may receive some sort of complaint from some 
sort of an entity. Maybe it is identity fraud, maybe it is 
online fraud, it could be really anything. So the first thing 
we have to do is try to investigate that allegation. Perhaps we 
will try to trace whatever information we can. Maybe we will 
try to find whether an online vendor or a money transmitter or 
someone has been involved.
    It may turn out that we will try to run the names through 
something that this Administration started, which is called 
IOC-2. It is a data base where we now try to get from all of 
law enforcement, whether from Treasury, from ICE, from wherever 
we can, information to see if we can find other touches 
throughout.
    But then we may need to get foreign evidence. Our foreign 
partners vary. Some, like Romania, where I was last week, are 
very, very strong, and they are happy to exchange information, 
and they work well with us. But, frankly, others will not share 
information. If we need it in court, we have to go through the 
court system and do what is called a mutual legal assistance 
treaty, and we have to get it that way. That can take months 
and months, if not years. We can sometimes follow very 
byzantine kinds of procedures that we have to do.
    Chairman Whitehouse. Something as simple as having an agent 
tail somebody is----
    Mr. Breuer. Right, I have to get----
    Chairman Whitehouse. At the agent level here, an agent and 
a supervisor will decide to do it based on a case. That is 
something you and the Department of Justice will never see. The 
U.S. Attorney might not even see it themselves in the local 
office. That would be really where-the-rubber-meets-the-road 
investigative determination, and there would be virtually no 
administrative burden or complexity to getting clearance to 
accomplish that task. You want to tail the same person, and you 
used the example of Romania, what is----
    Mr. Breuer. We have to get the Romanian authorities to 
agree to do that. We have to work with them, and they have to 
be willing to do it, and it is enormously difficult. Not only 
is that difficult----
    Chairman Whitehouse. Trap-and-trace.
    Mr. Breuer. Right. I mean, we----
    Chairman Whitehouse. I mean, compare trap-and-trace.
    Mr. Breuer. Well, I mean, in the United States we are able 
to do that with some efficiency. In countries around the world, 
there is the entire gamut of what we are allowed to do with 
respect to telephonic and other kinds of information. Some 
countries will do it somewhat easily. Other countries will 
almost never do it. Some countries, for instance, if we 
identify the criminals, will never extradite their nationals. 
So with impunity, unless that country is willing to prosecute 
the person, we cannot do it.
    These are very huge problems, and that is why----
    Chairman Whitehouse. Unless you can lure them overseas.
    Mr. Breuer. Unless we can lure them overseas. That is 
exactly right. And that is a very difficult issue. We do it, as 
you know, but that can also have international ramifications. 
And so it is something we do only after much consideration.
    Chairman Whitehouse. From a Treasury point of view, Mr. 
Glaser, in terms of asset forfeiture and seizure of goods, 
again, a couple of practical comparisons, if you could, on how 
the international element of one of these investigations adds 
to the burden and challenge that you have to face compared to a 
pure domestic case.
    Mr. Glaser. As has been alluded to a number of times, the 
international financial system is seamless, it is borderless, 
it is instantaneous. And people who are operating within the 
international financial system do so in that environment. So 
the challenge that we have is that, unfortunately, governments 
are not borderless, governments are not instantaneous, 
governments are not seamless. We have to operate through 
treaties; we have to operate through mutual legal assistance 
agreements, through information sharing and other types of 
information-sharing agreements.
    What our challenge is, at the Treasury Department what we 
try to do with respect to the international financial system is 
make it as transparent as possible so that the investigators 
and the prosecutors that Lanny works with on a daily basis have 
the opportunity to trace through the international financial 
system where the information is, and really even more 
fundamentally to make sure that the information is there in the 
first place, to make sure that financial institutions are 
asking the right questions and keeping the right records so 
that when there is a mutual legal assistance request that can 
be made, that the information is there in the first place.
    I think the biggest challenge we have now, as I said in 
both my written and oral testimony, is with respect to 
corporate vehicles, with respect to companies, both 
domestically and internationally, and the use of companies to 
disguise the true parties to transactions.
    Chairman Whitehouse. What we would call shell or phony 
corporations?
    Mr. Glaser. Front companies, shell companies, there are all 
different sorts. And it is not just necessarily companies. It 
could be trusts. But there are all sorts of non-transparent 
corporate vehicles that exist for perfectly legitimate reasons, 
and in no way certainly from the Treasury Department 
perspective do we want to interfere with how these corporate 
vehicles are used in legitimate commerce. But the fact is that 
they are also very useful to criminals, and I think there are 
some very common-sense things that we could do, again, both 
domestically and globally to ensure that when law enforcement 
investigators and prosecutors need to know who is behind these 
transactions, that information is available to them.
    Chairman Whitehouse. Thank you.
    Mr. Kibble.
    Mr. Kibble. I would just pick up on some of the same 
themes, Chairman. The nature of the transnational criminal 
threat has migrated to a very cellular structure so that 
frequently in our investigations, whether they are counterfeit 
pharmaceuticals or counter-proliferation investigations, they 
involve multiple countries and multiple continents. And when 
you are trying to reduce that illicit flow across our borders, 
which is the perspective which ICE comes at it from, it is 
coordinating that effort in multiple countries. And getting 
back to the point that Mr. Glaser said, the agile nature of our 
adversary that does not respect our borders, it is fashioning 
structures and partnerships and information exchange frameworks 
that allow us to move every bit as nimbly.
    A good example in Mexico, during the course of our 
investigations along the southwest border, we will develop 
information that identifies sicarios, cartel hit men that are 
in houses across the border, and during the course of our 
investigations, we have been able to share that with partners 
in Mexico that we have cultivated that have arrested those 
assassins, that have seized grenades, that have seized weapons, 
and we need to build that across the entire illicit pathway, 
and that can be challenging, depending on the framework and the 
governance of the particular countries we are dealing with.
    So it is just trying to build the structure that allows us 
to act every bit as nimbly as the transnational criminal threat 
we face.
    Chairman Whitehouse. Let me ask a final question, but I 
will make it a question for the record and you can get back to 
me. But, again, trying to be as practical about this as 
possible, as a U.S. Attorney, even if you have a relatively 
complicated case, the universe of folks that is involved in 
that case is your chain of command to the prosecutor who has 
been assigned it. It is the investigating agency, or in some 
cases agencies, but usually only two or three, and usually all, 
you know, ATF working with the FBI on a case, for instance, 
side by side, and so that is simple and within the district. 
You have the deconfliction to make sure that you are not doing 
something that somebody else is already into. And you have your 
relationship with the Department of Justice if it is a case in 
which the Department of Justice needs to sign off at various 
stages. That is kind of your universe for doing even a very 
complicated case.
    I would like to ask if you could pull together an example 
of an international case, maybe one that has been taken down, 
or maybe just pull the other hypothetical one, and lay out what 
the prosecutor in charge of that case is looking at in terms of 
not only their own chain of command to the prosecutor, not only 
the American domestic law enforcement investigative agency or 
agencies, but then the MLAT network, if it is not FBI, you have 
got to get the legats involved through the FBI. You have got an 
intelligence component to it often. You have to have a liaison 
with the local embassy. There is probably a Treasury component.
    I would like to kind of be able to almost construct kind of 
a diagram of what it takes to put all these agencies in the 
field to mount a really effective international investigation 
and how much bigger an administrative group and reach that is 
than just plain for the same crime if it were entirely 
domestic. So if I could ask you to do that, is that all right?
    Mr. Breuer. Of course, Senator.
    Chairman Whitehouse. Good.
    [The information referred to appears as a submission for 
the record.]
    Chairman Whitehouse. Thank you very much.
    I will put the Attorney General's letter to Chairman Issa 
and Chairman Leahy, which I do not think I have a date on, but 
it is the one that refers to Operation Fast and Furious--oh, 
there it is--the October 7, 2011, letter from Attorney General 
Holder to Chairman Issa, Chairman Leahy, and others, and 
without objection, that will be added to the record of these 
proceedings.
    [The letter appears as a submission for the record.]
    Chairman Whitehouse. The hearing record will remain open 
for another week if anybody wants to add anything further.
    I will close by again thanking the witnesses for their 
dedication to keeping our country safe and to protecting us 
from the criminal threat that we have always faced, but the 
international criminal threat that we face now in, I think, 
unprecedented intensity and in unprecedented means. And your 
service to your country is much appreciated, and the hearing is 
adjourned.
    [Whereupon, at 10:51 a.m., the Subcommittee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]

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