[Senate Report 110-66]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 148
110th Congress                                                   Report
                                 SENATE
 1st Session                                                     110-66

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



 
                WAR PROFITEERING PREVENTION ACT OF 2007

                                _______
                                

  Mr. Leahy, from the Committee on Judiciary, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 119]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to which was referred the 
bill (S. 119) to prohibit profiteering and fraud relating to 
military action, relief, and reconstruction efforts, and for 
other purposes, reports favorably thereon with amendments, and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose of the War Profiteering Prevention Act of 2007...........1
 II. History of the Bill and Committee Consideration..................4
III. Section-by-Section Summary of the Bill...........................5
 IV. Cost Estimate....................................................6
  V. Regulatory Impact Evaluation.....................................7
 VI. Conclusion.......................................................7
VII. Additional Views of Senator Sessions.............................7
VIII.Changes in Existing Law Made by the Bill as Reported............10


       I. Purpose of the War Profiteering Prevention Act of 2007

    Chairman Patrick Leahy introduced the War Profiteering 
Prevention Act of 2007 on January 4, 2007, which was 
cosponsored by Senators Bingaman, Kerry, Harkin, Rockefeller, 
Dorgan, Wyden, Schumer, Nelson of Florida, Clinton, Lautenberg, 
and Menendez. Senators Feinstein, Feingold, Durbin, Landrieu, 
Mikulski, Boxer, Cardin, and Byrd have since joined as 
cosponsors. This legislation strengthens the tools available to 
federal law enforcement to combat contracting fraud during 
times of war, military action, or relief or reconstruction 
activities. This legislation also extends the extraterritorial 
jurisdiction for these frauds to the full extent of the law in 
order to reach fraudulent conduct wherever it occurs.
    The legislation creates a new criminal fraud offense in 
title 18 of the United States Code to prohibit fraudulent acts 
involving the provision of goods or services in connection with 
a war, military action, or relief or reconstruction activities. 
It also makes this new offense a predicate crime for criminal 
and civil forfeiture, as well as for federal money laundering 
and racketeering offenses.

                             A. BACKGROUND

    Efforts to combat war profiteering have a long history in 
this nation. During the Civil War, President Abraham Lincoln 
fought against war profiteers, denouncing them as ``worse than 
traitors.'' He signed the first civil laws curbing this abuse.
    In World War II, President Franklin Delano Roosevelt spoke 
out against ``war millionaires'' who made excessive profits 
exploiting the calamity of war. President Harry Truman, when he 
served in the Senate, held historic public hearings to expose 
gross fraud, waste and abuse by military contractors.
    Over the past four years, war profiteering has again 
plagued this nation during the engagement of U.S. forces in 
Iraq and Afghanistan. The United States has devoted hundreds of 
billions of dollars to military, relief, and reconstruction 
activities in Iraq and Afghanistan, including more than $50 
billion to relief and reconstruction activities. Private 
contractors have been used to a greater extent during these 
war-time activities than at any time in our history. The 
exigencies of war overseas, however, often make oversight of 
these contractors more difficult, and expenditures are often 
made with fewer audit and other controls than during normal 
government procurement. As a result, the provision of goods and 
services during these military actions, as well as during 
relief and reconstruction activities, are more vulnerable to 
acts of fraud and abuse.
    Inspectors General overseeing the provision of goods and 
services in Iraq and Afghanistan have found that billions of 
dollars spent in Iraq are unaccounted for and may have been 
lost to fraud or other misconduct. These Inspectors General 
have opened hundreds of investigations into fraud, waste, and 
abuse in Iraq, Kuwait, and Afghanistan involving, among other 
things, illegal kickbacks, bid-rigging, embezzlement, and 
fraudulent over-billing. These investigations have uncovered 
crimes committed by employees of large and small government 
contractors in Iraq and Afghanistan, and many of these 
investigations involve abuse of the ``cost-plus'' and ``no-
bid'' contracts used during times of emergency, such as 
military, relief, or reconstruction activities.

                        B. NEED FOR LEGISLATION

    There is no federal criminal law specifically targeted at 
prohibiting contracting fraud during times of war, military 
action, or relief or reconstruction activities. The current 
regime of federal fraud statutes does not provide an offense 
for those who take advantage of the exigent circumstances 
created by these times of extreme emergency. Moreover, no 
federal law provides enhanced criminal punishment for 
fraudulent acts during times of war, or relief or 
reconstruction activities.
    In addition, none of the current fraud statutes explicitly 
extend extraterritorial jurisdiction for fraud offenses during 
times of war, military action, or relief or reconstruction 
activities. While in some cases courts have implied 
extraterritorial jurisdiction for fraud offenses, the common 
law suggests that extraterritoriality in a criminal statute 
should be clearly asserted and, without such a provision, there 
is a presumption against extraterritorial application. This 
bill addresses all of these gaps in existing federal criminal 
law.

             C. THE WAR PROFITEERING PREVENTION ACT OF 2007

    The War Profiteering Prevention Act of 2007 creates a new 
criminal offense in title 18 of the United States Code for 
fraudulent acts involving contracts or the provision of goods 
and services in connection with war, military actions, and 
relief or reconstruction activities. This new offense provides 
a significant new tool for federal law enforcement, as well as 
creating a strong deterrent to those who would contemplate 
exploiting the exigencies of war, military actions, relief or 
reconstruction activities to commit fraud and profit thereby.
    The new offense may be committed in two ways: (1) by 
committing fraud or (2) by making a materially false statement. 
The fraud provisions would make it a crime to execute or 
attempt to execute a scheme or artifice to defraud the United 
States or to materially overvalue any good or service with the 
specific intent to defraud. These provisions are designed to 
prohibit schemes to defraud the United States, including 
efforts to exploit ``cost plus'' or ``no-bid'' contracts by 
materially overvaluing goods or services with the specific 
intent to defraud. These provisions are not intended to 
prohibit or punish contractors providing goods or services in 
the normal course of business, and the legislation specifically 
requires that violators may only be criminally liable if they 
materially overvalue any good or service ``with the specific 
intent to defraud.'' This provision has been included to ensure 
that no contractor shall be prosecuted under this offense for 
mere negligent or mistaken conduct.
    The material false statement provisions would make it a 
crime (1) to falsify, conceal, or covering up by any trick, 
scheme or device a material fact, or (2) to make any materially 
false, fictitious, or fraudulent statements or representations, 
or (3) to make or use any materially false writing or document 
knowing they contain a false, fictitious, or fraudulent 
statement. This language is consistent with other material 
false statement provisions under federal law, such as 18 U.S.C. 
Sec. Sec. 1001, 1035. The new offense also requires that 
conduct be done knowingly and willfully to be a criminal 
violation.
    The new offense would require that any fraud or material 
false statement be in connection with any war, military action, 
or relief or reconstruction activities. This would include 
circumstances where war was declared, or where the executive 
branch was engaged in any military action with or without 
congressional authorization. This would also include relief or 
reconstruction activities, whether or not a war or military 
action was undertaken. This new offense is intended to deter 
fraud and material false statements committed in connection to 
any of these emergency circumstances.
    The new offense also requires that the conduct be subject 
to the jurisdiction of the United States. This term is to be 
interpreted broadly consistent with the jurisdictional scope of 
the federal material false statement statute, 18 U.S.C. 
Sec. 1001. In addition, the new offense explicitly provides 
extraterritorial jurisdiction and is intended to extend 
jurisdiction for this offense to the full extent of U.S. law. 
This provision has been included to ensure that offenses 
occurring outside the United States, even by non-U.S. 
nationals, may be prosecuted. Furthermore, consistent with 
other federal fraud provisions, the U.S. Government need not be 
a victim or suffer a loss from this offense provided the 
conduct meets the other elements of the offense. The bill also 
establishes venue for the offense as authorized by existing 
federal statutes (see 18 U.S.C. Sec. Sec. 3231-3244) including 
extradition, or in any district where any act in further of the 
offense took place, or where any party to the contract or the 
provider of goods or services is located.
    Violations of the fraud provisions in this bill would be 
punishable by imprisonment for up to 20 years, and violations 
of the material false statement provisions would be punishable 
by imprisonment for up to 10 years. All violations of this new 
offense would be subject to fines of up to $1,000,000 or twice 
the gross profits or other proceeds of the offense. The offense 
provides for criminal and civil forfeiture of any unlawful 
proceeds, and makes the new offense a predicate crime for money 
laundering (18 U.S.C. Sec. 1956(c)(7)) and for racketeering 
offenses (18 U.S.C. Sec. 1961(1)).

          II. History of the Bill and Committee Consideration


                               A. HEARING

    On March 20, 2007, the Judiciary Committee held a hearing 
on ``Combating War Profiteering: Are We Doing Enough to 
Investigate and Prosecute Contracting Fraud and Abuse in 
Iraq?'' which examined the War Profiteering Prevention Act of 
2007 and ongoing efforts to investigate and prosecute 
contracting fraud in Iraq. At the hearing, the Special 
Inspector General for Iraq Reconstruction, Stuart W. Bowen, 
Jr., and the Acting Inspector General for the Department of 
Defense, Thomas F. Gimble, testified concerning their ongoing 
investigations of contracting fraud and abuse in Iraq and 
Afghanistan. The Inspectors General testified that fraud and 
abuse during the military actions and relief and reconstruction 
activities in Iraq and Afghanistan remain a serious problem, 
and they reported on their investigations of criminal conduct 
involving illegal kickbacks, bid-rigging, embezzlement, and 
fraudulent over-billing. Special Inspector General Bowen 
confirmed that billions in cash transferred to Iraq remained 
unaccounted for and may be lost to fraud and abuse. Both 
Inspectors General indicated that they would support more tools 
to combat contracting fraud in Iraq, Afghanistan, and Kuwait. 
At the hearing, Deputy Assistant Attorney General for the 
Criminal Division at the Department of Justice Barry Sabin also 
testified concerning efforts by the Department to investigate 
and prosecute contracting fraud in Iraq. He confirmed that, in 
the four years since the start of military action in Iraq, the 
Justice Department had prosecuted 9 cases involving 25 
individuals, and these cases involved fraud of approximately 
$10 million.

                         B. LEGISLATIVE HISTORY

    On September 30, 2003, Senator Leahy offered the War 
Profiteering Prevention Act of 2003 as an amendment to the Iraq 
emergency supplemental appropriations bill (S. 1689), and the 
amendment was accepted by the Senate Appropriations Committee, 
incorporated into the bill, and reported to the Senate. On 
October 17, 2003, the Senate passed S. 1689, as amended with 
the War Profiteering Prevention Act; however, the provision was 
deleted from the bill in conference. On November 3, 2003, 
Senator Leahy reintroduced the bill (S.1813), the bill was 
referred to the Judiciary Committee and, on November 19, 2003, 
it was also referred to the Foreign Relations Committee, but no 
further action was taken by either committee.
    On March 2, 2006, Senator Leahy introduced the War 
Profiteering Prevention Act of 2006 (S. 2356). The bill was 
referred to the Committee on the Judiciary, but no further 
action was taken. Provisions of the bill were also incorporated 
in the Honest Leadership and Accountability in Contracting Act 
of 2006 (S. 2361). That bill was referred to the Committee on 
Homeland Security and Governmental Affairs, but no further 
action was taken.
    On January 4, 2007, Senator Leahy and cosponsors introduced 
the War Profiteering Prevention Act of 2007 (S. 119). The bill 
currently has 20 cosponsors: Senators Leahy, Bingaman, Kerry, 
Harkin, Rockefeller, Dorgan, Wyden, Schumer, Nelson of Florida, 
Clinton, Lautenberg, Menendez, Feinstein, Feingold, Durbin, 
Landrieu, Mikulski, Boxer, Cardin, and Byrd. After the hearing 
on March 20, 2007, the bill was placed on the agendas for 
business meetings of the Committee on March 22, March 29, April 
12 and April 25. It was considered by the Committee on April 
25, 2007. During that consideration, Senator Leahy offered an 
amendment to clarify language related to one of the fraud 
provisions by striking certain language \1\ and to add the new 
violation as a predicate offense for federal racketeering. The 
Committee agreed by unanimous consent to the amendment and to 
report the bill favorably to the Senate.\2\
---------------------------------------------------------------------------
    \1\ The amendment struck the words ``and excessively profit from 
the war, military action, or relief or reconstruction activities'' from 
Section 1039(a)(1)(A)(ii).
    \2\ Senator Kyl considered offering two amendments related to 
material support for terrorism and enhanced penalties for crimes 
committed outside the United States, but he agreed to proceed to report 
the bill without amendment and to introduce his amendments as separate 
bills.
---------------------------------------------------------------------------

              III. Section-by-Section Summary of the Bill

    Sec. 1. Short Title. This section provides that the 
legislation may be cited as the ``War Profiteering Prevention 
Act of 2007.''
    Sec. 2. Prohibition of Profiteering. This provision creates 
a new criminal offense to be added to Title 18 of the United 
States Code, as Section 1039.\3\ This offense would make it a 
crime for any person to commit fraud or make material false 
statements involving a contract or the provision of goods or 
services in connection with a war, military action, relief or 
reconstruction activities. The fraud offense may be committed 
either by executing or attempting to execute a scheme or 
artifice to defraud the United States or by materially 
overvaluing any good or service with the specific intent to 
defraud. The material false statement offense may be committed 
by falsifying, concealing, or covering up any material fact, by 
making a materially false statement, document, or writing. 
Violations of the fraud provisions would be imprisoned for up 
to 20 years; violations of the material false statement 
provisions would be imprisoned for up to 10 years. All 
violations of this provision could be also be punished with a 
fine of up to $1,000,000 or twice the gross profits or other 
proceeds of the offense. The statute asserts extraterritorial 
jurisdiction for this offense and establishes venue for the 
offense as authorized by current U.S. law, or in any district 
where any act in furtherance of the offense took place, or 
where any party to the contract or the provider of goods or 
services is located. The offense provides for criminal and 
civil forfeiture of any unlawful proceeds, and makes the new 
offense a predicate crime for money laundering and racketeering 
offenses.
---------------------------------------------------------------------------
    \3\ After S. 119 was introduced, Pub. L. 109-476 was signed into 
law and created a Section 1039 in Title 18. A technical amendment will 
be offered once this bill is considered by the full Senate to correct 
this problem.
---------------------------------------------------------------------------

             IV. Congressional Budget Office Cost Estimate

                                                       May 2, 2007.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 119, the War 
Profiteering Prevention Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

S. 119--War Profiteering Prevention Act of 2007

    CBO estimates that implementing S. 119 would have no 
significant cost to the federal government. Enacting the bill 
could affect direct spending and revenues, but CBO estimates 
that any such effects would not be significant. S. 119 contains 
no intergovernmental or private-sector mandates as defined in 
the Unfunded Mandates Reform Act and would impose no costs on 
state, local, or tribal governments.
    S. 119 would make it a federal crime to commit fraudulent 
acts while providing goods or services for a U.S. military 
action, or relief or reconstruction activities. Because the 
bill would establish a new offense, the government would be 
able to pursue cases that it otherwise would not be able to 
prosecute. We expect that S. 119 would apply to a relatively 
small number of offenders, so any increase in costs for law 
enforcement, court proceedings, or prison operations would not 
be significant. Any such costs would be subject to the 
availability of appropriated funds.
    Because those prosecuted and convicted under S. 119 could 
be subject to criminal fines, the federal government might 
collect additional fines if the legislation is enacted. 
Criminal fines are recorded as revenues, then deposited in the 
Crime Victims Fund, and later spent. CBO expects that any 
additional revenues and direct spending would not be 
significant because of the small number of cases likely to be 
affected.
    Persons prosecuted and convicted under the bill also could 
be subject to the seizure of certain assets by the federal 
government. Proceeds from the sale of such assets would be 
deposited into the Assets Forfeiture Fund and spent from that 
fund, mostly in the same year. Thus, enacting S. 119 could 
increase both revenues deposited into the fund and direct 
spending from the fund. However, CBO estimates that any 
increased revenues or spending would be negligible.
    Estimate prepared by: Federal costs: Mark Grabowicz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    V. Regulatory Impact Evaluation

    In compliance with rule XXVI of the Standing Rules of the 
Senate, the Committee finds that no significant regulatory 
impact will result from the enactment of S. 119.

                             VI. Conclusion

    Passage and enactment of the War Profiteering Act of 2007, 
S. 119, will give federal law enforcement a potent new tool to 
combat fraudulent acts during times of war, military action, or 
relief or reconstruction activities. This legislation will 
create a new criminal offense to deter and punish those who 
take advantage of the exigencies of war, military actions, or 
relief or reconstruction activities to commit fraud.

                VI. Additional Views of Senator Sessions

    This legislation deals with two issues that are very 
important to me: contractor fraud in Iraq and disaster relief 
fraud. It will ensure that those who commit fraud against the 
United States by fraudulently obtaining war or emergency 
disaster relief funds will be brought to justice.
    The Chairman and I have worked together in past years to 
pass legislation to ensure that crimes and frauds perpetrated 
in Iraq or in other places overseas are rightly brought to 
justice here in the United States. I am glad to be working with 
him again to make sure we give the Department of Justice all 
the tools they need to bring contractors who commit fraud to 
justice.

             THE MILITARY EXTRATERRITORIAL JURISDICTION ACT

    I first looked into this issue almost a decade ago. In 
1999, one of my constituents approached me with a horrifying 
story of how two innocent children were molested while living 
overseas with their father, an Army serviceman. Because the 
perpetrator committed this despicable act overseas, he was 
beyond the scope of jurisdiction in the United States. 
Moreover, German law did not allow for prosecution.
    Immediately after hearing this story, I began working to 
introduce the Military Extraterritorial Jurisdiction Act 
(``MEJA''), which was signed into law in 2000. The Chairman was 
an original cosponsor of my bill, and we worked together to 
close a legal loophole which had shielded civilian employees 
working overseas from being prosecuted for criminal acts they 
commit abroad.
    Because of the loophole, these persons were outside the 
scope of military justice, and beyond the jurisdiction of U.S. 
federal courts. When foreign countries declined prosecuting 
these individuals, they were never brought to justice for their 
acts.
    MEJA provided U.S. federal courts with jurisdiction over 
civilian employees, contractors and subcontractors affiliated 
with the Defense Department who commit crimes that would have 
otherwise subjected that person to at least one year in 
prison--if the offense had been committed in America.
    By eliminating the statutory loophole that previously 
allowed these criminals to walk free, MEJA provided the 
Department of Justice with the necessary prosecutorial tools to 
hold criminals accountable for their actions.

                2004 SESSIONS/SCHUMER AMENDMENT TO MEJA

    In 2004, Senator Schumer and I recognized that events 
overseas had clouded the scope of who could be prosecuted under 
MEJA. On its face, it applied only to persons directly 
associated with the Department of Defense, either as 
contractors or civilian employees. The statute did not address 
contractors employed by other federal agencies.
    Some of the prison abuses at Abu Gharib involved employees 
of private contractors who may not have been directly 
affiliated with the Department of Defense, but with other 
federal entities.
    As such, these private contractors could fall outside the 
scope of MEJA, and accordingly, outside the jurisdiction of 
U.S. federal courts. These events highlighted the need to 
clarify and expand the coverage of MEJA to cover all types of 
contractors--no matter what federal agency was signing their 
paycheck.
    In June 2004, Senator Schumer and I offered an amendment to 
the Department of Defense Reauthorization Bill that would give 
the Justice Department authority to prosecute civilian 
contractors employed not only with the Department of Defense, 
but with any federal agency supporting American military 
missions overseas.
    At that time, the number of private contractors working in 
Iraq was about 10 times as great as it was during the Persian 
Gulf conflict. I argued then and I reiterate now that private 
contractors are necessary to rebuilding a healthy Iraq, yet we 
cannot allow them to escape justice for crimes committed 
overseas.
    The Senate accepted the Sessions-Schumer amendment by voice 
vote, forever closing a jurisdictional gap and leaving no doubt 
as to whether overseas offenders can be brought to justice.

         HISTORY OF THE WAR PROFITEERING PREVENTION ACT OF 2007

    In June 2004, the Chairman also offered an amendment to the 
Department of Defense Reauthorization bill aimed at cracking 
down on contracting fraud. At that time, his amendment was 
defeated 52-46. Many Senators, myself included, agreed that 
there was a need for legislation to impose criminal penalties 
on persons who commit wrongdoing in contracting in the course 
of our military operations. However, we were concerned that the 
language in the amendment introduced a new standard of 
criminality that required further review.
    At that time, the amendment created a specific crime when 
an individual, contractor, entity, or corporation knowingly and 
willfully ``materially overvalues any good or service with the 
specific intent to excessively profit from the war, military 
action, or relief or reconstruction activities in Iraq, 
Afghanistan, or such other country.''
    The term ``excessively profit'' has been used in civil 
statutes, but not in criminal statutes. Many Senators who 
opposed the Chairman's amendment did not want to introduce such 
vague language into the Criminal Code. I preferred to use 
language found in other fraud statutes so we know precisely 
what the language means.
    On April 25, 2007, the War Profiteering Prevention Act 
passed out of the Judiciary Committee. This legislation is very 
similar to Senator Leahy's 2004 amendment, but he has made some 
very important changes. I am pleased that before the bill 
passed out of Committee, Senator Leahy offered an amendment 
that removes the vague phrase ``excessively profits'' from the 
bill. In its amended form, the language now creates a specific 
crime for:
          ``Whoever, in any matter involving a contract or the 
        provision of goods or services, directly or indirectly, 
        in connection with a war, military action, or relief or 
        reconstruction activities . . . knowingly and willfully 
        . . . materially overvalues any good or service with 
        the specific intent to defraud.''
    The ``materially overvalues'' language comes directly from 
the insurance fraud section of Title 18 (18 U.S.C. Sec. 1033), 
which includes the phrase ``materially overvalues any land, 
property, or security.'' Importantly, the current language of 
``specific intent to defraud'' will be a much clearer standard 
than the previous language of ``specific intent to excessively 
profit.''

                         DISASTER RELIEF FRAUD

    The intent of this bill somewhat overlaps the intent of my 
Emergency and Disaster Assistance Fraud Penalty Enhancement 
Act, which was passed out of the Judiciary Committee in March 
of this year. The chairman's bill includes disaster relief 
efforts, which are the specific focus of my anti-fraud bill.
    The goal of my bill is to protect the victims of disasters 
like Hurricane Katrina by making it a specific crime under the 
existing fraud chapter of Title 18 (18 U.S.C., chapter 47) to 
fraudulently obtain emergency disaster funds.
    After an emergency or disaster like the tornadoes that 
devastated the city of Enterprise in my home state this March, 
and the deadly tornadoes that devastated Texas this April, we 
should do everything we can to make sure 100% of federal relief 
funds get into the hands of real victims and not people 
pretending to be victims. Taxpayers should not sustain a 
financial loss at the hands of scam artists, and wrongdoers 
should not profit from exploiting the victims of such horrific 
events.
    Common sense requires that those who deceive the government 
and obtain emergency disaster funds by fraud be subject to 
criminal punishment. We need to create a mindset that disaster 
relief funds are sacred; that they are for the benefit of 
people who have suffered tremendous loss; and only people who 
have suffered should gain the benefit of federal relief monies.
    The total price tag for the fraud committed after 
Hurricanes Katrina and Rita is not yet known, but the 
Government Accountability Office investigators have testified 
that it will be in the billions of dollars for the federal 
government.
    Billions of dollars in fraudulent payments is an insult to 
the victims of these natural disasters and an insult to the 
ultimate victim in this fraud, the American taxpayer. Natural 
disasters and emergency situations often create an opportunity 
for unscrupulous individuals to take advantage of both the 
immediate victims of the disaster or emergency, as well as 
those who offer financial and other assistance to the victims. 
The American people are extremely generous in responding to 
disasters, but they will not tolerate fraud by those who 
deceitfully exploit their generosity.
    Our resources are not unlimited, and it is critical that we 
ensure that every relief dollar goes to legitimate victims. It 
is important we give prosecutors the tools they need to protect 
legitimate victims and to protect American taxpayers. 
Exploiting the kindness of the American people in times of 
crisis is a serious crime that will be treated with appropriate 
severity. We will not tolerate criminals stealing from the 
pockets of disaster victims. We must ensure that victims and 
the generous members of the American public are not preyed upon 
by criminals attempting to profit from these disasters and 
emergencies.
    This bill creates a new section in the fraud chapter of 
Title 18 that prohibits fraud relating to military action, 
relief, and reconstruction efforts, while my bill adds a 
section to the fraud chapter which prohibits fraud in 
connection with major disaster or emergency benefits. My bill 
also increases the penalties currently available for such acts. 
It is clear that these two important pieces of legislation must 
be harmonized before they become law.

                               CONCLUSION

    I am pleased that the Chairman amended this legislation to 
remove a potentially vague term, ``excessively profits,'' from 
the language of the bill. After this revision, the bill sets 
forth a clear criminal standard that is both fair to 
contractors and appropriate for prosecuting these terrible 
crimes. In light of this significant change, I am happy to 
express my support for this legislation.

       VII. Changes in Existing Law Made by the Bill as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 119, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           UNITED STATES CODE


                TITLE 18--CRIMES AND CRIMINAL PROCEDURE


PART I--CRIMES

           *       *       *       *       *       *       *



CHAPTER 46--FORFEITURE

           *       *       *       *       *       *       *


    Sec. 981. Civil Forfeiture
    (a)(1) The following property is subject to forfeiture to 
the United States:
          (A) Any property, real or personal, involved in a 
        transaction or attempted transaction in violation of 
        section 1956, 1957 or 1960 of this title, or any 
        property traceable to such property.

           *       *       *       *       *       *       *

          (C) Any property, real or personal, which constitutes 
        or is derived from proceeds traceable to a violation of 
        section 215, 471, 472, 473, 474, 476, 477, 478, 479, 
        480, 481, 485, 486, 487, 488, 501, 502, 510, 542, 545, 
        656, 657, 842, 844, 1005, 1006, 1007, 1014, 1028, 1029, 
        1030, 1032, 1039, or 1344 of this title or any offense 
        constituting specified unlawful activity'' (as defined 
        in section 1956(c)(7) of this title), or a conspiracy 
        to commit such offense.

           *       *       *       *       *       *       *

    Sec. 982. Criminal Forfeiture
    (a)(1) The court, in imposing sentence on a person 
convicted of an offense in violation of section 1956, 1957, or 
1960 of this title, shall order that the person forfeit to the 
United States any property, real or personal, involved in such 
offense, or any property traceable to such
    (2) The court, in imposing sentence on a person convicted 
of a violation of, or a conspiracy to violate--
          (A) section 215, 656, 657, 1005, 1006, 1007, 1014, 
        1341, 1343, or 1344 of this title, affecting a 
        financial institution, or 485, 486, 487, 488, 501, 502, 
        510, 542, 545, 842, 844, 1028, 1029, [or 1030] 1030 or 
        1030 of this title, shall order that the property 
        constituting, or derived from, proceeds the person 
        obtained directly or indirectly, as the result of such 
        violation.

           *       *       *       *       *       *       *


CHAPTER 47--FRAUD AND FALSE STATEMENTS

           *       *       *       *       *       *       *


    Sec.

           *       *       *       *       *       *       *

    1038. False Information and hoaxes.
    1039. Fraud and related activity in connection with 
obtaining confidential phone records information of a covered 
entity.
    1039. War profiteering and fraud relating to military 
action, relief, and reconstruction efforts.

           *       *       *       *       *       *       *

    Sec. 1039. War profiteering and fraud relating to military 
action, relief, and reconstruction efforts
    (a) Prohibition.--
          (1) In General.--Whoever, in any matter involving a 
        contract or the provision of goods or services, 
        directly or indirectly, in connection with a war, 
        military action, or relief or reconstruction activities 
        within the jurisdiction of the United States 
        Government, knowingly and willfully--
                  (A)(i) executes or attempts to execute a 
                scheme or artifice to defraud the United 
                States; or
                  (ii) materially overvalues any good or 
                service with the specific intent to defraud; 
                shall be fined under paragraph (2), imprisoned 
                not more than 20 years, or both; or
                  (B)(i) falsifies, conceals, or covers up by 
                any trick, scheme, or device a material fact;
                  (ii) makes any materially false, fictitious, 
                or fraudulent statements or representations; or
                  (iii) makes or uses any materially false 
                writing or document knowing the same to contain 
                any materially false, fictitious or fraudulent 
                statement or entry; shall be fined under 
                paragraph (2) imprisoned not more than 10 
                years, or both.
          (2) Fine.-- A person convicted of an offense under 
        paragraph (1) may be fined the greater of--
                  (A) $1,000,000; or
                  (B) if such person derives profits or other 
                proceeds from the offense, not more than twice 
                the gross profits or other proceeds.
    (b) Extraterritorial Jurisdiction.--There is 
extraterritorial Federal jurisdiction over an offense under 
this section.
    (c) Venue.--A prosecution for an offense under this section 
may be brought--
          (1) as authorized by chapter 211 of this title;
          (2) in any district where any act in furtherance of 
        the offense took place; or
          (3) in any district where any party to the contract 
        or provider of goods or services is located.

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CHAPTER 95--RACKETEERING

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    Sec. 1956. Laundering of Monetary Instruments

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    (c) As used in this section----

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          (7) the term ``specified unlawful activity'' means--

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                  (D) an offense under section 32 (relating to 
                the destruction of aircraft), section 37 
                (relating to violence at international 
                airports), section 115 (relating to 
                influencing, impeding, or retaliating against a 
                Federal official by threatening or injuring a 
                family member), section 152 (relating to 
                concealment of assets; false oaths and claims; 
                bribery), section 175c (relating to the variola 
                virus), section 215 (relating to commissions or 
                gifts for procuring loans), section 351 
                (relating to congressional or Cabinet officer 
                assassination), any of sections 500 through 503 
                (relating to certain counterfeiting offenses), 
                section 513 (relating to securities of States 
                and private entities), section 541 (relating to 
                goods falsely classified), section 542 
                (relating to entry of goods by means of false 
                statements), section 545 (relating to smuggling 
                goods into the United States), section 549 
                (relating to removing goods from Customs 
                custody), section 641 (relating to public 
                money, property, or records), section 656 
                (relating to theft, embezzlement, or 
                misapplication by bank officer or employee), 
                section 657 (relating to lending, credit, and 
                insurance institutions), section 658 (relating 
                to property mortgaged or pledged to farm credit 
                agencies), section 666 (relating to theft or 
                bribery concerning programs receiving Federal 
                funds), section 793, 794, or 798 (relating to 
                espionage), section 831 (relating to prohibited 
                transactions involving nuclear materials), 
                section 844(f) or (i) (relating to destruction 
                by explosives or fire of Government property or 
                property affecting interstate or foreign 
                commerce), section 875 (relating to interstate 
                communications), section 922(l) (relating to 
                the unlawful importation of firearms), section 
                924(n) (relating to firearms trafficking), 
                section 956 (relating to conspiracy to kill, 
                kidnap, maim, or injure certain property in a 
                foreign country), section 1005 (relating to 
                fraudulent bank entries), 1006 (2) (relating to 
                fraudulent Federal credit institution entries), 
                1007 (relating to Federal Deposit Insurance 
                transactions), 1014 (relating to fraudulent 
                loan or credit applications), section 1030 
                (relating to computer fraud and abuse), 1032 
                (relating to concealment of assets from 
                conservator, receiver, or liquidating agent of 
                financial institution), section 1039 (relating 
                to war profiteering and fraud relating to 
                military action, relief, and reconstruction 
                efforts), section 1111 (relating to murder), 
                section 1114 (relating to murder of United 
                States law enforcement officials), section 1116 
                (relating to murder of foreign officials, 
                official guests, or internationally protected 
                persons), section 1201 (relating to kidnaping), 
                section 1203 (relating to hostage taking), 
                section 1361 (relating to willful injury of 
                Government property), . . .

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CHAPTER 96--RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS

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    As used in this chapter--
          (1) ``racketeering activity'' means (A) any act or 
        threat involving murder, kidnapping, gambling, arson, 
        robbery, bribery, extortion, dealing in obscene matter, 
        or dealing in a controlled substance or listed chemical 
        (as defined in section 102 of the Controlled Substances 
        Act), which is chargeable under State law and 
        punishable by imprisonment for more than one year; (B) 
        any act which is indictable under any of the following 
        provisions of title 18, United States Code: Section 201 
        (relating to bribery), section 224 (relating to sports 
        bribery), sections 471, 472, and 473 (relating to 
        counterfeiting), section 659 (relating to theft from 
        interstate shipment) if the act indictable under 
        section 659 is felonious, section 664 (relating to 
        embezzlement from pension and welfare funds), sections 
        891-894 (relating to extortionate credit transactions), 
        section 1028 (relating to fraud and related activity in 
        connection with identification documents), section 1029 
        (relating to fraud and related activity in connection 
        with access devices), section 1039 (relating to war 
        profiteering and fraud relating to military action, 
        relief, and reconstruction efforts), section 1084 
        (relating to the transmission of gambling information), 
        section 1341 (relating to mail fraud), section 1343 
        (relating to wire fraud), section 1344 (relating to 
        financial institution fraud), section 1425 (relating to 
        the procurement of citizenship or nationalization 
        unlawfully), . . .

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